TIDMSTX
RNS Number : 7244Q
Shield Therapeutics PLC
30 June 2022
Shield Therapeutics plc
("Shield" or the "Company" or the "Group")
Business Update, Final Results and Financing Agreement
Shield Provides a Business Update, its Final Results for the
Year Ended 31 December 2021 and announces a financing agreement of
US$10 million
London, UK, 30 June 2022: Shield Therapeutics plc (LSE: STX), a
commercial stage pharmaceutical company focused on the
commercialization of Accrufer(R)/Feraccru(R) (ferric maltol), a
novel, oral iron therapy differentiated from other conventional
irons by its efficacy, well-tolerated formulation, and broad
indication, today reports a business update covering recent
developments, its audited final results for the year ended 31
December 2021 and details of a financing transaction of US$10
million through a shareholder loan from AOP Orphan International AG
('AOP'). Upon completion this transaction will extend the Company's
cash runway to approximately the end of calendar 2022.
Shield had a transformational 2021, successfully launching
Accrufer(R) in the US, with strong growth in revenue and demand,
and achieving a solid start to the financial year. The Company
executed 100% growth in prescriptions for the first months of 2022
whilst focusing on the Company's three main priorities: increasing
awareness of Accrufer(R), generating clinical experience and
expanding payor coverage.
Current Business Updates
-- 100% increase in total Accrufer(R) prescriptions in Q1 '22 as
compared to Q4 '21 , exceeding 3,900 total prescriptions during the
first quarter, with a small 30-person sales team.
o Women's Health practitioners, a rapidly growing segment
treating women with underlying diseases leading to iron deficiency,
now represents over 50% of Accrufer(R) prescriptions.
o Continued high Accrufer(R) demand from the General
Practitioners representing the balance of prescriptions.
o Estimated 20 million people in the US with anaemia reflecting
a huge medical need.
-- 100 million or 40% of eligible lives now have coverage for
Accrufer (R) by US payers across commercial and Medicaid segments,
dramatically expanding access for patients and growing further.
-- > 1,100 Health Care Providers have been introduced to
Accrufer(R) by participating in Shield sponsored programmes from
January to April.
-- 700 New First Time Writers of Accrufer(R) from January to
April, indicating growing awareness and interest by healthcare
providers.
-- FDA approval of Accrufer(R) product shelf life increased from
24 to 36 months providing additional flexibility in manufacturing
and storage timelines.
-- Phase 3 paediatric study in the US and UK on track with over 50% of sites active.
-- Out-licensing agreement for Accrufer(R)/Feraccru(R) with KYE
Pharmaceuticals Inc. ("KYE") in Canada in January 2022. In March
2022, KYE submitted their documentation for approval in the
Canadian market, expected mid-2023.
Greg Madison, CEO of Shield Therapeutics, stated: "I am
extremely proud of the team here at Shield and the incredible work
they have done. Twelve months ago, awareness of Accrufer(R) and its
clinical application was low along with the Company's profile so
it's rewarding to stand here today with a rapidly growing business
highlighted by increasing prescriptions, expanding payer coverage,
growing awareness and first-time writers. That, coupled with a
dynamic new commercial leadership team who bring not only expertise
but passion and belief that we can alter the dynamics of how
patients are treated for iron deficiency, with or without anaemia.
Based on all our collective insights, we are even more confident
today about Accrufer(R) becoming the oral iron of choice, and the
potential for significant value creation. The team here at Shield
will continue to work tirelessly in our pursuit to ensure the
millions of patients seeking treatment for their iron deficiency,
will have the opportunity to experience the benefits of
Accrufer(R)."
Financing
Shield has agreed a financing transaction, through an executed
binding letter of intent, which will, when completed, extend the
Group's cash runway until approximately the end of calendar 2022
through a shareholder loan in the amount of US$10 million from AOP
Orphan International AG ("AOP"), a shareholder owning 13.1% of the
Company's issued share capital (registered in the name of MaRu
AG).
The loan facility will be structured to be drawn down by 1
August 2022. Interest of 7.0% above the 12-month USD-LIBOR is
payable monthly in arrears. The shareholder loan will be secured
against the US intellectual property rights associated with
Accrufer(R) and will be repayable in cash in the event that Shield
secures a further debt or equity financing for no less than
approximately US$30 million or, in any event, by 31 December 2023.
The lenders will have the right, but not the obligation, to convert
any outstanding loan balances into new ordinary shares in Shield at
any time at a 10% discount to the average closing middle market
price for the preceding ten business days or, in the event of a new
equity raise, on the same terms as all other investors subscribe.
An arrangement fee of 2% is payable to the lenders on signing the
formal loan documentation. Execution of the formal loan
documentation will be subject to Aim Rule 13.
As a result of the loan being convertible into Shield ordinary
shares, it is subject to the approval of Shield shareholders. A
general meeting of Shield is expected to be convened for the last
week of July 2022 for the purpose of obtaining this approval.
Prior to agreeing the shareholder loan, the Company initiated
efforts to raise US$30 million in equity which if completed would
have provided access to a larger non-dilutive debt facility offered
in the form of a non-binding term sheet from a financial
institution. However, due to the extremely challenging equity
market conditions it became apparent that it was unlikely such an
equity financing could be closed at this time.
The Company has continued to engage with various parties in
relation to potential financing opportunities and other strategic
partnerships, which in combination with the US$10 million loan
expected from AOP, has led Shield to re-assess the optimal level
and structure of its future funding required to drive sales growth
of Accrufer(R) in the US. That assessment is ongoing and further
announcements will be made in due course.
2021 Operational highlights
-- US Commercialisation : US Accrufer(R) sales reached
approximately 2,500 prescriptions in the six months following the
US launch in July 2021. This achievement was accomplished in
context of limited awareness of Accrufer(R) by US healthcare
providers at launch due to no prior market development and no payer
coverage until the end of December 2021.
-- Reimbursement : No payer coverage established until the end
of 2021, when four major contracts were signed creating access
heading into 2022.
-- Growth in the EU : Feraccru(R) volume in Europe increased by
60% in 2021 compared to 2020 through efforts of our partner,
Norgine BV. The growth was due to increased demand in Germany,
where packs sold increased by more than 20% over the prior
year.
-- Expanded Global Commercial Partnering : Shield licensed
Accrufer(R)/Feraccru(R) to Korea Pharma Co., Ltd. in the Republic
of Korea.
-- Progression of Clinical Studies by Our Commercial Partners :
Our partner, Beijing Aosaikang Pharmaceutical Co., Ltd. ("ASK
Pharma"), completed a pharmacokinetics study requirement in China
and started enrolment in the Phase 3 registrational trial.
-- Label Expansion Opportunities : Shield initiated a Phase 3 paediatric study in the US and UK.
-- Strengthened Leadership Team: Greg Madison (Chief Executive
Officer, 'CEO'), Hans-Peter Rudolf (Chief Financial Officer, 'CFO')
and Dr José Menoyo (Chief Medical Officer, 'CMO') joined the
team.
2021 Financial highlights
-- Revenues of GBP1.5 million (2020: GBP10.4 million).
o With first payer contracts signed in December 2021, limited
prescription sales in six months following the launch benefited
from commercial reimbursement.
-- Loss for the year of GBP17.9 million (2020: GBP2.6 million).
o The loss in 2021 increased by GBP15.3 million compared to the
loss in 2020, primarily due to a GBP11.4 million increase in
operating costs related to the US launch activities, plus one-time
net revenues of GBP9.4 million in 2020 from the upfront payment
received on the signing of the Chinese license agreement.
-- Net cash of GBP12.1 million (2020: GBP2.9 million).
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 (as it forms part of
domestic law by virtue of the European Union (Withdrawal) Act
2018). Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to
be in the public domain.
For further information please contact:
Shield Therapeutics plc www.shieldtherapeutics.com
Greg Madison, CEO +44 (0) 191 511 8500
Hans-Peter Rudolf, CFO
Nominated Adviser and Joint
Broker
Peel Hunt LLP
James Steel/Christopher Golden +44 (0)20 7418 8900
Joint Broker
finnCap Ltd
Geoff Nash/ George Dollemore/Alice
Lane/Nigel Birks +44 (0)20 7220 0500
Financial PR & IR Advisor
Walbrook PR
Paul McManus/Lianne Applegarth/Alice +44 (0)20 7933 8780 or shield@walbrookpr.com
Woodings
Investor Contact (US Advisor)
LifeSci Advisors, LLC
John Mullaly +1 617 429 3548 or jmullaly@lifesciadvisors.com
About Accrufer(R)/Feraccru(R)
Accrufer(R)/Feraccru(R) (ferric maltol) is a novel, stable,
non-salt based oral therapy for adults with iron deficiency, with
or without anaemia. Accrufer(R)/Feraccru(R) has a novel mechanism
of absorption compared to other oral iron therapies and has been
shown to be an efficacious and well-tolerated therapy in a range of
clinical trials. More information about Accrufer(R)/Feraccru(R),
including the product label, can be found at: www.accrufer.com and
www.feraccru.com
About Shield Therapeutics plc
Shield is a commercial stage specialty pharmaceutical company
with a focus on addressing iron deficiency with its lead product
Accrufer(R)/Feraccru(R) (ferric maltol). The Group has launched
Accrufer(R) in the US and Feraccru(R) is commercialized in the UK
and European Union by Norgine B.V., who also have the marketing
rights in Australia and New Zealand. Shield also has an exclusive
license agreement with Beijing Aosaikang Pharmaceutical Co., Ltd.,
for the development and commercialization of Accrufer(R) /
Feraccru(R) in China, Hong Kong, Macau and Taiwan, with Korea
Pharma Co., Ltd. in the Republic of Korea, and with KYE
Pharmaceuticals Inc. in Canada.
Accrufer(R)/Feraccru(R) has patent coverage until the
mid-2030s
Accrufer(R)/Feraccru(R) are registered trademarks of the Shield
Group
Forward-Looking Statements
This press release contains forward-looking statements. All
statements contained in this press release that do not relate to
matters of historical fact should be considered forward-looking
statements. These forward-looking statements are based on
management's current expectations and include statements related to
the commercial strategy for Accrufer(R)/Feraccru(R) These
statements are neither promises nor guarantees, but involve known
and unknown risks and uncertainties, many of which are beyond our
control, that may cause actual results, performance or achievements
to be materially different from management's expectations expressed
or implied by the forward-looking statements, including, but not
limited to, risks associated with, the Group's business and results
of operations, competition and other market factors. The
forward-looking statements made in this press release represent
management's expectations as of the date of this press release, and
except as required by law, the Group disclaims any obligation to
update any forward-looking statements contained in this release,
even if subsequent events cause our views to change.
Chairman's Statement
Despite the continued challenges thrown at us by the COVID-19
pandemic, Shield had a transformational 2021 which included the
successful completion of a GBP27.6 million (net) fundraise, the
launch of Accrufer(R) in the US and a further licence agreement
secured in the Republic of Korea.
The successful fundraise enabled Shield to establish a US entity
and make the product available to physicians from July 2021. I
would like to acknowledge the vast expertise and dedication shown
by the team to enable Accrufer(R) to be launched in such a pivotal
territory so that we can continue to realise our global ambitions
of improving patients' lives all over the world.
Strong team with the ability to deliver
Our people are a major strength of the business and during 2021
we continued to attract and retain key talent, selecting and
developing exceptional people who are motivated by our common
purpose and goals.
At our Board level Shield welcomed to the Board of Directors,
Fabiana Lacerca-Allen and Anders Lundstrom in 2021. Fabiana brings
with her a wealth of expertise on corporate compliance and
governance having implemented many compliance programmes at major
pharmaceutical companies and is widely known as one of the
pre-eminent specialists in the field of leadership and
compliance.
Anders has over 25 years' experience in senior commercial roles
within the pharmaceutical industry and is currently Executive Vice
President and Chief Commercial Officer at Banner Life Sciences
where he is executing a US launch of a novel fumarate,
Bafiertam(TM), for the treatment of multiple sclerosis. His US
commercial launch expertise has proved invaluable to the Company
during 2021.
During 2021 Shield appointed three key hires who are based in
our Boston Office: Greg Madison joined the team in May as Chief
Executive Officer. Greg's proven experience and leadership skills
are key to support the ongoing launch in the USA. I am confident
that the Company is equipped with the team to deliver on the large
US market opportunity for Accrufer(R). In addition to Greg,
Hans-Peter Rudolf joined the team in March as Group Chief Financial
Officer and Dr Jose Menoyo joined the team in September as Chief
Medical Officer.
As reported at the 2021 AGM, Rolf Hoffmann stepped down from his
position on the Board; I would like to thank Rolf for his
contributions to Shield across his three year tenure.
Strategy
The launch of Accrufer(R) in the US cemented the Group's
strategy to make Accrufer(R) the brand leader in oral iron therapy
in the US. In order to achieve this the Company continues to work
hard to achieve patient coverage to as many patients as possible
within the US. The Company is pleased to report that at the
year-end 60 million commercial lives were covered and ensuring
patient coverage is achieved from the other major pharmacy benefit
managers (PBMs) continues to be core focus. This further increased
to 100 million commercial lives post period end.
In addition, the paediatric Phase III study was initiated by the
end of 2021 and our business development team continues to pursue
out-license and other opportunities for Accrufer(R)/Feraccru(R) to
further drive sales growth and expand the product's reach.
Governance
The Board believes that good corporate governance improves
long-term success. The Board applies the 2018 Quoted Companies
Alliance Corporate Governance Code (the "QCA Code") as the basis of
the Group's governance framework. The Company's statement of
compliance continues to be made available on the Company's website.
In addition to its UK corporate governance the Company has
implemented a robust US compliance programme spearheaded by Fabiana
Lacerca-Allen. Our compliance programme incorporates the Office of
Inspector General's seven key principles on compliance, and we have
established a strong team made up of a representative from the
Board, the Company and an external compliance specialist who manage
all aspects of our legal, medical and regulatory compliance.
Culture
Our focus is our people, patients, partnerships and medicines to
create a working culture founded on our core values. It's through
this collaboration and alignment that we are able to attract highly
dedicated, ambitious people and demonstrate a genuine employee
value proposition.
As our team has expanded across the US, the Company has been
working to ensure that there is a strong focus on culture within
the business and we are working with the team to refresh the values
and behaviours to ensure all geographies and the way they work are
represented. This will be carried out by teams in both the US and
UK working together and if the recent pandemic has taught us
anything it is that we can break down those geographical
communication barriers to enable cross-Group collaboration.
Hans Peter Hasler, Non-Executive Chairman
Chief Executive Officer's statement
I joined the Shield organisation as CEO in May 2021, and what
attracted me to Shield was both our medicine and the opportunity.
Our medicine, Accrufer(R)/Feraccru(R), or ferric maltol, is one
that is very much needed by patients seeking treatment for iron
deficiency, with or without anaemia. Highly effective, well
tolerated, and a broad label were all factors that stood out as
differentiators from the 'other' oral irons in the marketplace. On
the opportunity side, it is immense. Iron Deficiency is the most
common and widespread nutritional disorder in the world, and iron
deficiency anaemia (IDA) accounts for 50% of anaemia worldwide. In
the US alone, there are an estimated 20 million people with
anaemia. Despite there being a number of iron products available
for patients, you can quickly determine that this is a very
unsatisfied market and patient population. No matter where you go
in the globe- Europe, China, Korea, Canada or the United Sates, one
issue remains constant - the tolerability of currently available
oral irons is a major concern. This is the proverbial Achilles heel
of current treatments that creates an immense amount of
dissatisfaction resulting in poor tolerability, high rates of
gastrointestinal events and resulting discontinuation. Most
importantly, as a result, patients remain unable to treat their
iron deficiency and reverse the effects of this disease. Our
mission is to change this narrative, and this is why we are here
'to improve lives together'.
US Market
As noted above, we estimate that there are 20 million people in
the US with anaemia. The US represents a very large and defined
market, with approximately 13.4 million prescriptions of oral iron
that are written by clinicians every year. When one thinks about
planning the launch of a new medication in the US, companies
routinely spend 12-18 months and significant capital as they
prepare for the launch, in order to launch the medicine in the most
effective way. During this time critical activities include
creating awareness and buzz about your product/company, setting up
the necessary infrastructure to support the launch, and starting
engagements and education with US payers to accelerate timing for
formulary coverage. Working with the resources it had available,
including limited pre-launch spend, Shield mobilised its launch
within three months meaning that it was not able to implement
pre-market development, the result being much of the work that's
typically done pre-launch, now needed to be done during the
launch.
With the core infrastructure in place at the time of launch
(brand campaign, marketing materials, website), our main focus
areas for the initial phase of launch were threefold: 1) create
awareness among healthcare providers (HCP's), 2) generate clinical
experience of Accrufer(R) and 3) initiate payer discussions to
establish coverage. We have made excellent progress across each of
these three priorities as described below:
Awareness - we saw a jump in awareness among HCP's from June to
December 2021 according to market research. This increase in
awareness was mainly the result of our thirty-person sales team
getting in front of HCP's and discussing the clinical benefits of
Accrufer(R).
Clinical Experience - HCP's wrote a total of 2,500 prescriptions
for Accrufer(R) during the first six months of launch, including
170% growth in Q4 vs. Q3 2021. This result is impressive
considering almost no physicians knew about Accrufer(R) prior to
July 2021. What we are also very happy to report is that the
clinical experience for patients is very consistent with what we
saw in our clinical trials- which is effectiveness at increasing
iron stores, and well tolerated.
Payer discussions - Discussions with payers were initiated
alongside our launch, and we successfully completed a number of
medical presentations with payers about the clinical benefits of
Accrufer(R), a gating step towards contracting discussions. Late in
Q4 2021, we signed several agreements with large payers, which
provided formulary access of Accrufer(R) for almost 60 million
patients by the end of 2021. This increased to 100 million
commercial lives post period end, and we expect access to continue
to grow as we move through 2022.
All of these are critical foundational aspects of a successful
launch of a brand in the US market and sets us up very well as we
move into 2022. We also made several important personnel additions
to the US team, bringing in highly experienced and motivated people
in the areas of commercial operations, medical affairs, and sales
leadership. Notably, we moved away from a contract model for our
field sales leadership team hiring our own VP, Sales and three
Regional Sales Directors during the early part of 2022.
As we move further into 2022, we are poised to take a major step
forward as we continue to advance our launch of Accrufer(R). We see
a very significant opportunity to become the oral iron of choice in
the US market. We continually hear from clinicians and patients how
dissatisfied they are with over the counter (OTC) irons, and when
they hear about Accrufer(R), the interest level is high. Breaking
the habits of these HCP's formed over a number of years takes a
strong, consistent and dedicated effort amongst the entirety of the
Shield commercial and medical affairs team, however we believe in
our product and are driven to get it into the hands of patients as
quickly as possible.
Europe/Australia
Upon my arrival as CEO, I wanted to better understand the
existing commercial relationships in Europe with our product
Feraccru(R), and how we could develop a stronger partnership with
our out-license partner, Norgine B.V. There were several reasons
for this, notably so that we can identify opportunities to drive
increased adoption of Feraccru(R) in key markets, but also to
understand critical learnings and experiences that could shape our
approach to the US launch.
Feraccru(R) pack sales coming out of Europe increased 60% on a
full year over year basis in 2021, however this is not
representative of the full opportunity. While the launch by Norgine
B.V. was certainly impeded due to the timing of the coronavirus
epidemic, working with our partner reviewing the German and UK
markets, a key insight appeared - the market for Feraccru(R)
primarily resides in Women's Health (OB/GYN) and General
Practitioners (GP), not in GI which is where the bulk of the
efforts until now have been focused. In fact, the market
opportunity exactly mirrors the opportunity seen in the US from a
physician specialty perspective. GP's and OB/GYN in Germany/UK
routinely prescribe a lot of oral iron and express the same
dissatisfaction around tolerability and are actively seeking
effective and well tolerated oral irons in lieu of sending patients
to get an IV infusion or switching from one oral iron to another in
the quest for one which they can better tolerate.
Armed with this key insight, Norgine B.V. is re-aligning their
strategic focus and efforts into the areas where the opportunity
lies. In addition, due to the similarities between these markets
and the US, there is a much stronger level of information sharing,
collaboration and open communication that has progressed
significantly between the two organisations in the past six months.
I am pleased with the progress we have made, however recognise
there remains much work to be done and remain focused on providing
the right level of support, insight and resources to get our
medicine to the patients.
Other Developments
We have made some very positive progress in other geographic
areas that I'd like to take a moment and highlight, specifically
China, Canada, and the Republic of Korea.
In China, there were two requirements for gaining potential
approval for Accrufer(R) - completion of a successful
pharmacokinetics (PK) study and Phase 3 study similar in design to
those that led to approval by EMA and FDA in Europe and US
respectively. Our partner has completed the PK study and are
currently enrolling patients into the Phase 3 study. As one of the
largest countries in the world, we believe there is great
opportunity for Accrufer(R). We signed new out-licensing deals with
KOREA PHARMA CO., LTD (Korea Pharma) for the Republic of Korea in
2021 and with KYE Pharmaceuticals Inc. (KYE) for Canada in early
2022. Both organisations showed a tremendous interest in the
product and have wasted no time in getting things moving with an
eye towards eventual approval in their respective markets. KYE has
recently submitted their documentation for approval in the Canadian
market, while Korea Pharma is actively engaged with the regulatory
authorities negotiating the clinical/regulatory pathway for
approval.
All of our respective out-licensing agreements entail a mix of
upfront payments, regulatory milestone payments, and royalties on
net sales.
On the development side of things, we successfully enrolled our
first patient into our paediatric study, which is for children and
adolescents age one month to 17 years. This study encompasses sites
both in the US and UK, and if successful, it adds an additional
patient population that is in need of effective and well tolerated
iron replacement therapies.
In conclusion, opportunity awaits. There has been a tremendous
amount of progress by the 'new' Shield, particularly over the past
twelve months that I have been a part of the organisation. Our
people in the organisation are a source of pride, and we have put
together an outstanding team of individuals that are focused on
achieving our goals and our mission 'to improve lives
together'.
Greg Madison, Chief Executive Officer
Financial review
Revenue
Revenue in 2021 was GBP1.5 million (2020: GBP10.4 million),
comprising GBP0.9 million royalty income from Feraccru(R) sales in
Europe by Norgine (2020: GBP0.7 million), GBP0.1 million net
product revenue from Accrufer(R) sales in the US (2020: GBPNil),
and a GBP0.5 million upfront payment from Korea Pharma on the
signing of the Korean licence agreement (2020: GBP9.7 million from
ASK Pharm on the signing of the Chinese licence agreement).
The 25% year-over-year increase in royalty income from
Feraccru(R) sales in Europe was achieved based on a 60% increase in
packs sold over the same period, lessened by a lower average sales
price due to the launches in Scandinavia, Luxembourg and
Belgium.
The approximately 2,500 prescriptions of Accrufer(R) sold since
the launch of the product in the US in July 2021 yielded net
revenue of GBP0.1 million. A majority of the 2021 prescription
sales were not reimbursed but subsidised through patient assistance
programs. Payer coverage through agreements with various pharmacy
benefit managers only became effective in December 2021.
Cost of sales
Cost of sales of GBP1.0 million (2020: GBP1.4 million) includes
the cost of finished packs supplied to Norgine for sale in Europe
and the 5% royalty payable to Vitra Pharmaceuticals Limited
("Vitra") on European net sales, and the payment to Vitra of 10% of
the licence upfront received from Korea Pharma.
Vitra was the original owner of the intellectual property
underpinning Feraccru(R) and, under the terms of the 2010 Asset
Purchase Agreement, is entitled to receive either a 5% royalty on
net sales or 10% of any licence upfront and sales milestones. For
the Norgine licence covering European commercialisation, Vitra
chose in 2018 to receive 5% on net sales whereas for the ASK Pharm
agreement covering China and the Korea Pharma agreement covering
the Republic of Korea, Vitra elected to receive 10% of the upfront
and sales milestones instead of future sales royalties.
H1 2020 cost of sales also includes the cost of finished goods
supplied to Norgine along with the 5% royalty payable to Vitra on
Norgine's net sales.
Selling, general and administrative expenses
Selling, general and administrative expenses were GBP20.0
million in 2021 (2020: GBP8.6 million). This increase was due to
the setup of the commercial functions related to the product launch
of Accrufer(R) in the US, either in the form of an increase in
selling costs or general administrative expenses. As a result, the
average number of persons employed by the Group increased from 16
employees in 2020 to 23 employees in 2021.
Research and development
The total cost of research and development was GBP0.6 million
(2020: GBP2.6 million), excluding capitalised development
expenditure of GBP1.7 million (2020: GBPNil) in connection with the
ongoing paediatric study.
Financial income
Financial income of GBP0.4 million was reported in 2021 (2020:
GBP0.3 million). This income was largely generated in connection
with currency gains on the cash held in US Dollars.
Tax
The tax credit of GBP0.2 million compares with a tax charge of
GBP0.7 million in 2020. The 2021 tax credit was created from an
accrual for the expected R&D tax credit, whereas the 2020
charge comprises the Chinese withholding tax of GBP1.0 million
arising on the upfront payment from ASK Pharm offset by the
anticipated R&D tax credit for 2020.
Balance sheet
Intangible assets at 31 December 2021 were GBP26.9 million
(2020: GBP27.3 million). The components of this are GBP16.0 million
(31 December 2020: GBP17.4 million) relating to the acquisition
costs of PT20, the phosphate binder product in our development
portfolio; GBP9.5 million (31 December 2020: GBP8.4 million)
relating to capitalised Feraccru(R) development expenditure, in
particular the AEGIS-H2H study and the paediatric pharmacokinetic
study; and GBP1.3 million (31 December 2020: GBP1.4 million)
expenditure on strengthening the Group's intellectual property.
Inventory at 31 December 2021 amounted to GBP1.6 million (31
December 2020: GBP1.4 million). The increase is due to the
conversion of bulk ferric maltol held at 31 December 2020 into
finished product which is now located in the US.
Trade and other receivables of GBP2.9 million at 31 December
2021 are higher than in 2020 (GBP0.6 million) due to the increase
in trading volume subsequent to the US product launch.
The current tax asset of GBP0.6 million (31 December 2020:
GBP0.3 million) represents the R&D tax credit expected to be
received in respect of 2020 and 2021.
Cash at 31 December 2021 amounted to GBP12.1 million (31
December 2020: GBP2.9 million) and at 31 May 2022 to GBP4.2 million
(unaudited).
Trade and other payables were GBP3.1 million at 31 December 2021
compared with GBP1.5 million at 31 December 2020. Other payables at
the end of 2021 were GBP0.1 million (31 December 2020: GBP0.8
million), the reduction being due to the payment of Swiss
corporation tax during 2021 in relation to the 2020 tax
liability.
Cash flow
The cash inflow during 2021 was GBP8.8 million, including
GBP27.6 million net proceeds from the equity raise in March 2021.
The loss for the year of GBP19.3 million, adjusted for non--cash
items of GBP4.0 million (depreciation and amortisation GBP2.2
million, share-based payments GBP1.0 million, net financial gains
GBP1.4 million, and income tax credit GBP0.2 million) and working
capital outflows of GBP1.4 million, resulted in a net cash outflow
from operating activities of GBP16.7 million.
Net cash outflows from investing activities of GBP2.0 million
are the result of capitalised development expenditure of GBP1.7
million and the acquisition of tangible assets of GBP0.4
million.
Net cash inflows from financing activities of GBP27.6 million
are attributable to the net proceeds from the equity raise in March
2021.
Currency gains of GBP0.4 million on US Dollar denominated cash
balances reduced the total cash outflow to GBP9.2 million.
Going concern
At 31 December 2021 the Group held GBP12.1 million in cash.
Since year-end, Shield secured an exclusive license agreement with
KYE Pharmaceuticals Inc. for the development and commercialisation
of Accrufer(R) in Canada, resulting in GBP0.15 million being
received as an upfront payment. In addition, the Group is starting
to receive cash deposits related to Accrufer(R) product sales. The
Group's unaudited cash balance at 31 May 2022 was GBP4.2
million.
The Directors have considered the funding requirements of the
Group through the preparation of detailed cash flow forecasts for
the period to December 2023. Under current business plans, the cash
resources at 31 May 2022 would extend into the third quarter of
2022. Based on the new shareholder loan expected to be received
from AOP in the amount of US$10 million, the Group's cash runway
would be extended until approximately the end of calendar 2022. To
allow the business plans to continue beyond that point in time, the
Company will continue to engage with various parties pursuing
various financing and strategic opportunities. Even though there
can be no guarantee that any of these opportunities will be
successfully concluded, the Directors believe that it remains
appropriate to prepare the financial statements on a going concern
basis based on the status of these discussions. Nevertheless, the
above matters indicate the existence of a material uncertainty
related to events or conditions which may cast significant doubt on
the Group's and the Company's ability to continue as a going
concern and, therefore, that the Group and the Company may be
unable to realise their assets and discharge their liabilities in
the normal course of business.
The financial statements do not include any adjustments that
would result from the basis of preparation being inappropriate.
Financial outlook
The Group plans to accelerate the US revenue growth by expanding
its field sales force, increasing product awareness by amplifying
digital strategies and direct-to-consumer programs, as well as
enhancing data systems to support marketing automation.
Selling, general and administrative costs in 2022 will likely
increase due to new commercial and marketing initiatives while
R&D expenditures (i.e., both the amount charged to the
statement of profit and any amounts capitalised) for the year will
be broadly in line with the amounts incurred in 2021.
The Group's current cash availability, including the new
shareholder loan which is expected to be received, should extend
until approximately the end of calendar 2022 and further financing
and strategic opportunities are being actively pursued.
Hans-Peter Rudolf, Chief Financial Officer
Following below are the consolidated statement of profit and
loss and other comprehensive income, the Group balance sheet, the
Group statement of changes in equity and the Group statement of
cash flows. Refer to Shield's 2021 Annual Report, available on the
Company's website at www.shieldtherapeutics.com , for the relevant
notes and disclosures.
Consolidated statement of profit and loss and other
comprehensive income
for the year ended 31 December
2021 2020
GBP000 GBP000
------------------------------------------------------ --------- ---------
Revenue 1,519 10,387
Cost of sales (980) (1,354)
------------------------------------------------------- --------- ---------
Gross profit 539 9,033
Other operating income 111 -
Operating costs - selling, general and administrative
expenses (20,023) (8,608)
------------------------------------------------------- --------- ---------
Operating profit/(loss) before research and
development expenditure (19,373) 425
Research and development expenditure (579) (2,579)
------------------------------------------------------- --------- ---------
Operating loss (19,952) (2,154)
Financial income 395 269
Financial expense (8) (1)
------------------------------------------------------- --------- ---------
Loss before tax (19,565) (1,886)
Taxation 229 (744)
------------------------------------------------------- --------- ---------
Loss for the year (19,336) (2,630)
------------------------------------------------------- --------- ---------
Attributable to
Equity holders of the parent (19,336) (2,630)
------------------------------------------------------- --------- ---------
Other comprehensive income
Items that are or may be reclassified subsequently
to profit or loss:
Foreign currency translation differences - foreign
operations 1,396 (16)
------------------------------------------------------- --------- ---------
Total comprehensive expenditure for the year (17,940) (2,646)
------------------------------------------------------- --------- ---------
Attributable to
Equity holders of the parent (17,940) (2,646)
------------------------------------------------------- --------- ---------
Total comprehensive expenditure for the year (17,940) (2,646)
------------------------------------------------------- --------- ---------
Earnings per share
Basic and diluted loss per share GBP(0.09) GBP(0.02)
------------------------------------------------------- --------- ---------
Group balance sheet
at 31 December
2021 2020
GBP000 GBP000
------------------------------ --------- --------
Non-current assets
Intangible assets 26,851 27,266
Property, plant and equipment 304 32
------------------------------- --------- --------
27,155 27,298
------------------------------ --------- --------
Current assets
Inventories 1,635 1,379
Trade and other receivables 2,930 619
Current tax asset 576 292
Cash and cash equivalents 12,117 2,940
------------------------------- --------- --------
17,258 5,230
------------------------------ --------- --------
Total assets 44,413 32,528
------------------------------- --------- --------
Current liabilities
Trade and other payables (3,114) (1,471)
Other liabilities (110) (753)
Lease liabilities (156) (28)
------------------------------- --------- --------
(3,380) (2,252)
------------------------------ --------- --------
Total liabilities (3,380) (2,252)
------------------------------- --------- --------
Net assets 41,033 30,276
------------------------------- --------- --------
Equity
Share capital 3,238 1,764
Share premium 114,583 88,352
Merger reserve 28,358 28,358
Currency translation reserve 1,449 53
Retained earnings (106,595) (88,251)
------------------------------- --------- --------
Total equity 41,033 30,276
------------------------------- --------- --------
Group statement of changes in equity
for the year ended 31 December
Currency
Issued Share Merger translation Retained
capital premium reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- ------- ------- ------- ----------- --------- --------
Balance at 1 January 2020 1,758 88,352 28,358 69 (86,392) 32,145
Loss for the year - - - - (2,630) (2,630)
Other comprehensive income:
Foreign currency translation
differences - - - (16) - (16)
----------------------------- ------- ------- ------- ----------- --------- --------
Total comprehensive expense
for the year - - - (16) (2,630) (2,646)
Transactions with owners,
recorded directly in equity
Equity-settled share-based
payment transactions 6 - - - 771 777
----------------------------- ------- ------- ------- ----------- --------- --------
Balance at 31 December 2020 1,764 88,352 28,358 53 (88,251) 30,276
Loss for the year - - - - (19,336) (19,336)
Other comprehensive income:
Foreign currency translation
differences - - - 1,396 - 1,396
----------------------------- ------- ------- ------- ----------- --------- --------
Total comprehensive expense
for the year - - - 1,396 (19,336) (17,940)
Transactions with owners,
recorded directly in equity
Equity placing - new shares
issued 1,459 26,220 - - - 27,679
Equity-settled share-based
payment transactions 15 11 - - 992 1,018
----------------------------- ------- ------- ------- ----------- --------- --------
Balance at 31 December 2021 3.238 114.583 28.358 1,449 (106,595) 41,033
----------------------------- ------- ------- ------- ----------- --------- --------
Group statement of cash flows
for the year ended 31 December
2021 2020
GBP000 GBP000
-------------------------------------------------- -------- -------
Cash flows from operating activities
Loss for the year (19,336) (2,630)
Adjustments for:
Depreciation and amortisation 2,207 2,705
Equity-settled share-based payment expenses 992 771
Financial income (395) (269)
Financial expense 42 1
Unrealised foreign exchange gains/(losses) 1,396 (11)
Income tax (229) 744
-------------------------------------------------- -------- -------
(15,323) 1,311
(Increase) in inventories (256) (431)
(Increase) in trade and other receivables (2,879) (264)
(Decrease)/increase in trade and other payables 1,643 (2,075)
Increase/(decrease) in other liabilities (643) 140
Change in lease assets and liabilities 128 8
Income tax (paid)/received 592 (89)
-------------------------------------------------- -------- -------
Net cash flows from operating activities (16,738) (1,400)
-------------------------------------------------- -------- -------
Cash flows from investing activities
Financial income 13 3
Acquisitions of intangible assets (9) (23)
Acquisitions of tangible assets (372) -
Capitalised development expenditure (1,683) -
-------------------------------------------------- -------- -------
Net cash flows from investing activities (2,051) (20)
-------------------------------------------------- -------- -------
Cash flows from financing activities
Interest paid (42) (1)
Leases - interest payment (3) (4)
Proceeds from equity raise 27,679 -
Proceeds of share options exercised 26 6
Total cash outflow for leases (76) (48)
-------------------------------------------------- -------- -------
Net cash flows from financing activities 27,584 (47)
-------------------------------------------------- -------- -------
Net decrease in cash 8,795 (1,467)
Effect of exchange rate fluctuations on cash held 382 266
Cash and cash equivalents at 1 January 2,940 4,141
-------------------------------------------------- -------- -------
Cash and cash equivalents at 31 December 12,117 2,940
-------------------------------------------------- -------- -------
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FR EANKNALKAEFA
(END) Dow Jones Newswires
June 30, 2022 02:00 ET (06:00 GMT)
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