REG - Shield Therapeutics - Interim results
04/09/2024 07:00
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RNS Number : 7870C Shield Therapeutics PLC 04 September 2024
Shield Therapeutics plc
("Shield" or the "Company" or the "Group")
Interim results for the six months ended 30 June 2024
More than threefold increase in Total Revenues compared to H1 2023
c. 65,200 ACCRUFeR® prescriptions sold, up 161% compared to H1 2023
Net average sales price increase of 33% from H1 2023
London, UK, September 4, 2024: Shield Therapeutics plc (LSE: STX), a
commercial stage pharmaceutical company that delivers ACCRUFeR®/FeRACCRU®
(ferric maltol), an innovative and differentiated specialty pharmaceutical
product, to address a significant unmet need for patients suffering from iron
deficiency (with or without anemia) announces its unaudited interim results
for the six months ended 30 June 2024, reporting a substantial increase in
revenues, ACCRUFeR® prescription sales and net average sales price.
Financial Highlights H1 2024
· Total Revenues: $12.1 million, a 3.2x increase over H1 2023 ($3.7
million)
o ACCRUFeR® revenue: $11.0 million, a 3.5x increase over H1 2023 ($3.1
million)
o Ex-US revenue: $1.1 million from global partners for product sales in
Europe (H1 2023: $0.6 million)
· Operating Loss: $15.5 million compared to $12.6 million in H1 2023
driven primarily by the expansion of US field force supporting the launch of
ACCRUFeR®, partially offset by higher ACCRUFER® revenues
· Cash and cash equivalents: $8.1 million (31 December 2023: $13.9
million). Post-Period End the Company completed a $5.7 million monetisation
agreement with AOP Health International Management AG (July 2024). Based on
our internal assumptions we remain funded to deliver on our growth plans and
look forward to further progress in the second half of the year and beyond.
Operational Highlights H1 2024
· Commercialization of ACCRUFeR® in the US: Continued growth and strong
market results with our partner, Viatris Inc.
o ACCRUFeR® total prescriptions grew to c.65,200 with an average quarterly
growth of 25% following field expansions with Viatris in Q2 2023. The growth
was primarily driven in large States such as California, Florida, New York,
and Texas.
o ACCRUFeR® net price per prescription steadily increased to $171 per
prescription in Q2 2024 driven by successful execution of our market access
strategies. H1 2024 was $158 per prescription, a 33% increase from $119 per
prescription in H1 2023.
· Global ACCRUFeR®/FeRACCRU® development programs: Continued progress
in development stage partnerships in Canada, Republic of Korea, and China.
o Kye Pharmaceuticals ("Kye") in Canada: ACCRUFeR® recently approved by
Health Canada, the only oral iron therapy approved as a prescription drug in
Canada. The team at Kye has been preparing for launch in late 2024 pending
this approval. In accordance with the collaborative agreement with Kye, Shield
is now due to receive a £250,000 milestone payment. For the remaining term of
the agreement, Shield will receive additional revenue-based milestone payments
along with double-digit royalties on net sales of ACCRUFeR®.
o Korea Pharma ("KP") in Korea: KP filed a New Drug Application for
ACCRUFeR® in the Republic of Korea (South Korea) following the successful
completion of a pharmacokinetic (PK) study.
o ASK Pharma ("ASK") in China: Enrolling patients into a Phase 3 study that
is similar in design to the previous studies conducted by Shield which led to
European Medicines Agency (EMA) and US Food & Drug approval (FDA). The
study is targeted to complete enrolment in late 2024.
o Paediatric study: Phase 3 paediatric clinical trial (FORTIS/ST10-01-305)
comparing the safety, tolerability and effectiveness of an oral liquid
suspension of ferric maltol with oral ferrous sulphate liquid in children with
iron deficiency anaemia (IDA) expected to be completed in 2024. The trial is
the final study in the comprehensive paediatric development program that
Shield committed to implement with both the European EMA and the US FDA.
Anders Lundstrom, Interim CEO of Shield Therapeutics, commented: "H1 2024 has
been another strong period of growth for Shield which is demonstrated through
the significant increase in sales figures, net selling price and number of
prescriptions for ACCRUFeR® in the US. We continue to focus on building
momentum through creating greater awareness of ACCRUFeR® among health care
professionals in the US as well as expanding our geographic reach with our
international partners.
We have also continued to manage our cash burn during launch and scale of
ACCRUFeR® while strengthening our balance sheet by implementing innovative
financing solutions like the working capital financing with Sallyport in April
and adding $5.7 million through the milestone monetization agreement with AOP
Health International Management AG post period end. It is a very exciting time
for Shield, and we look forward to providing updates for shareholders on our
path to making ACCRUFeR® the oral iron of choice for patients with iron
deficiency, with or without anemia"
Investor presentation
Interim CEO, Anders Lundstrom, and CFO, Santosh Shanbhag, will be hosting a
live online presentation relating to the interim results via the Investor Meet
Company platform at 4.30pm (BST) today, Wednesday 4 September 2024.
The presentation is open to all existing and potential investors. Questions
can be submitted at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to
meet Shield Therapeutics plc via:
https://www.investormeetcompany.com/shield-therapeutics-plc/register-investor
(https://www.investormeetcompany.com/shield-therapeutics-plc/register-investor)
For further information please contact:
Shield Therapeutics plc www.shieldtherapeutics.com (http://www.shieldtherapeutics.com/)
Anders Lundstrom, CEO +44 (0) 191 511 8500
Santosh Shanbhag, CFO
Nominated Adviser and Joint Broker
Peel Hunt LLP
James Steel/Patrick Birkholm +44 (0)20 7418 8900
Joint Broker
Cavendish Ltd
Geoff Nash/ Rory Sale/Nigel Birks/Harriet Ward
+44 (0)20 7220 0500
Financial PR & IR Advisor
Walbrook PR
Charlotte Edgar / Alice Woodings +44 (0)20 7933 8780 or shield@walbrookpr.com (mailto:shield@walbrookpr.com)
About Iron Deficiency and ACCRUFeR®/FeRACCRU®
Clinically low iron levels (aka iron deficiency, ID) can cause serious health
problems for adults of all ages, across multiple therapeutic areas. Together,
ID and ID with anemia (IDA) affect about 20 million people in the US and
represent a $2.3B market opportunity. As the first and only FDA approved oral
iron to treat ID/IDA, ACCRUFeR® has the potential to meet an important unmet
medical need for both physicians and patients.
ACCRUFeR®/FeRACCRU® (ferric maltol) is a novel, stable, non-salt-based oral
therapy for adults with ID/IDA. The drug 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®/FeRACCRU®, including the product label, can be found at:
www.accrufer.com (http://www.accrufer.com) and www.feraccru.com
(http://www.feraccru.com) .
About Shield Therapeutics plc
Shield is a commercial stage specialty pharmaceutical company that delivers
ACCRUFeR®/FeRACCRU® (ferric maltol), an innovative and differentiated
pharmaceutical product, to address a significant unmet need for patients
suffering from iron deficiency, with or without anemia. The Company has
launched ACCRUFeR® in the U.S. with an exclusive, multi-year collaboration
agreement with Viatris. Outside of the U.S., the Company has licensed the
rights to four specialty pharmaceutical companies. FeRACCRU® is
commercialized in the UK and European Union by Norgine B.V., which also has
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®/ FeRACCRU® in China, Hong
Kong, Macau and Taiwan, with Korea Pharma Co., Ltd. for the Republic of Korea,
and with KYE Pharmaceuticals Inc. for Canada.
ACCRUFeR®/FeRACCRU® has patent coverage until the mid-2030s.
ACCRUFeR®/FeRACCRU® are registered trademarks of Shield Therapeutics.
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®/FeRACCRU®. 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 and 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 Company'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 Company disclaims any obligation to update any
forward-looking statements contained in this release, even if subsequent
events cause its views to change.
Operational Review
Commercialisation of ACCRUFeR® in the US
Shield continues to see the positive impact of the successful organisational
expansion and launch of ACCRUFeR® in the US with our partner, Viatris Inc.
Over the first half of 2024, we generated approximately $11 million in
ACCRUFeR® net revenues which is broadly on par with ACCRUFeR® net revenues
generated in the prior entire financial year (2023: $11.6 million) and a 3.5x
increase compared to H1 2023.
ACCRUFeR® net price has steadily increased to $158 per prescription in H1
2024, a 33% increase on the same period last year (H1 2023: $119 per
prescription), driven by successful execution of our market access strategies.
Prescriptions grew to c. 65,200 in the first half of 2024 demonstrating an
average quarterly growth of 25% following field expansions with Viatris in Q2
2023. The growth was primarily driven by large States such as California, New
York, and Florida. Following the challenges we experienced with the transition
and lack of a Texas State Medicaid Pharmacy Benefit Manager (PBM) during Q1
2024, we continue to see a rebound in the Texas prescription volume.
Overall, our sales team continues to receive very positive feedback on the
product from physicians. We continue to believe this provides additional
confirmation in two key areas. First, that there is a need from health care
professionals (HCPs) and patients for an effective and well tolerated oral
iron. Second, ACCRUFeR® is highly promotionally sensitive, so the more HCPs
we can reach with sales and marketing efforts, the faster we can increase
awareness and the opportunity to grow our prescriber base. Awareness about
ACCRUFeR® as an option to treat iron deficiency, with or without anaemia
(ID/IDA) among many of these HCPs remains quite low, and our objective is
simple: increase awareness of ACCRUFeR®, generate prescriptions from HCPs,
and allow patients to experience the benefits we believe ACCRUFeR® can
provide. While we have made continued progress over the first six months of
this year, there is much opportunity still ahead of us to make ACCRUFeR® the
oral iron of choice for patients with iron ID/IDA.
Global partnerships and development
We have a number of global partnerships, and our objective is to expand this,
identifying further opportunities to bring ACCRUFeR®/FeRACCRU® to patients
with iron deficiency in as many markets as possible. We have a long-standing
relationship with Norgine for the distribution of FeRACCRU® in Europe; their
efforts are primarily concentrated in those countries where we have positive
reimbursement, specifically Germany, UK and the Nordics. During H1 2024, we
received $1.1 million in revenues from our global partners including royalties
from Norgine in respect of sales of FeRACCRU® in Europe.
We continue to make excellent progress in our development stage partnerships
in Canada, Republic of Korea, and China. Health Canada has recently approved
ACCRUFeR® (ferric maltol) as a prescription drug for the treatment of adults
with iron deficiency anemia (IDA). This development allows Shield's partner,
Kye, to launch ACCRUFeR® in Canada. In accordance with the collaborative
agreement, Shield is now due to receive a £250,000 milestone payment. For the
remaining term of the agreement, Shield will receive additional revenue--based
milestone payments along with double-digit royalties on net sales of
ACCRUFeR®.
In the Republic of Korea, our partner, Korea Pharma, filed a New Drug
Application for ACCRUFeR® following the successful completion of a
pharmacokinetic (PK) study.
Lastly, our partner in China, ASK Pharma, is enrolling patients into a Phase 3
study that is similar in design to the previous studies conducted by Shield
which led to European Medicines Agency (EMA) and US Food & Drug
Administration approval (FDA). The study is targeted to complete enrolment in
late 2024. Each of these markets represent a growth opportunity with many
patients challenged in treating their iron deficiency today. Shield receives
various milestones and royalties on net sales across each of these
geographies.
Paediatric study
Our paediatric study could lead to an expansion of the indication and uses for
ACCRUFeR®/FeRACCRU® in both US and EU markets. The study, a requirement of
both the FDA and EMA, is enrolling patients with iron deficiency ranging from
12 months to 17 years of age. This is another population where iron deficiency
is prevalent and similar challenges to over-the-counter irons exist. As part
of this study, Shield is using a new liquid formulation, which, if approved,
may offer an alternative approach for those who can't swallow our current
capsule formulation. We expect to complete enrolment of our paediatric study
in 2024.
Outlook
The Group continued to execute the expansion and growth of ACCRUFeR® in the
first half of 2024. We have substantially increased revenues, the net selling
price and the number of prescriptions for ACCRUFeR® in the US as we continue
to build awareness of the product and fine tune our commercial efforts. Based
on our internal assumptions we remain funded to deliver on our growth plans.
We see an oral iron market which has clear unmet needs, based on physician
and patient feedback, for a product that delivers both effectiveness and
tolerability. As we move into the second half of 2024 and 2025, Shield and our
partner Viatris expect to achieve continued growth in ACCRUFeR® prescriptions
in the US along with further improvement of other financial metrics.
Additionally, we should complete our paediatric study during 2024, increasing
expansion opportunities in both the US and EU in future years. Lastly, our
ex-US partnerships continue to progress not only making ACCRUFeR® /FeRACCRU®
available around the globe, but also adding to our revenues through both
milestones and royalties.
Financial Review
Revenue
Revenue in the first six months of 2024 (H1 2024) amounted to $12.1 million
(H1 2023: $3.7 million), of which $11.0 million (H1 2023: $3.1 million) was
derived from ACCRUFeR® sales in the US. The 2023 year-end audit process
identified a change in the accounting treatment of commercial rebates
resulting in a reduction in both, revenues as well as selling, general and
administrative expenses by $0.6 million compared to the H1 2023 Interim
Financials reported in September 2023. There was no impact on the loss for the
period, the balance sheet, or the cash flow. The balance of $1.1 million (H1
2023: $0.6 million) represents revenues from our global partners including
royalties from Norgine in respect of sales of FeRACCRU® in Europe.
Approximately 65,200 prescriptions of ACCRUFeR® were sold in the US in H1
2024 and that yielded net revenue of $11.0 million (H1 2023: $3.1 million from
approximately 25,000 prescriptions). Additionally, the net average sales price
per prescription was $158 in H1 2024 an increase of 33% compared to $119 per
prescription in H1 2023.
In addition, the Group reports $0.1 million (H1 2023: $4.3 million) of other
operating income. Most of the other operating income in H1 2023 was related to
the deferred portion of the upfront payment from Viatris Inc., Shield's
co-promote partner in the US, received at the end of 2022.
Cost of sales
Cost of sales in H1 2024 amounted to $6.7 million (H1 2023: $2.1 million).
The H1 2024 cost of sales comprises manufacturing costs of the prescriptions
sold in the US and in Europe, plus the 45% share of the US net product
revenues payable to Viatris and 5% royalty on net sales, payable to Vitra
Pharmaceuticals Ltd (Vitra).
Selling, general and administrative expenses
Selling, general and administrative expenses were $18.8 million in H1 2024 (H1
2023: $17.0 million). The increase is directly attributable to the expansion
of the US commercial business in connection with the implementation and
commencement of the co-promote partnership with Viatris. As indicated above,
H1 2023 expenses reflects a change in the accounting treatment of commercial
rebates that were identified during the year end audit process.
Research and development
In H1 2024, $0.8 million in development costs were expensed in the statement
of profit and loss (H1 2023: $0.4 million). In addition, $1.5 million (H1
2023: $1.5 million) of development expenditure was recorded directly to the
balance sheet in accordance with the underlying conditions for capitalization
(disclosed in the detail in the notes of the Company's 2023 annual report).
These development costs and expenditure have been spent in connection with the
ongoing pediatric study.
Loss for the period
The loss for H1 2024 was $15.5 million (H1 2023: $12.6 million) which includes
financial income of $0.2 million (H1 2023: $0.3 million), financial expense of
$1.6 million (H1 2023: $0.6 million) and taxation of $0.0 million (H1 2023:
$0.8 million).
Balance sheet
Effective 30 April 2024, the Group strengthened its balance sheet through a
$10.0 million accounts receivable financing with Sallyport Commercial Finance
(Sallyport). The accounts receivable financing is secured by ACCRUFeR®
accounts receivables in the US and bears an interest rate of WSJ Prime + 3.0%
on funds deployed. Additionally, the Group also amended its existing $20.0
million debt facility agreement with SWK Funding LLC (SWK), with more
favorable loan covenant terms.
Intangible assets on 30 June 2024 were $17.4 million (31 December 2023: $16.9
million), comprised of $16.2 million of capitalized ACCRUFeR®/FeRACCRU®
development expenditure (31 December 2023: $15.7 million) and $1.2 million
expenditure related patents and trademarks (31 December 2023: $1.2 million) to
strengthen the Group's intellectual property.
Inventory on 30 June 2024 amounted to $4.0 million (31 December 2023: $3.2
million), which comprises work in progress and finished product available for
sale.
Trade and other receivables increased to $15.4 million on 30 June 2024 from
$13.5 million on 31 December 2023. This change is driven by the higher sales
volume in the US.
The current tax asset of $0.3 million (31 December 2023: $0.6 million)
represents anticipated R&D tax credits.
Cash and cash equivalents on 30 June 2024 amounted to $8.1 million (31
December 2023: $13.9 million).
Trade and other payables increased from $12.7 million on 31 December 2023 to
$19.4 million on 30 June 2024. The increase is largely attributed to the
revenue share payment due to Viatris on growing ACCRUFeR® sales, and the
usage of the accounts receivable financing mentioned above.
Cash flow
Net cash outflow from operations in H1 2024 was $3.6 million (H1 2023: $19.9
million). The H1 2024 loss for the period was $15.5 million but, after
adjusting for various non-cash items, the actual cash outflow from this loss
was $12.9 million (H1 2023: $10.8 million). Working capital cash outflows were
$9.1 million in H1 2023 turning to a working capital inflow of $9.3 million in
H1 2024, mainly due to the growing sales of ACCRUFeR® in the US, the usage of
the accounts receivable financing (see note 11) mentioned above, and the
benefit of the R&D tax credits received in the UK.
Net cash outflow from investing activities in H1 2024 was $0.8 million (H1
2023: $1.3 million) driven primarily by the capitalized development
expenditure of $1.0 million in H1 2024 (H1 2023: $1.5 million) partially
offset by financial income.
The net cash outflow from financing activities in H1 2024 was $1.9 million (H1
2023: inflow $30.1 million) primarily attributable to the interest paid on the
Group long-term loan financing. H1 2023 included $10 million proceeds from
convertible shareholder loan and $20 million cash raised from an equity
placing.
Going concern
For the reasons set out in detail under Note 2 of the attached condensed
interim financial statements as of and for the six months ended 30 June 2024,
the Directors believe that it remains appropriate to prepare the financial
statements on a going concern basis.
Consolidated statement of profit and loss and other comprehensive income
for the six months ended 30 June 2024
Note Year
Six months ended ended
30 June Six months ended 31 December
2024 30 June 2023
(unaudited) 2023 (audited)
$000 (unaudited) $000
$000
Revenue 4 12,132 3,743 13,085
Cost of sales (6,675) (2,085) (9,058)
Gross profit 5,457 1,658 4,027
Other operating income 52 4,298 4,412
Operating costs - selling, general and administrative expenses 5 (18,815) (17,063) (37,960)
Operating loss before impairment and research and development expenditure (29,521)
(13,306) (11,107)
Impairment of intangible assets - - -
Research and development expenditure (752) (434) (1,810)
Operating loss (14,058) (11,541) (31,331)
Financial income 203 326 518
Financial expense (1,625) (578) (1,562)
Loss before tax (15,480) (11,793) (32,375)
Taxation 2 (812) (918)
Loss for the period (15,478) (12,605) (33,293)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations (1,890)
(402) 894
Total comprehensive expenditure for the period (15,880) (11,711) (35,183)
Loss per share
Basic and diluted loss per share (in US cents) 7 $(0.02) $(0.02) $(0.05)
Group balance sheet
at 30 June 2024
Note
30 June 30 June 3
1
2024 2023 D
e
(unaudited) (unaudited) c
e
$000 $000 m
b
e
r
2
0
2
3
(
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d
i
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e
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$
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Non-current assets
Intangible assets 7 17,401 15,239 16,863
Property, plant and equipment 524 327 673
Restricted cash 8 1,000 - -
18,925 15,566 17,536
Current assets
Inventories 9 4,035 2,695 3,203
Trade and other receivables 15,406 9,262 13,498
Current tax asset 296 550 614
Cash and cash equivalents 8,099 13,594 13,948
27,836 26,101 31,263
Total assets 46,761 41,667 48,799
Non-current liabilities
Convertible shareholder loan - (5,705) -
Long-term loan (19,679) - (19,836)
Lease liabilities - - (195)
Fair value of loan conversion feature - - -
(19,679) (5,705) (20,031)
Current liabilities
Trade and other payables 10 (19,364) (8,080) (12,721)
Lease liabilities (292) (67) (214)
Other liabilities 11 (6,885) (713) (800)
(26,541) (8,860) (13,735)
Total liabilities (46,220) (14,565) (33,766)
Net assets 541 27,102 15,033
Equity
Share capital 12 (15,011) (13,734) (15,011)
Share premium (198,759) (173,087) (198,759)
Merger reserve (43,240) (42,966) (43,240)
Currency translation reserve 8,050 (10,603) (8,452)
Deposit for shares - - -
Accumulated deficit 248,419 213,288 233,525
Total equity (541) (27,102) (15,033)
Group statement of changes in equity
for the six months ended 30 June 2024
Share Share Merger Currency translation Retained Total
capital Deposit premium reserve reserve earnings $000
$000 For shares $000 $000 $000 $000
$000
Balance at 1 January 2023 (audited) 5,371 (100) 169,482 43,240 (10,342) (201,107) 6,544
Loss for the year - - - - - (33,293) (33,293)
Other comprehensive income:
Foreign currency translation differences - - - - 1,890 - 1,890
Total comprehensive expense for the year - - - - 1,890 (33,293) (31,403)
Transactions with owners, recorded directly in equity
Equity placing 6,556 100 19,819 - - - 26,475
Warrants exercised 98 - 345 443
Loan conversion 2,986 - 9,113 - - - 12,099
Equity-settled share-based payment transactions - - - - - 875 875
Balance at 31 December 2023 (audited) 15,011 - 198,759 43,240 (8,452) (233,525) 15,033
Loss for the period - - - - (15,478) (15,478)
Other comprehensive income:
Foreign currency translation differences - - - 402 - 402
Total comprehensive expense for the period - - - - 402 (15,478) (15,076)
Transactions with owners, recorded directly in equity
Equity placing - - - - - - -
Loan conversion - - - - - -
Equity-settled share-based payment transactions - - - - 584 584
Balance at 30 June 2024 (unaudited) 15,011 - 198,759 43,240 (8,050) (248,419) 541
Group statement of cash flows
for the six months ended 30 June 2024
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
$000 $000 $000
Cash flows from operating activities
Loss for the period (15,478) (12,605) (33,293)
Adjustments for:
Depreciation and amortization 601 524 1,071
Equity-settled share-based payment expenses 584 176 875
Financial income (203) (326) (518)
Financial expense 1,625 578 1,562
Impairment of intangible assets - - -
Income tax - 813 918
(12,871) (10,840) (29,385)
Increase in inventories (832) (938) (1,446)
Increase in trade and other receivables (1,908) (3,612) (7,007)
Increase in restricted cash (1,000) - -
Increase/(decrease) in trade and other payables 6,643 (3,364) 1,907
Increase/(decrease) in other liabilities 5,212 (1,142) (478)
Income tax received/(paid) 1,191 - (717)
Net cash flows from operating activities (3,565) (19,896) (37,126)
Cash flows from investing activities
Financial income 203 326 518
Acquisition of tangible assets (34) (178) (239)
Capitalised development expenditure (978) (1,466) (2,709)
Net cash flows from investing activities (809) (1,318) (2,430)
Cash flows from financing activities
Cash raised from equity placing - 20,170 26,375
Interest paid (1,782) - (613)
Warrants exercised - - 442
Proceeds from convertible shareholder loan - 10,000 10,000
Proceeds from long-term loan - - 19,446
Total cash outflow from leases (117) (40) (546)
Net cash flows from financing activities (1,899) 30,130 49,656
Net increase/(reduction) in cash (6,273) 8,916 10,100
Effect of exchange rate fluctuations on cash held 424 1,276 446
Cash and cash equivalents at beginning period 13,948 3,402 3,402
Cash and cash equivalents at period end 8,099 13,594 13,948
Notes
for the six months ended 30 June 2024
1. General information
Shield Therapeutics plc (the "Company") is incorporated in England and Wales
as a public limited company. The Company trades on the London Stock Exchange's
AIM market, having been admitted on 26 February 2016.
The Company is domiciled in England and the registered office of the Company
is at Northern Design Centre, Baltic Business Quarter, Gateshead Quays NE8
3DF.
The financial statements in this interim report comprise the Company and its
subsidiaries (together referred to as the 'Group'). The Group is engaged in
the late-stage development and commercialization of clinical stage
pharmaceuticals to treat unmet medical needs.
This interim report, which is not audited, has been prepared in accordance
with the measurement and recognition criteria of EU Adopted International
Financial Reporting Standards. It does not include all the information
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Group as at and
for the year ended 31 December 2023. This financial information does not
constitute statutory financial statements as defined in Section 435 of the
Companies Act 2006. The comparative figures for the year ended 31 December
2023 are not the Company's statutory accounts for that financial year. Those
accounts have been reported on by the Company's auditor and delivered to the
Registrar of Companies. The report of the auditors was unqualified. The
auditor has reported on those accounts; their report was unqualified and did
not contain a statement under Section 498 (2) or (3) of the Companies Act
2006.
The interim report was approved by the board of directors on 4 September 2024.
2. Accounting policies
The accounting policies applied in these interim financial statements are
consistent with those of the annual financial statements for the year ended 31
December 2023, as described in those annual financial statements.
Going concern
At 30 June 2024, the Group held $8.1 million in cash. On 3 July 2024, the
Group announced a $5.7 million milestone monetization agreement with AOP.
The Directors have considered the funding requirements of the Group through
the preparation of detailed cash flow forecasts for the period to December
2025, including the prospective ACCRUFeR® sales revenues and the related
commercial operating costs. These forecasts show that the Group's monthly cash
flows start to turn positive in H2 2025 and that the funding detailed above
should provide sufficient cash to allow the business to continue in operations
for at least twelve months from the date of this report. The Directors have
considered scenarios in which sales revenues fall below forecasts. In these
circumstances mitigating actions such as reduction of discretionary selling
and marketing expenditure could be taken to preserve cash. The Directors also
believe that other forms of finance, such as debt finance or royalty finance
are likely to be available to the Group.
Based on the above factors, the Directors believe that it remains appropriate
to prepare the financial statements on a going concern basis.
3. Critical accounting judgments and key sources of estimation uncertainty
In the application of the Group's accounting policies, management is required
to make judgments, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources.
The significant judgments made in relation to the financial statements are:
Development expenditure
Development expenditure is capitalized when the conditions referred to in Note
2 of the Company's annual report are met.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and
future periods. The significant estimates which may lead to material
adjustment in the next accounting period are:
Valuation of intellectual property associated with ACCRUFeR®/FeRACCRU®
The valuation of intellectual property associated with ACCRUFeR®/FeRACCRU®
(including patents, development costs and the Company's investment in Shield
TX (Switzerland) AG) is based on cash flow forecasts for the underlying
business and an assumed appropriate cost of capital and other inputs in order
to arrive at a fair value for the asset. The realization of its value is
ultimately dependent on the successful commercialization of the asset. In the
event that commercial returns are lower than current expectations this may
lead to an impairment. No impairment has been recognized to date.
Deferred tax assets
Estimates of future profitability are required for the decision whether to
create a deferred tax asset. To date no deferred tax assets have been
recognized.
4. Segmental reporting
The following analysis by segment is presented in accordance with IFRS 8 on
the basis of those segments whose operating results are regularly reviewed by
the Chief Operating Decision Maker (considered to be the Board of Directors)
to assess performance and make strategic decisions about the allocation of
resources. Segmental results are calculated on an IFRS basis.
A brief description of the segments of the business is as follows:
· ACCRUFeR®/FeRACCRU® - development and commercialization of the
Group's lead ACCRUFeR®/FeRACCRU® product
· PT20 - development of the Group's secondary asset (all related
assets were written off effective 31 December 2022)
Operating results which cannot be allocated to an individual segment are
recorded as central and unallocated overheads.
Six months ended 30 June 2024 (unaudited) Six months ended 30 June
2023
(unaudited)
ACCRUFeR®/ FeRACCRU® Central and unallocated $000 ACCRUFeR®/ FeRACCRU® Central and unallocated $000
$000 PT20 Total $000 PT20 Total
$000 $000 $000 $000
Revenue 12,132 - - 12,132 3,743 - - 3,743
Operating loss (12,412) - (1,652) (14,058) (865) - (10,676) (11,541)
Financial income 203 326 326
Financial expense (1,625) (578) (578)
Tax 2 (812)
Loss for the period (15,478) (12,605)
Year ended 31 December
2023
(audited)
ACCRUFeR®/ FeRACCRU® Central and unallocated $000
$000 PT20 Total
$000 $000
Revenue 13,085 - - 13,085
Operating loss (26,649) 858 (5,540) (31,331)
Financial income 518 518
Financial expense (1,562) (1,562)
Tax (918)
Loss for the period (33,293)
The revenue analysis in the table below is based on the country of
registration of the fee-paying party. $11.0 million revenue (H1 2023: $3.1
million) was derived from ACCRUFeR® sales in the US and $1.1 million (H1
2023: $0.6 million).
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
$000 $000 $£000
USA 10,955 3,151 11,570
The Netherlands 1,067 592 1,495
Canada - - -
South Korea 110 - 20
12,132 3,743 13,085
5. Operating costs - selling, general and administrative expenses
Operating costs are comprised of:
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2022
(unaudited) (unaudited) (audited)
$000 $000 $000
Selling costs 12,341 11,202 21,717
General and administrative expenses 5,703 5,366 15,172
Depreciation and amortization 771 495 1,071
18,815 17,063 37,960
6. Loss per share
The basic loss per share of $0.02 (H1 2023: $0.02) has been calculated by
dividing the loss for the period by the weighted average number of shares of
782,056,367 in issue during the six months ended 30 June 2024 (six months
ended 30 June 2023: 702,902,306).
Although there are potentially dilutive ordinary shares these would not serve
to increase or reduce the loss per ordinary share, as the Group is
loss-making. There is therefore no difference between the loss per ordinary
share and the diluted loss per ordinary share.
7. Intangible assets
ACCRUFeR®/ ACCRUFeR®/
FeRACCRU® FeRACCRU®
patents and trademarks development costs
$000 $000 Total
$000
Cost
Balance at 1 January 2023 (audited) 2,284 16,245 18,529
Additions - externally purchased 2,709 2,709
Effect of change in foreign currency 126 878 1,004
Balance at 31 December 2023 (audited) 2,410 19,832 22,242
Additions - externally purchased - 1,466 1,466
Effect of change in foreign currency (29) (203) (232)
Balance at 30 June 2024 (unaudited) 2,381 20,607 22,988
Accumulated amortization
Balance at 1 January 2023 (audited) 1,054 3,267 4,321
Charge for the period 121 705 826
Effect of change in foreign currency 52 180 232
Balance at 31 December 2023 (audited) 1,227 4,152 5,379
Charge for the period 47 388 435
Effect of change in foreign currency (26) (184) (210)
Balance at 30 June 2024 (unaudited) 1,262 4,325 5,587
Net book values
30 June 2024 (unaudited) 1,119 16,282 17,401
31 December 2023 (audited) 1,183 15,680 16,863
8. Restricted cash
The Group has $1.0 million (H1 2023: $Nil) of restricted cash held within an
escrow account in relation to the accounts receivable financing with Sallyport
Commercial Finance, LLC.
9. Inventories
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
(unaudited) (unaudited) (audited)
$000 $000 $000
Work in progress 1,284 - 1,098
Finished goods 2,751 2,695 2,105
4,035 2,695 3,203
10. Trade and other payables
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
(unaudited) (unaudited) (audited)
$000 $000 $000
Taxation payables 3,674 2,835 4,049
Accruals 15,690 5,245 8,672
19,364 8,080 12,721
11. Other liabilities
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
(unaudited) (unaudited) (audited)
$000 $000 $000
Taxation and social security 33 63 96
Accounts receivable financing 6,835 - -
Other payables 17 650 704
6,885 713 800
12. Share capital
Six months ended 30 June 2024 Six months ended 30 June 2024 Six months ended 30 June 2023 Number Six months ended 30 June 2023 Year ended Year ended 31 December 2023
Number 000 31 December 2023
000 $000 $000 Number $000
000
At beginning of period 782,056 15,011 259,388 5,371 259,388 5,371
Exercise of share options - - - -
Conversion of loan - - 158,805 2,941 158,805 2,986
Warrants exercised 5148 98
Equity placing - - 294,844 5,422 358,715 6,556
Total shares authorized and in issue at end of period - fully paid 782,056 15,011 713,037 13,734 782,056 15,011
No share options were exercised during the six months ended 30 June 2024 (six
months ended 30 June 2023: Nil)
13. Subsequent events
On 3 July 2024 the Group announced a $5.7 million milestone monetization
agreement with AOP. Under the terms of the Agreement, AOP provided Shield with
$5.7 million in cash, in exchange for the right to receive the $11.4 million
China approval milestone payment that may be paid to Shield by Jiangsu
Aosaikang Pharmaceutical Co., Ltd. ASK Pharma continues to enroll patients
into a Phase 3 study and enrollment is expected to complete late in 2024.
Subject to the Phase 3 reading out successfully and regulatory approval by the
Chinese regulator Shield believes the Approval Milestone may be payable by the
year ending 2026. Under the terms of the Agreement, if the Approval
Milestone falls due Shield is required to pay its full value to AOP 30 days
after the Approval Milestone has been achieved. Further, if the Approval
Milestone has not been triggered by 31 December 2026, or in the event the
Agreement is terminated, including at Shield's election or due to a breach by
Shield of its terms, the Advance plus accrued interest and fees at the
interest rate of SOFR+9.25% (calculated from the date of the Advance until the
day of payment) and an exit fee of 6.5% of the Advance will be payable by
Shield to AOP. The Advance will be secured inter alia by AOP's right to
receive the ASK Approval Milestone.
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