TIDMSTX
RNS Number : 9177N
Shield Therapeutics PLC
28 September 2023
Shield Therapeutics plc
("Shield" or the "Company" or the "Group")
Interim results update and business update
Shield reports strong H1 2023 prescription growth momentum for
Accrufer(R)
Accelerating prescription growth, with expectations for 80%
increase in Q3 2023
KPI performance and new market access expansion puts Shield on
track to grow 2023 Accrufer(R) prescriptions to 100,000-130,000
Total H1 2023 revenue and other income of $8.6 million
New $20 million Term Loan and equity financing to accelerate
growth and expand working capital, fortifying plans to reach cash
flow break-even by end of 2024
London, UK, 28 September, 2023: Shield Therapeutics plc (LSE:
STX), a commercial stage pharmaceutical company that delivers
Accrufer(R)/Feraccru(R) (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) today provides a business update, covering
recent operational and financing progress, and reported interim
financial results including 50% sequential Q2 2023 US Accrufer(R)
growth and expectations for 80% sequential growth in Q3 2023.
Shield reported strong, consistent, sequential Accrufer(R)
prescription momentum for H1 2023, powered by expanded sales and
marketing resources from the commercial partnership with Viatris
Inc. (Viatris), supported by continuous acceleration across the
Company's key performance indicators/KPIs, the refreshed branding
campaign and significantly expanded market access. Total
prescriptions for H1 2023 increased 59% compared to H2 2022,
totaling over 26,200 for the first six months of 2023. The average
net selling price per prescription was $119 during H1 2023.
Early indications suggest Accrufer's(R) growth trajectory will
continue to rise in Q3 2023, exceeding 28,400 prescriptions,
representing an 80% sequential increase vs Q2. The prescriptions in
Q3 2023 are on track to exceed the total for the entire first six
months of the year. Excellent initial results following the
commercial expansion put Shield on track to reach a major corporate
milestone for 2023, with line of sight to total Accrufer(R)
prescriptions of 100,000 to 130,000. Since the completion of the
sales force expansion in May, Accrufer(R) has grown an average of
26% month over month through to the end of August.
Current Business Updates
New market access expansion for Accrufer(R) increases total
covered lives to 123 million
-- Recent addition of the two largest Medicaid programs in California and New York
-- Market access lives expanded by 20% heading into Q4 2023
KPIs underscore U.S. Accrufer(R) growth momentum (all quarters
refer to 2023):
-- Total prescriptions - - 15,808, increased 51% Q2 vs Q1
-- First time writers -- increased 157% Q2 vs Q1
-- New prescriptions -- increased 63% Q2 vs Q1
-- Repeat writers - 73% of writers who wrote a prescription in Q1 also wrote one in Q2
Key drivers highlight effective Shield-Viatris partnership and
growth strategy : Shield continues to make excellent progress on
its mission of making Accrufer(R) the oral iron treatment of choice
in the US and beyond, evidenced by continued execution across key
commercial drivers including:
-- Fully-deployed Shield/Viatris commercial team poised for
continued growth - The Shield/Viatris commercial team, fully
operational since May, is well poised to target the 12,000+ highest
prescribers. Early results, marked by strong Accrufer(R) growth,
indicate the partnership is working extremely well.
-- Refreshed branding campaign resonating in the field -
Shield's campaign to take "irony out of oral iron" was launched for
patients and prescribers along with the new commercial team, with
accompanying new patient and HCP websites.
-- New Chief Commercial Officer adds to the Shield C-Suite :
Addition of Andy Hurley, hired in April, provides dedicated
leadership and expertise to lead the Accrufer(R) brand and
marketing campaign.
Shield Chief Executive Officer Greg Madison commented : "I am
pleased to report that Shield has had an excellent first half of
2023. We successfully initiated the Accrufer(R) commercial
partnership with Viatris, completed the build out of the combined
team and effectively implemented our new commercial growth strategy
and marketing campaign. Our strong performance, following
completion of the commercial expansion in May, is evidenced by the
momentum achieved across each of our KPIs and consistent,
significant prescription growth. These results reflect the
unwavering dedication and deep experience of our outstanding team
and our commitment to make Accrufer(R) the oral iron of choice.
We believe our standout H1 2023 results, KPI achievements and
expectations for continued Q3 2023 growth put us on track to reach
total 2023 Accrufer(R) prescriptions of 100,000 to 130,000. This is
a major corporate milestone for Shield and forms the foundation for
future growth. Looking ahead, we have defined additional
initiatives to improve our gross-to-net, continue the growth in
Accrufer(R) prescriptions and market adoption and expand market
access. Our commercial results provide validation of our strategic
plan and give us access to important growth capital. The new $20
million term loan announced today and an equity financing of up to
$7.4 million will put us on a steady path to reach our guidance of
cash flow breakeven, expected by year-end 2024.
As we enter the fourth quarter of 2023, I am optimistic about
the growth prospects for Accrufer(R) and Shield. The combination of
our high-performance team, the high-value Viatris partnership,
well-crafted growth strategy and strong balance sheet set the
Company up to maximize potential future growth and value creation
opportunities for our investors and key stakeholders. "
Global Partners and Pipeline Update
-- Norgine (EU+ rights) - Data received from Norgine indicate
that in H1 2023, the number of Feraccru(R) sales packs sold in
Europe increased by 19% vs H2 2022 and 11% vs H1 2022.
-- KYE Pharmaceuticals (Canada) - KYE filed a New Drug
Submission for Accrufer(TM) with Health Canada in Q1 2022, and
decision is expected by year end 2023.
-- Korea Pharma (Republic of Korea) - Korea Pharma is currently
enrolling patients in the pharmacokinetic study, which is the only
study required to support approval.
-- Beijing Aosaikang Pharmaceutical Co. Ltd. (China, ASK Pharma)
- Patients are currently being enrolled in the pivotal Phase 3
study. While the pace of enrolment in the Phase 3 program was
impacted by COVID-19, these challenges are now resolved.
Cash and Balance Sheet Items
-- Cash on hand of $13.6 million (unaudited) at 30 June 2023,
excluding receipt of selling cost and payment of net revenue shares
for Q2 2023 from commercial partner Viatris
-- New financing transactions announced today of a new $20
million term loan and an equity financing of up to $7.4
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/Patrick Birkholm +44 (0)20 7418 8900
Joint Broker
Cavendish Capital Markets
Limited
Geoff Nash/ George Dollemore/Nigel
Birks/Harriet Ward +44 (0)20 7220 0500
Financial PR & IR Advisor
Walbrook PR
Paul McManus/Lianne Applegarth/ +44 (0)20 7933 8780 or shield@walbrookpr.com
Alice Woodings
Investor Contact (US Advisor)
LifeSci Advisors, LLC
John Mullaly +1 617 429 3548 or jmullaly@lifesciadvisors.com
About Iron Deficiency and Accrufer(R)/Feraccru(R)
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 $2.3 billion
market opportunity. As the first and only FDA approved oral iron to
treat ID/IDA, Accrufer(R) has the potential to meet an important
unmet medical need for both physicians and patients.
Accrufer(R)/Feraccru(R) (ferric maltol) is a novel, stable,
non-salt-based oral therapy for adults with ID/IDA.
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
that delivers Accrufer(R)/Feraccru(R) (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(R) in the
US with an exclusive, multi-year commercial agreement with Viatris.
Outside of the US, the Company has licensed the rights to four
specialty pharmaceutical companies. Feraccru(R) is commercialized
in the UK and European Union by Norgine B.V. (Norgine), 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(R)/ Feraccru(R) in China, Hong Kong, Macau and Taiwan;
with Korea Pharma Co., Ltd. for the Republic of Korea (Korea
Pharma); and with KYE Pharmaceuticals Inc. for Canada.
Accrufer(R)/Feraccru(R) has patent coverage until the
mid-2030s.
Accrufer(R)/Feraccru(R) 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(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 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(R) / Feraccru(R)
USA
Following the completion of the co-commercialization agreement
with Viatris in late December 2022, we successfully recruited,
hired and trained a new 50-person sales team along with six
regional managers, all of whom are employees of Shield. This effort
ran in parallel with our new partner Viatris, having a designated
50-person sales team on their own, and together, we held a National
Sales Meeting in mid-May as the final training for the combined
100-person field sales force. That team is tasked to call on
approximately 12,000 high prescribing HCP's
In the first half of 2023, we generated 26,284 prescriptions for
Accrufer(R) with the second quarter recording a volume increase of
50% versus the first quarter, a strong early indication of the
potential of this expanded commercial team and high sensitivity of
promotional efforts. The number of prescriptions generated during
the first half of 2023 exceeds the total for all prescriptions
written in 2022. The average net selling price in the first half of
2023 declined slightly relative to H2 2022 at $119 per prescription
(H2: 2022 $124), and we are planning to undertake a variety of
initiatives to increase this net price during H2 2023 and into
2024.
Europe
Feraccru(R) is commercialised in Europe by our license partner
Norgine BV. The product is currently sold in Germany, the United
Kingdom and the Nordics.
The number of Feraccru(R) packs sold by Norgine in Europe
increased by 11% in H1 2023 compared with H1 2022 and by 19%
compared with H2 2022. The most notable volume increase incurred in
the United Kingdom and Germany with 19% and 16% increases,
respectively, now representing 88% of the total Feraccru(R) packs
sold in Europe. Maybe to include the new initiative to shift
targeting beyond GI giving additional sales potential as shown in
the US.
Asia and Canada
In China, our license partner Beijing Aosaikang Pharmaceutical
Co., Ltd. ("ASK Pharm") is currently enrolling patients in the
pivotal Phase 3 study (required by regulatory authority). There
were delays in recruiting primarily due to COVID related challenges
within China.
Korea Pharma Co. Ltd. ("Korea Pharma") is currently enrolling
patients in the PK study, which is the only study required prior to
submission for approval. This study is targeted to complete
enrolment by year end.
KYE submitted a New Drug Submission ("NDS") during the first
half of 2022, which was accepted by Health Canada in July 2022. The
submission is currently under review by Health Canada and decision
is expected in the H2 2023.
Product development
Shield has agreed a Feraccru (R) /Accrufer (R) Paediatric
Investigational Plan (PIP)/Pediatric Development Plan (PDP) with
the EMA/FDA, respectively, both culminating in the conduct of a
study to evaluate the safety, tolerability and efficacy of the
product in infants, children and adolescents. This study is
currently enrolling patients across its sites.
Outlook
During the second half of 2023, we are planning to continue the
momentum on prescription growth we started to achieve in our US
business during the second quarter. At the same time, we will focus
on improving the profitability by reducing the gross-to-net
discount with the goal of increasing the average net selling price.
In addition, we will continue to support our license partners
across the globe in their efforts to obtain regulatory approvals
for Accrufer(R)/Feraccru(R) and their commercialisation efforts to
increase market shares.
Financial Review
As announced on 6 September 2023, the Company decided to change
its presentational currency from Pounds Sterling to US Dollars (or
dollars), as most of its revenues and operating expenses are
denominated in dollars due to the continuing focus on its US-based
commercial operations. As a result, the interim results for the six
months ending 30 June 2023 have been published in dollars, and the
comparative prior year figures have been restated to the same
currency.
Revenue
Revenue in the first six months of 2023 (H1 2023) amounted to
$4.3 million (H1 2022: $2.6 million), of which $3.7 million (H1
2022: $1.7 million) was derived from Accrufer(R) sales in the US.
The balance of $0.6 million (H1 2022: $0.7 million) represents
royalties from Norgine in respect of sales of Feraccru(R) in
Europe. In addition, the Group reports $4.3 million (H1 2022: nil)
of other operating income, representing the previous deferred
portion of the upfront payment from Viatris Inc., Shield's
co-promote partner in the US, received at the end of 2022 and now
recognized in H1 2023.
Cost of sales
Cost of sales in H1 2023 amounted to $2.1 million (H1 2022: $1.1
million). The H1 2022 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)
under the 2010 Asset Purchase Agreement.
Vitra was the original owner of the intellectual property
underpinning Accrufer(R) / 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 agreement Vitra chose to
receive a royalty of 5% of net sales; for the ASK Pharm agreement
Vitra opted to receive 10% of the upfront receipt and any
subsequent milestones.
Selling, general and administrative expenses
Selling, general and administrative expenses were $17.7 million
in H1 2023 (H1 2022: $15.2 million) of which $0.5 million (H1 2022:
$1.3 million) represents the amortization of intangible assets.
Excluding amortization, the underlying costs increased by 24% from
$13.9 million in H1 2022 to $17.2 million in H1 2023, which 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.
Research and development
In H1 2023, $0.4 million (H1 2022: $1.3 million) development
costs were expensed in the statement of profit and loss. In
addition, $1.5 million (H1 2022: $1.5 million) of development
expenditure were recorded directly to the balance sheet in
accordance with the underlying conditions for capitalization, which
are disclosed in the detail in the notes of the Company's annual
report. These development costs and expenditure have been spent in
connection with the ongoing pediatric study.
Tax
The tax charge of $0.8 million (H1 2022: $0.5 million)
represents the tax accrual for income taxes due in the US in
connection with the Group's commercial activities.
Loss for the period
The loss for H1 2023 was $12.6 million (H1 2022: $15.1
million).
Balance sheet
Intangible assets at 30 June 2023 were $15.2 million (31
December 2022: $14.2 million), comprised of $14.1 million (31
December 2022: $1.2 million) of capitalised Accrufer(R)/Feraccru(R)
development expenditure and $1.2 million (31 December 2022: $1.2
million) expenditure for related patents and trademarks to
strengthen the Group's intellectual property.
Inventory at 30 June 2023 amounted to $2.7 million (31 December
2022: $1.8 million), which comprises finished product available for
sale.
Trade and other receivables increased to $9.3 million at 30 June
2023 from $6.5 million at 31 December 2022. This increase can be
directly attributable to the higher sales volume in the US.
The current tax asset of $0.6 million (31 December 2022: $0.5
million) represents anticipated R&D tax credits.
Cash and cash equivalents at 30 June 2023 amounted to $13.6
million (31 December 2022: $3.4 million). Effective 28 September
2023, the Company finalized a credit agreement for $20 million with
SWK Holdings. The facility has a five-year term and is secured over
the Group's US intellectual property rights associated with
Accrufer(R). Interest will be payable at a rate of 9.25% above the
Secured Overnight Financing Rate ("SOFR"). The first eight quarters
from the effective date are interest only periods; thereafter, the
loan will be amortized at a fixed amount of $1 million per quarter.
The proceeds from this loan facility will be used 1) to repay the
remaining balance of $5.7 million (31 December 2022: $7.2 million)
on the AOP shareholder loan, 2) on commercial programs and
initiatives to accelerate the launch curve and increase the average
net selling price, and 3) on further investment in working capital
to pre-finance inventory and trade receivable build-up.
Trade and other payables decreased from $11.4 million at 31
December 2022 to $8.1 million at 30 June 2023. This difference is
largely due to the deferred portion of the Viatris upfront payment
in the amount of $4.3 million, which was included in the year-end
payables balance and recognized as other operating income in the
first half of 2023.
Cash flow
The net cash outflow from operations in H1 2023 was $19.9
million (H1 2022: $14.3 million). The H1 2023 loss for the period
was $12.6 million but, after adjusting for various non-cash items,
the actual cash outflow from this loss was $10.8 million (H1 2022:
$13.2 million). Working capital cash outflows increased from $1.1
million in H1 2022 to $9.1 million in H1 2023, mainly due to the
underlying volume increase of the US commercial business.
Capitalised development expenditure of $1.5 million in H1 2023
(H1 2022: $1.5 million) was the main driver of the net cash outflow
from investing activities of $1.3 million (H1 2022: $1.3
million).
The cash inflow from financing activities of $30.1 million (H1
2022: $0.1 million) is primarily attributable to the net proceeds
from the equity placing in the amount of $20.2 million (H1 2022:
nil) and the proceeds from the convertible shareholder loan from
AOP in the amount of $10 million (H1 2022: nil), both of which were
completed in January 2023.
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 2023, the Directors believe that it remains
appropriate to prepare the financial statements on a going concern
basis.
Financial outlook
During the second half of 2023, management expects a further
increase in net product revenue from Accrufer(R) sales in the US.
That increase will be driven by a continuing increase in
prescription volume, plus a modest increase in the net selling
price through several initiatives specifically targeted to reduce
the gross-to-net discount. Whereas several of these initiatives
will be implemented during 2023, it is expected that an
acceleration in the improvement in gross-to-net discounts will be
achieved through 2024 with an average net sales price of between
$220 and $240 being targeted by 2025. In addition, we expect a
continuing steady increase in royalties from product sales by our
European license partner Norgine.
Consolidated statement of profit and loss and other
comprehensive income
for the six months ended 30 June 2023
Six
months
ended Year
30 June Six months
ended ended
2023 30 June 31 December
(unaudited) 2022 2022
$000 (unaudited) (audited)
Note $000 $000
------------------------------------------- ----- --------------- -------------- -------------
Revenue 4 4,334 2,614 5,492
Cost of sales (2,085) (1,139) (3,038)
------------------------------------------- ----- --------------- -------------- -------------
Gross profit 2,249 1,475 2,454
Other operating income 4,298 - 859
Operating costs - selling, general
and administrative expenses 5 (17,654) (15,205) (33,611)
Operating loss before impairment
and research and development expenditure (11,107) (13,730) (30,298)
Impairment of intangible assets - - (17,748)
Research and development expenditure (434) (1,313) (1,315)
Operating loss 4 (11,541) (15,043) (49,361)
Financial income 4 326 381 811
Financial expense 4 (578) - (403)
------------------------------------------- ----- --------------- -------------- -------------
Loss before tax (11,793) (14,662) (48,953)
Taxation 4,6 (812) (456) (447)
------------------------------------------- ----- --------------- -------------- -------------
Loss for the period (12,605) (15,118) (49,400)
------------------------------------------- ----- --------------- -------------- -------------
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss:
Foreign currency translation differences
- foreign operations 894 2,583 1,441
------------------------------------------- ----- --------------- -------------- -------------
Total comprehensive expenditure
for the period (11,711) (12,535) (47,959)
------------------------------------------- ----- --------------- -------------- -------------
Loss per share
Basic and diluted loss per share
(in US cents) 7 $(0.02) $(0.07) $(0.21)
------------------------------------------- ----- --------------- -------------- -------------
(1)
Group balance sheet
at 30 June 2023
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Note $000 $000 $000
------------------------------- ----------- --------------- ---------------- -------------
Non-current assets
Intangible assets 8 15,239 32,912 14,208
Property, plant and equipment 327 373 238
------------------------------- ----------- --------------- ---------------- -------------
15,566 33,285 14,446
------------------------------- ----------- --------------- ---------------- -------------
Current assets
Inventories 9 2,695 1,730 1,757
Trade and other receivables 9,262 5,449 6,487
Current tax asset 550 224 526
Cash and cash equivalents 13,594 2,934 3,402
------------------------------- ----------- --------------- ---------------- -------------
26,101 10,337 12,172
------------------------------- ----------- --------------- ---------------- -------------
Total assets 41,667 43,622 26,618
------------------------------- ----------- --------------- ---------------- -------------
Non-current liabilities
------------------------------- ----------- --------------- ---------------- -------------
Convertible shareholder loan (5,705) - (6,683)
Fair value of loan conversion
feature - - (562)
------------------------------- ----------- --------------- ---------------- -------------
(5,705) - (7,245)
------------------------------- ----------- --------------- ---------------- -------------
Current liabilities
------------------------------- ----------- --------------- ---------------- -------------
Trade and other payables (8,080) (3,839) (11,443)
Lease liabilities (67) - (107)
Other liabilities (713) (117) (1.278)
------------------------------- ----------- --------------- ---------------- -------------
(8,860) (3,956) (12,828)
------------------------------- ----------- --------------- ---------------- -------------
Total liabilities (14,565) (3,956) (20,073)
------------------------------- ----------- --------------- ---------------- -------------
Net assets 27,102 39,666 6,545
------------------------------- ----------- --------------- ---------------- -------------
Equity
Share capital 10 (13,734) (4,017) (5,371)
Share premium (173,087) (147,927) (149,458)
Merger reserve (42,966) (42,966) (42,966)
Currency translation reserve (10,603) (10,851) (9,709)
Deposit for shares - - 100
Accumulated deficit 213,288 166,095 200,859
------------------------------- ----------- --------------- ---------------- -------------
Total equity (27,102) (39,666) (6,545)
------------------------------- ----------- --------------- ---------------- -------------
Group statement of changes in equity
for the six months ended 30 June 2023
Deposit Currency
Share For Share Merger translation Retained
capital shares premium reserve reserve earnings Total
$000 $000 $000 $000 $000 $000 $000
------------------------------ ----------- ---------- --------- --------- ------------- ---------- ---------
Balance at 1 January 2022
(audited) 4,574 - 147,927 42,966 8,268 (152,371) 51,364
------------------------------ ----------- ---------- --------- --------- ------------- ---------- ---------
Loss for the year - - - - - (49,400) (49,400)
Other comprehensive income:
Foreign currency translation
differences - - - - 1,441 - 1,441
------------------------------ ----------- ---------- --------- --------- ------------- ---------- ---------
Total comprehensive expense
for the year - - - - 1,441 (49,400) (47,959)
Transactions with owners,
recorded directly in equity
Share options exercised 42 - 62 - - 104
Prepaid shares for equity
placing (100) (100)
Loan conversion 755 1,469 - - - 2,224
Equity-settled share-based
payment transactions - - - - - 912 912
----------------------------------- ------ ---------- --------- --------- ------------- ---------- ---------
Balance at 31 December
2022 (audited) 5,371 (100) 149,458 42,966 9,709 (200,859) 6,545
------------------------------ ----------- ---------- --------- --------- ------------- ---------- ---------
Loss for the period - - - - (12,605) (12,605)
Other comprehensive income:
Foreign currency translation
differences - - - 894 - 894
------------------------------ ----------- ---------- --------- --------- ------------- ---------- ---------
Total comprehensive expense
for the period - - - - 894 (12,605) (11,711)
Transactions with owners,
recorded directly in equity
Equity placing 5,422 100 14,648 - - - 20,170
Loan conversion 2,941 8,981 - - - 11,922
Equity-settled share-based
payment transactions - - - - 176 176
----------------------------------- ------ ---------- --------- --------- ------------- ---------- ---------
Balance at 30 June 2023
(unaudited) 13,734 - 173,087 42,966 10,603 (213,288) 27,102
------------------------------ ----------- ---------- --------- --------- ------------- ---------- ---------
Group statement of cash flows
for the six months ended 30 June 2023
Six Six months Year
months
ended ended ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
$000 $000 $GBP000
------------------------------------------------- --------------- -------------- --------------
Cash flows from operating activities
Loss for the period (12,605) (15,118) (49,400)
Adjustments for:
Depreciation and amortisation 524 1,318 2,848
Equity-settled share-based payment expenses 176 967 912
Financial income (326) (381) (869)
Financial expense 578 - 469
Impairment of intangible assets - - 17,735
Income tax 813 - 437
------------------------------------------------- --------------- -------------- --------------
(10,840) (13,214) (27,868)
(Increase)/decrease in inventories (938) 258 215
Increase in trade and other receivables (3,612) (1,410) (2,787)
Increase/(decrease) in trade and other payables (3,364) 52 7,271
Decrease in other liabilities (1,142) (19) 1,262
Income tax (paid)/received - - (427)
Fair value conversion option - - 843
Net cash flows from operating activities (19,896) (14,333) (21,491)
------------------------------------------------- --------------- -------------- --------------
Cash flows from investing activities
Financial income 326 320 36
Acquisitions of intangible assets - - -
Acquisition of tangible assets (178) (43) (64)
Capitalised development expenditure (1,466) (1,542) (2,221)
Net cash flows from investing activities (1,318) (1,265) (2,249)
------------------------------------------------- --------------- -------------- --------------
Cash flows from financing activities
Cash raised from equity placing 20,170 - -
Interest paid - - (403)
Leases - interest payment - - (5)
Proceeds from convertible shareholder loan 10,000 - 10,000
Deposit for shares - - (100)
Proceeds of share options exercised - 69 105
Change in lease assets and liabilities (new
leased assets) - - (76)
Total cash outflow from leases (40) (190) (152)
------------------------------------------------- --------------- -------------- --------------
Net cash flows from financing activities 30,130 (121) 9,369
------------------------------------------------- --------------- -------------- --------------
Net increase/(reduction) in cash 8,916 (15,719) (14,371)
Effect of exchange rate fluctuations on cash
held 1,276 2,252 1,372
Cash and cash equivalents at beginning period 3,402 16,401 16,401
Cash and cash equivalents at period end 13,594 2,934 3,402
------------------------------------------------- --------------- -------------- --------------
Notes
for the six months ended 30 June 2023
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 2022. 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 2022 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 27
September 2023.
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 2022, as described in
those annual financial statements, except for the change in the
Company's presentation currency which is further described
below.
Change in reporting currency
The Company's presentation currency has changed from Pound
Sterling ('Sterling' or 'GBP') to US Dollars ('$' or 'US$')
effective 1 January 2023. This is on the basis that an increasing
proportion of the Company transactions are denominated in US
Dollars. We consider that this change will give investors and other
key stakeholders a clearer understanding of the Company's
performance over time.
Following this change in accounting policy the impact was
applied retrospectively and thus the comparatives in the
consolidated financial statements were restated in US Dollars, as
required by IAS 8. The procedures used for this restatement were
formed based on the requirements of IAS 21 and were as follows:
-- Share capital, share premiums and other reserves are
translated at historic rates prevailing at the dates of
transactions.
-- Other assets and liabilities are translated into US Dollars at closing rates of exchange.
-- Trading results are translated into US Dollars at the average
rate for the financial period.
-- For differences resulting from the assets and the results for
the period have been presented in the foreign exchange reserve, a
component within shareholders' equity.
-- Cumulative currency translation adjustments are presented as
if the Group had used US Dollars as the presentation currency of
its consolidated financial statements since that date.
Going concern
At 30 June 2023, the Group held $13.6 million in cash. On 28
September 2023, the Company announced a new credit facility in the
amount of $20 million from SWK Holdings. The Company further
announced an equity fundraise of up to $7.4 million before
expenses.
The Group is planning to use these funds to repay the remaining
balance of the existing convertible shareholder loan from AOP
Health International Management AG, undertake further investments
in the commercial business to accelerate the launch curve and help
increase the net sales price, and invest in the working capital
needs of the Group.
The Directors have considered the funding requirements of the
Group through the preparation of detailed cash flow forecasts for
the period to December 2024, including the prospective Accrufer(R)
sales revenues and the related commercial operating costs. These
forecasts show that the Group's monthly cash flows start to turn
positive by the end of 2024 and that the fundraise detailed above
should provide sufficient cash to allow the business to continue in
operations for at least twelve months from the balance sheet date.
The Directors have considered scenarios in which sales revenues
fall below base case 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 capitalised 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 recognised 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(R)/Feraccru(R)
The valuation of intellectual property associated with
Accrufer(R)/Feraccru(R) (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 realisation of its value is
ultimately dependent on the successful commercialisation of the
asset. In the event that commercial returns are lower than current
expectations this may lead to an impairment. No impairment has been
recognised to date.
Deferred tax assets
Estimates of future profitability are required for the decision
whether or not to create a deferred tax asset. To date no deferred
tax assets have been recognised.
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(R)/Feraccru(R) - development and commercialisation
of the Group's lead Accrufer(R)/Feraccru(R) 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 Year
months ended
ended 31 December
30 June
2023
(unaudited)
2022
(audited)
-------------- ------------- ---------------- --------- ------------- ------------- ---------------- ---------
Accrufer(R)/ Central Accrufer(R)/ Central
Feraccru and unallocated Feraccru(R) and unallocated
(R) $000 $000
$000 PT20 Total $000 PT20 Total
$000 $000 $000 $000
-------------- ------------- ---------------- --------- ------------- ------------- ---------------- ---------
Revenue 4,334 - - 4,334 5,492 - - 5,429
-------------- ------------- ---------------- --------- ------------- ------------- ---------------- ---------
Operating
loss (865) - (10,676) (11,541) (27,635) (18,625) (3,101) (49,361)
Financial
income 326 811
Financial
expense (578) (403)
Tax (812) (447)
-------------- ------------- ---------------- --------- ------------- ------------- ---------------- ---------
Loss for
the
period (12,605) (49,400)
-------------- ------------- ---------------- --------- ------------- ------------- ---------------- ---------
The revenue analysis in the table below is based on the country
of registration of the fee-paying party. $3.7 million revenue (year
ended 31 December 2022: $3.5 million) was derived from Accrufer(R)
sales in the US, $0.6 million (year ended 31 December 2022: $1.8
million) from royalties, and $Nil (year ended 31 December 2022:
$0.2 million) from license upfront and milestone payments from
commercial partners.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
$000 $000 $GBP000
----------------- --------------- -------------- --------------
USA 3,742 1,664 3,539
The Netherlands 592 752 1,766
Canada - 193 181
South Korea - 5 6
4,334 2,614 5,492
----------------- --------------- -------------- --------------
5. Operating costs - selling, general and administrative
expenses
Operating costs are comprised of:
Six Six Year
months months ended
ended ended 31 December
30 June 30 June 2022
2023 2022
(unaudited) (unaudited) (audited)
$000 $000 $000
------------------------------------- -------------- ------------- -------------
Selling costs 11,793 9,855 19,964
General and administrative expenses 5,366 4,006 10,743
Depreciation and amortization 495 1,344 2,904
17,654 15,205 33,611
------------------------------------- -------------- ------------- -------------
6. Taxation
The Group's tax charge for the six months ended 30 June 2023 was
$0.8 million (H1 2022: $0.5 million), mostly related to the Group's
commercial activities in the US.
7. Loss per share
The basic loss per share of $0.02 (H1 2022: $0.07) has been
calculated by dividing the loss for the period by the weighted
average number of shares of 702,902,306 in issue during the six
months ended 30 June 2023 (six months ended 30 June 2022:
216,015,815).
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.
8. Intangible assets
Accrufer(R)/ Accrufer(R)/
Feraccru(R) Feraccru(R) Phosphate
patents development Therapeutics
Group and trademarks costs licences Total
$000 $000 $000 $000
--------------------------------------- ----------------- --------------- --------------- ---------
Cost
Balance at 1 January 2022 (audited) 2,490 14,023 32,651 49,164
Additions - externally purchased - 2,222 - 2,222
Impairment of intangible assets (212) - (32,651) (32,863)
Balance at 31 December 2022 (audited) 2,278 16,245 - 18,523
Additions - externally purchased - 1,466 - 1,466
Balance at 30 June 2023 (unaudited) 2,278 17,711 - 19,989
--------------------------------------- ----------------- --------------- --------------- ---------
Accumulated amortisation
Balance at 1 January 2022 (audited) 884 2,529 13,363 16,776
Charge for the period 164 738 1,754 2,656
Impairment of intangible assets - - (15,117) (15,117)
Balance at 31 December 2022 (audited) 1,048 3,267 - 4,315
Charge for the period 47 388 - 435
Balance at 30 June 2023 (unaudited) 1,095 3,655 - 4,750
--------------------------------------- ----------------- --------------- --------------- ---------
Net book values
30 June 2023 (unaudited) 1,183 14,056 - 15,239
--------------------------------------- ----------------- --------------- --------------- ---------
31 December 2022 (audited) 1,230 12,978 - 14,208
--------------------------------------- ----------------- --------------- --------------- ---------
9. Inventories
Six Six months Year
months ended ended
ended 30 June 31 December
30 June 2022 2022
2023
(unaudited) (unaudited) (audited)
Group $000 $000 $000
---------------- ---- --------------- -------------- --------------
Finished goods 2,695 1,730 1,757
2,695 1,730 1,757
--------------------- --------------- -------------- --------------
10. Share capital
Six Six Year Year
months months ended ended
ended ended 31 December 31 December
30 June 30 June 2022 2022
2023 2023 Number
Number 000 $000
000 $000
At beginning of period 259,388 5,371 215,885 4,574
-------------------------------------- ---------- ---------- -------------- --------------
Exercise of share options - - 2,348 35
Conversion of loan 158,805 2,941 41,155 762
Equity placing 294,844 5,422 - -
Total shares authorised and in issue
at end of period - fully paid 713,037 13,734 259,388 5,371
-------------------------------------- ---------- ---------- -------------- --------------
No share options were exercised during the six months ended 30
June 2023 (six months ended 30 June 2022: 307,438)
11. Subsequent events
On 28 September 2023, the Company announced a new credit
facility in the amount of $20 million from SWK Holdings. The
facility has a five-year term and is secured over the Group's US
intellectual property rights associated with Accrufer(R). Interest
will be payable at a rate of 9.25% above the Secured Overnight
Financing Rate ("SOFR"). The first eight quarters from the
effective date are interest only periods; thereafter, the loan will
amortize at a fixed amount of $1 million per quarter. The credit
agreement with SWK Holdings includes financial covenants in respect
to minimal liquidity and minimum revenue targets.
The Company further announced on 28 September 2023, an equity
fundraise of up to $7.4 million before expenses.
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END
IR NKOBNBBKBACB
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September 28, 2023 02:00 ET (06:00 GMT)
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