Shield Therapeutics: US Partnering Discussions Nearing Fruition
In its recent business and trading update Shield Therapeutics (STX) underlined that the US partnering discussions are progressing, which is a key factor given that the US represents around 70% of the US$3bn global iron replacement market. Therefore, this event can potentially more than double the addressable market for oral iron replacement Feraccru. While there is an ongoing review into the AEGIS-H2H 12-week trial data, longer-term 52-week study data support Feraccru’s efficacy profile, as well as data from two pivotal clinical studies. The balance sheet was recently bolstered by an US$11.4mln milestone payment from China partner ASK Pharm, providing liquidity in the months ahead to negotiate potential uncertainty owing to the coronavirus crisis.
European Commercialisation STX’s European partner Norgine for its iron deficiency treatment Feraccru saw continued growth in the initial European markets of UK and Germany during the first quarter (Q1) of 2020, with no impact from coronavirus on trading seen so far. The outlook can be helped by achieving reimbursement in additional larger markets including France and Spain. We are encouraged to hear that STX has taken steps to secure its supply chain and to date with minimal disruption to commercial progress, although the potential impact on full-year trading is not yet clear. The company and its partners have largely successfully made the transition to working from home.
US Commercialisation A central theme for further de-risking of the investment case is in securing a licence partner for Feraccru (branded as Accrufer in US) as this represents around 70% of the US$3bn global iron replacement market for treating adults with iron deficiency with or without anaemia. The total addressable population could reach up to 40 million in the US. STX is engaged in partnering discussions to secure the most attractive terms possible in the US given the broad label and as an alternative to market incumbent Injectafer (Vifor Pharma). Accrufer is positioned to command a high market share because of its convenience, favourable clinical evidence and side effect profile. STX is progressing towards an agreement that can unlock this key market, and is in the process of scaling-up production of Accrufer ahead of this event.
China Progress Despite the coronavirus pandemic STX is working with its Chinese partner, ASK Pharma, progressing towards IND submission ahead of a regulatory study to gain approval in China. Commercially-speaking, this deal offers STX significant potential since there is a high prevalence of ID/IDA in China by sheer population size, albeit potentially at a lower price point than in Europe or the US, while having a relatively undeveloped treatment market. ASK Pharma is a well-resourced participant in the vast Chinese pharmaceuticals market valued at more than US$120bn, the second largest in the world, and where the prevalence of ID/IDA is very high.
Investment Case
Feraccru is a differentiated oral iron therapy, already de-risked by means of a significant body of clinical evidence and STX’s partnerships in China and Europe. A US deal or deals in 2020 for Accrufer would multiply up the product’s addressable markets significantly. While it is early days since the European launch in 2018, talks on reimbursement and market access are advancing on a country-by-country basis. News on US partnering, a successful outcome on its patent claims and initiation of a paediatric development programme that might be included in a US deal are the main catalysts in our view.
Late Stage Speciality Pharma
Shield Therapeutics is a speciality pharmaceutical company focused on the development and commercialisation of late-stage pharmaceuticals. The company's lead asset, Feraccru, is an oral treatment for iron deficiency with or without anaemia. Feraccru is approved and marketed in Europe and was recently approved in the US to be marketed as Accrufer. It also has a pipeline of prescription pharmaceutical assets, the most advanced of which is PT20, a phase III-ready treatment for the electrolyte disorder, hypophosphataemia, which is extremely common in patients with chronic kidney disease (CKD).
• Iron deficiency (ID) and iron deficiency anaemia (IDA) are caused by low levels of iron in the body
• Anaemia affects around 33% of the world’s population (source: WHO) c 50% of cases are due to iron deficiency
• Moderate-to-severe IDA may cause fatigue or tiredness, breathing problems or chest pain
• The most common reasons for ID are insufficient iron intake in the diet, an inability to absorb iron well in the body and/or loss of iron in the blood through bleeding
• Treating ID and IDA: The conditions are common and often serious complications in people suffering from chronic heart or kidney disease, cancers or gastrointestinal diseases. Treatment can help improve patients’ symptoms and quality of life.