Shield Therapeutics eyes US$37m of new funding to drive sales of Accrufer
( ) a commercial stage pharmaceutical company, announced a placing to raise £14.7m at a price of 6p/share. Additionally, Shield said it would make an open offer to qualifying shareholders for up to 64 million new shares at 6p/share to raise a further £3.9m.
Shield also announced a US$10m extension of its convertible shareholder loan facility with AOP Health International Management AG, interest-free for the first 12 months. Shield has granted AOP warrants to subscribe to 5.1 million new shares at a price of 6.75p.
AOP has also indicated its intention to participate in the equity fundraise with 57 million subscription shares at the issue price of 6p/share. AOP is Shield's largest shareholder and already invested US$10m in the company via a convertible debt issuance in August 2022.
Additionally, Shield announced a multi-year collaborative sales agreement with Viatris, a global healthcare company, that includes an up-front cash payment to Shield of US$5m. Shield and Viatris will share revenues 55%/45% as both companies contribute equally to marketing Accrufer in the US. An additional US$30m will be avilable to Shield contingent on sales milestones.
Neither the AOP nor Viatris deals are conditional on completion of Shield's equity fundraise.
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All combined, the equity fundraise, extension of AOP facility, and sales agreement with Viatris would result in US$37.7m of new funding for Shield before expenses. The company intends to use the proceeds as follows:
- US$13m on the expansion of the US sales force and taking the sales force in-house
- US$8m to amplify the digital marketing strategy and other marketing initiatives
- US$3m to expand market access and distribution
- US$8m for working capital and infrastructure needs
The equity fundraise's issue price represents a discount of 11.1% to Shield's closing price on Dec 12. Yet, shares jumped 11% this morning in London as investors cheered the large amount of new funding that will enable Shield to drive significant growth in sales of Accrufer in the US.
Accrufer is Shield's flagship product, a novel therapy to treat iron deficiency and iron deficiency anaemia. Accrufer prescriptions accelerated in 2022, with 350% growth half-on-half to 11,223 in 1H22 compared 2,516 in 2H21. Sales in Europe are increasing as well, and expansion in Canada is expected next year.
With Viatris' help, Accrufer has the potential to generate combined net product revenues in excess of US$150m by FY25. Shield is expected to turn cash flow positive by 4Q24 if it manages to reach its revenues targets in the US - a highly attainable goal now that funding is not a concern. The upside for investors will be significant should this timeline materialise.
It is worth noting that certain directors and employees of Shield have stated their intention to subscribe to a total of 11.4 million placing shares, further underpinning the company's confidence in its sales strategy.
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