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Thanks Shandy... that's helpful and interesting.
Based on those figures and assuming the half year figure of £200k in royalties for Europe is correct implies sales of ~£1.6 -2.0 mill this year. As to the US , I assume the NPV figure represents earnings from sales over a ten-year period(when I did cost projections that the period we used).So £80 mill pa( there is a discount factor for future sales but in a no inflation era it must be tiny) for from the US dwarfs the current European sales revenue and illustrates the sort of bump the SP might(should?) get from a signed US deal.
It's from the RNS back in Sept 2018 when we announced the agreement with Norgine.
It does mention net sales - so not sure what gets deducted before the royalties are applied.
I've copied the main excerpt below, to save you searching.
In the Feb 2020 presentation STX estimated 5% of US market was worth £821m NPV to STX , based on the same royalty levels as Europe.
Shield Therapeutics and Norgine B.V. (Norgine) enter into an exclusive licence agreement for the commercialisation of Feraccru® in Europe, Australia and New Zealand
· Shield to receive an £11 million upfront licence payment
· Up to €54.5million in development and sales milestones, together with royalties ranging from 25% to 40%
· Shield retains full commercial rights to Feraccru® in all unlicensed countries including the USA
London, UK, 19 September 2018: Shield Therapeutics plc (LSE:STX), a commercial stage, pharmaceutical company delivering innovative specialty pharmaceuticals to address patients' unmet medical needs and Norgine, a leading European specialist pharma company, today announced that they have entered into an exclusive licence agreement in Europe, Australia and New Zealand by which Norgine will commercialise Feraccru®, Shield's approved product for the treatment of iron deficiency in adults.
Under the terms of the agreement, Shield will receive an immediate £11 million upfront payment, is eligible to receive up to €4.5 million in short-term development milestones and up to €50 million in sales milestones upon the achievement of specified targets. Shield will also receive tiered royalties ranging from 25% to 40% of net sales of Feraccru®.
HI shandy.... where did you get that figure from? I was puzzled that latest results seemed to show only £200k for the half year in Europe, despite the " 50% higher..." hype. I posed a question on that number at the recent presentation but it wasn't answered.
European royalties are c25% i think , so expect US to be in the same ball park
The article suggests that the US represents 70% of a ~$3bill market, BUT the $1billion quoted would be shared between STX and their partner and I suspect that the partner will take the lions share , so perhaps $100mill pa to STX, still pretty good for a £150 mill MC company.
decent summary - analysts believe US opportunity is worth $1bn alone. Enough said IMHO
Hi does anyone know when phase 3 and phase 2 trials are due?
The main priority for the Group during 2020 to date has been to secure a commercialisation partner for Accrufer(R) in the USA. As well as achieving the right financial terms, we have also been focussed on engaging with potential partners that could exploit Accrufer(R) across the broad range of therapy areas where iron deficiency is prevalent. We and our advisers have engaged with multiple companies, a number of which have signed confidentiality agreements, several have submitted non-binding offers and more detailed negotiations have been undertaken with a number of parties. We remain confident of securing a partner in 2020 and have recently ordered launch stocks of US packs of Accrufer(R) which should be available for sale by around the end of 2020.
Zak Mir overview of the fundamentals in this video charting update.
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Revenue for the six months to 30 June 2020 was £8.9m, up from £430,000 in the same period of 2019.
Pre-tax profit reached £2.7m, up from the loss of £4.6m.
350p excluding US deal estimated at 50 million upfront and 100 million in milestones.
On sale now at LSE for 120p. Grab a bargain !!!
Interims in line, awaiting US partner
Interim results to 30 June largely reflected the licensing income from ASK Pharm in China. Revenues were £8.9m, with royalties of c.£0.2m despite disruptions due to COVID-19 and £8.7m of milestone payments. This resulted in an adjusted net profit of £4.4m (vs a loss of £3.4m in H1 2019). A net cash inflow of £2.4m in the period resulted in cash at 30 June of £6.5m, providing a cash runway to Q1 2021. The figure excludes potential significant up-front payments and milestones for the US, for which a licensing deal is still expected. An order to its contract manufacturer for US launch stocks for delivery by year-end should provide comfort despite the understandable shortage of information pertaining to licensing discussions. We leave our forecasts unchanged (excludes potential upfront payments from US licensing deal) and reiterate our 350p target price.
?Interim results in brief. Revenues rose to £8.9m (vs. £0.4m), comprising £8.7m of milestone payments and c.£0.2m of royalties. Net profit of £3.1m (vs. a restated net loss of £4.2m in H1 2019) implied an adjusted net profit of £4.4m (vs a loss of £2.9m). Period- end cash was £6.5m, up from £4.1m at 31 December 2019, implying an underlying (ex- upfront) cashburn of c.£4.2m in the period (excludes the net £7.8m cash receipt from Chinese licensing rights and the £1.2m of fees paid to advisers for the China licence).
?Outlook – US licensing deal. Shield is in discussions with a number of potential partners, some of which have submitted non-binding offers. Whilst details of the ongoing discussions are understandably not disclosed, confirmation that Shield has ordered launch stocks of US packs of Accrufer from its contract manufacturer for year-end 2020 should serve as a strong indication that a licensing deal is close.
?Regulatory update. Indications from the Chinese regulatory authority that approval could be gained from short-term Phase III study in Inflammatory Bowel Disease without the need for a pharmacokinetic study or Phase III clinical study in Chronic Kidney Disease is positive and indicates a potential 2023 launch. The regulatory approval process in Australia is also underway, with a potential approval by year-end.
?Cash runway extends into Q1 2021 with year-end 2020 cash of £1.2m dependent on the timing of R&D expenses relating to the paediatric Feraccru study. This excludes the potential for substantial upfront payments from a US licence deal and other smaller markets where Shield has entered discussions.
?Valuation. We reiterate our 350p target price (DCF). This excludes the potential value of milestone payments from a US licensing deal, which we estimate could be c.$50m upfront with $100m+ of commercial milestones.
Tim also closed off by saying there would be significant rerate following the deal.
Another important bit from the talk was that they are also talking to other countries and couple of deals might be signed in coming months, so that would be bonus
I'v just finished the investor call with the company where I asked the question "is the value of the US upfront likely to exceed the China deal" to which the answer was a fairly unambiguous "yes"and the mood music was that STX could be looking for an upfront in the tens of millions and sufficient to fund them comfortably through to profit.
Great update IMO
Companies signing confidentiality agreements in the US. So not if , just when.
China market is massive so good news that it will happen quicker.
Norgine going up 50% during Covid pandemic is fantastic.
Stunned this still is around this price.
A few more observations from today's RNS .
A minor note in the RNS stated that STX had received £0.2 mill from Norgine for the half year(cf £0.6mill for the last FY as per annual report) which doesn't seem to square with the quote "Norgine grew net sales of Feraccru® in Europe by 50% compared with the second half of 2020, and the first half sales in 2020 have matched the sales for the whole of 2019".
I know that STX say they receive between 25 and 40 % of Norgine sales revenue so there appears to be an inconsistency.
However if we accept at face value a European sales revenue of £0.4 -0.5 mill pa and growing, for a product serving the UK and Germany , with perhaps max revenues of ~£1mill pa in those markets and another £0.5-0.7 mill for the rest of Europe, a long run sales related income of approaching £2 mill pa in Europe.
The US market is half as big as the EU 300 mill pop versus 600 mill, but healthcare there is far more expensive and I would expect STX's potential partners would be looking for several times EU revenues. It may be conceivable that STX could earn £10 mill pa or more in the US and maybe £5 mill in the vast , but less cash-driven markets in China.
AT best, based on those figures, I can find recurring revenues of the order of £20 mill pa , and of course the significant one-off payments associated with sales agreements.
Nevertheless that to me suggests a maximum medium term market cap , with a p/e of 10-15 reaching maybe £250 mill or just about twice the present value.
Am I missing something?
In my defence STX is a very small part of my portfolio and doesn't get as much attention as the rest so there may be (and I hope there is ) a glaring flaw in my analysis.
Couple of good vids with Tim going over his summary of the results and a few bits of analysis.
Proactive video with Tim:
Vox Markets with Tim:
a very good update in my view also. more secure cash position, pipeline sales activities and seems more positive news on the way. I didn't see much evidence of downplaying anything or talking around elephants in the room, even the US deal, not landed yet, was mentioned in a positive light, so short term seems very encouraging for q3-4.
Another thing worth noting is that it seems the product could get onto the Chinese regional market somewhat sooner than expected:
The Chinese regulatory authority (CDE) has recently indicated that, for the New Drug Application, it is likely to require only a short-term Phase III study in Inflammatory Bowel Disease (IBD) patients and will not require a pharmacokinetic study nor a Phase III clinical study in Chronic Kidney Disease (CKD) patients. Assuming this is definitively confirmed by the CDE, successful execution of this study, which could start in early 2021, could lead to an application for marketing approval in H1 2022 and launch in H2 2023
In Australia, also a Norgine territory, the regulatory approval process is underway and it is possible that Feraccru® could be approved by the end of 2020.
Re: under 18 group
We have now successfully formulated and manufactured a suitable liquid formulation and the clinical study will start this month.
And a nice note to end on...
Accordingly, the strong progress being made across the Group gives the Board considerable confidence in Shield's outlook and prospects.
The key takeaway is this
" We and our advisers have engaged with multiple companies, a number of which have signed confidentiality agreements, several have submitted non-binding offers and more detailed negotiations have been undertaken with a number of parties. We remain confident of securing a partner in 2020 and have recently ordered launch stocks of US packs of Accrufer® which should be available for sale by around the end of 2020."
As most here know an agreement in the US is fundamental to STX's long term profitability. The US market is large and crucially has the means and incentive to pay for a much simpler and equally effective treatment to injectables .
Another perhaps short=lived bounce today but the company is on the threshold of being a long term profit making business.
Good results and confirmation of US deal and Australian approval by end of the year to provide this a major boast. Looking forward to next few months...