- Raises $10 million via shareholder loan agreement
- More funding needed to achieve US roll-out
- Good progress on commercializing Accufer
Iron deficiency-focused pharma company Shield Therapeutics (STX:AIM) said it will raise $10 million (£8.2 million) through a loan agreement with its second largest shareholder AOP Orphan International AG, which is expected to extend its cash runway until the end of 2022.
Today’s unexpected loan announcement comes after the company apparently initiated efforts to raise $30 million of fresh equity which, if it had completed, would have provided access to a larger non-dilutive debt facility.
Shield Therapeutics said ‘extremely challenging equity market conditions’ made it unlikely a financing could be achieved in the current climate.
Investors were seemingly unimpressed with the shares dropping 30% to 8.5p.
HIGH LOAN COST AND EQUITY DILUTION
The loan is expected to be drawn down by 1 August 2022 and is repayable by the end of 2023. It is subject to a 2% loan fee and Shield will pay the lenders annual interest of 7% above US libor rates, monthly in arrears.
The lenders have the right but not the obligation to convert any outstanding loan amounts into Shield shares at a 10% discount to the average closing price over the prior trading 10 days.
Shield’s net cash had declined to £4.2 million at the end of May, down from the £12.1 million reported at the end of 2021. The company is building its own sales and marketing infrastructure in the US to commercialise its novel iron therapy product Accrufer.
GOOD COMMERCIAL PROGRESS
Shield Therapeutics said it has doubled total Accrufer prescriptions in the first quarter of 2021 compared with the last quarter of 2021. It has negotiated contracts which cover 100 million lives supported by large healthcare insurers and pharmacy benefit managers.
This has dramatically increased access for patients and is a step-change from 2021 when the company subsidised sales of Acruffer in the US.
CEO Gregg Madison commented: ‘I am extremely proud of the team here at Shield and the incredible work they have done.
‘Twelve months ago, awareness of Accrufer® and its clinical application was low along with the Company's profile so it's rewarding to stand here today with a rapidly growing business highlighted by increasing prescriptions, expanding payer coverage, growing awareness and first-time writers.’
EXPERT VIEW
Mark Brewer, pharma analyst at FinnCap, commented: ‘Few other companies have been able to raise funding in such a difficult market, reflecting the fact that Shield is one of the few small cap companies with an approved product in the US and Europe.
‘In our forecast, we have assumed further funding will come from the issue of circa £50 million of additional debt (straight debt and/ or convertible) which would allow funding to allow the US plan to be executed.’
