Shield Therapeutics Share Discussion Threads

[daveboy1] 04/8/2020 10:39

Agreed lako. This drip drip down every day after a small rise is not exactly reassuring - quite disappointing in fact.

[lako42] 04/8/2020 08:19

The best thing to do here is set your own time fence for when news should land. If it doesn't then move on.

Cash runway dictates as much.

[whatno] 03/8/2020 21:05

I stand corrected :-) I think you grasp my point, whatever the CEO says, it will the partner that decides on timing, especially if they are undertaking significant due dilligence. This is borne out by the fact that the date has slipped twice already.

I have a fairly chunky investment in STX (at least for me) so I'm definitely not trying to talk anything down. They have a drug with excellent commercial potential so partnering is a no brainer.

[coxypete] 02/8/2020 23:04

Before any deal is signed best response you would get is either along the lines of (a) we are still in discussions with a number of interest parties (deal coming) or (b) we are reviewing our strategic options (no deal)

[nobbygnome] 02/8/2020 14:15

That presentation where the slide said 'Summer' was on May 28th so over 9 weeks ago. There is the best part of a month to go and I don't see why they shouldn't deliver in that time. This will not be a normal holiday season and shouldn't hinder a deal being done.

[shandypants2] 02/8/2020 12:04

Whatno you may well be correct and an US deal may take slightly longer than the company has advised, however, to ensure balance i need to correct your CEO's quote.

Following the June presentation, in which, p24, the company advised the timescales for an US deal as summer 2020, there was a Q & A section.
The question asked was something like " what is the likelihood of an US deal this year" and the CEO replied "high".

Having spoken to CEO (when CFO) he generally comes across as quite a conservative chap. As US deal was initially Q1 2020 and then Q2 2020 he is well aware that any further delays will be viewed poorly. As this new date was provided in early June impact of covid and holiday season etc would already be known.
However, i do agree with you it is not an exact science and getting the right deal is the most important thing.

[whatno] 31/7/2020 12:45

Some parts of the pharma sector have held up well but that is not universally true. Many routine procedures and operations have been postponed due to COVID and this has had a significant effect on profitability for some.

Deal making takes time and we are now in holiday season so I would caution on undue optimism. Experience tells us not to take what director's say too literally. In any case, Tim Watts stated in a recent webinar that the chances of having a deal in place by the "END OF THE YEAR" were high.

I would say that it is better to be pleasantly surprised by an early deal rather than discourage if nothing moves forward in the next month or so.

[shandypants2] 31/7/2020 12:42

I'm now getting a bit frustrated waiting for this deal to be finalised, as i'm sure others are too, so have done a bit more digging.

More on the FinnCap £3.50 estimate is below ...

Valuation
We are leaving our target valuation unchanged at 350p. We use a DCF model to value
Shield Therapeutics, with Feraccru/Accrufer estimated to be worth £412m, which implies
352p per share. This target price, however, excludes:
?The potential value of European milestones from Norgine, which are dependent on
reaching pre-defined in-market net sales of Feraccru. These amount to €50m, of which
€2m is expected to be paid in 2022 on completion of a paediatric study (due to start in
early 2020) and approval of a once-daily formulation of Feraccru. The balance is
expected to be paid over the next 5-10 years.
?Any milestones from a US partnering deal. Given the size of the US market (volume and
price) and the fact that Shield was able to negotiate a licensing deal for Europe at a time
of financial stress that generated an £11.0m upfront payment with €54.5m of
development and commercial milestones, we estimate that Shield could receive as much
as $50m upfront with over $100m of additional revenue-based milestones in the US.
?Any additional development and commercial milestones for China as well as for other
markets such as Japan and Korea

Not only are there many exclusions to the above but a £412m NPV seems quite conservative IMHO.

I am sure there was an interview last year when then CEO stated at its peak Feraccru could generate £500m p.a revenues. Not sure if this is total revenues or just royalties to STX, but even assuming the latter at 20% that's c£100m to STX and probably 90% profit. If so that would make us a £1bn company.

On page 5 of this Feb 2020 presentation just 5% of US market (so ultra conservative) generates a NPV of £821m alone so this makes the £412m estimate very low.
Obviously DYOR but £4 in 2024 seems very reasonable to me. Another top up at 95.5.

hxxps://www.shieldtherapeutics.com/wp-content/uploads/2020/02/STX-Corp-Deck_Investor-presentations-6_11Feb20.pdf

[daveboy1] 31/7/2020 11:18

Good post. Thanks shandy.

[shandypants2] 31/7/2020 10:28

Covid is definitely having an impact, but on the whole the pharma sector has been less impacted than others. Also as there is a drive to avoid non essential hospital visits arguably the demand for Feraccru has increased.

I do think that not having face to face meetings may be having some impact though especially getting a deal over the line.

Remember STX could have stated H2 and yet they estimated summer 2020 instead and they are already producing a supply for the US market so both are positive indications IMHO.

I am not sure if they can comment on current negotiations if they are in the middle of them.

Found this excerpt from a previous update - shows the size of the US and the need to get the right deal.

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

[whatno] 31/7/2020 08:59

Covid-19 has had a huge impact on many US businesses - both in terms of operations and on the balance sheet. I believe that STX is a great partnering proposition and will make the US deal but my expectations of timing are less certain given all that is going on. The CEO hasn't given any indication that they are in final negotiations which means due diligence will probably still be required. I could easily see this going into the fourth quarter which in itself does not worry me unduly.

[adman50] 30/7/2020 17:44

Haha I picked a great time to buy kiss of death 🤣

[shandypants2] 29/7/2020 11:22

always a few positive and negative views re US deal. I'm with Nobby, i was hoping for end of July, but if it needs to go into August i'm not too bothered.

In additional to Peel and Hardman research notes and valuations of c£2, FinnCap has a £3.5 valuation based on quite conservative NPVs from US and Europe and China is excluded, as not yet achieved regulatory approval.

From the FinnCap research...
Shield confirmed that it has had considerable interest in Accrufer from a
number of US-based companies, ranging from relatively small ones (which focus on single
therapeutic areas) to larger organisations (which span several of the therapeutic areas in
which Accrufer is relevant). Management is seeking a partner with the optimal
combination of capability and favourable financial terms. We still believe that the NPV of
any deal will be considerably higher than the current share price indicates, driven by a
significant upfront payment, commercial-based milestones and royalties on sales.

[daveboy1] 29/7/2020 08:33

Knowing these they will say British summertime !!

[peachie 74] 29/7/2020 08:27

It’s simple really.

If you think the US deal will happen , hold the share as atm it’s well undervalued.

If you’ve lost faith, sell up and move on. Don’t look back.

[nobbygnome] 29/7/2020 08:17

There is only one announcement we want and that is the deal! They said 'Summer' so they have another 32 days to produce something. It wouldn't really be a problem if it wasn't until September but I would be getting a little concerned if it doesn't appear by then.

[peachie 74] 29/7/2020 08:13

Wouldn’t quite say meaningless.
Broker forecasts can’t be made without foundation.

[lako42] 29/7/2020 07:49

Peel Hunt can say what they like, it's meaningless.

[daveboy1] 29/7/2020 07:06

Yep, time just drifting by and they never announce anything. Quite the anti-climax here. What difference another month ...

[nobbygnome] 28/7/2020 21:03

Good stuff. My tp is 1.55 in the first instance.....

I have to admit I was very hopeful we would hear of a deal before the end of July...but there is only 3 days left now. Maybe tomorrow Rodney....

[bobaxe1] 28/7/2020 18:08

Like this on the lse.£2 targetThu 20:3316th July 2020, Peel Hunt say BUY with a tp of 200p.Peel have consistently reiterated this attainable target, on several occasions since May 20th of this year.

[itshenderz] 28/7/2020 00:33

Well, we'll found out soon won't we.

[best1467] 27/7/2020 19:26

It’s old news Current CEO and previous have been confident of a deal for the last 13 months but at some point the confidence needs to produce and time and cash are running out.

[itshenderz] 27/7/2020 19:16

The CEO is very bullish of this it appears, having 22yrs at AZ and other large pharmas, Tim is more than qualified to seal the deal. Also interesting to note..."Carl has willingly agreed to actively support Tim over the coming months, thereby ensuring his knowledge and expertise of Feraccru®/Accrufer® are readily available to the Company through to the closing of a partnering agreement in the United States"Looks like they want the job done and proper before TW properly has the reigns. Liking this more and more everyday.All imo