EDISON INVESTMENT RESEARCH LIMITED Edison Investment Research Limited: Shield Therapeutics (STX): Beefing up for the US opportunity

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02/02/2021 09:00

Edison Investment Research Limited
Edison Investment Research Limited: Shield Therapeutics (STX): Beefing up for the US opportunity

02-Feb-2021 / 08:00 GMT/BST


London, UK, 2 February 2021


Shield Therapeutics (STX): Beefing up for the US opportunity

Shield Therapeutics' (STX's) shares fell sharply in December 2020 on the announcement that a US partnering deal would not be completed in 2020 and that the company is considering launching Accrufer itself in the US. We believe the market reaction has been overdone and the current share price fully discounts any value from the US and China opportunities. Until STX provides further clarity, we have continued to evaluate it based on a US partnering deal. Our modelling suggests an STX-led US launch could more than double longer-term shareholder value, but this is accompanied by increased near-term financial and investment risk, as STX will need to raise funds to establish a small but focused US marketing organisation. We value STX at £298.5m.

Our revised valuation is £298.5m or 254p/share, vs £379.1m or 324p/share previously. This reflects a US partnering deal but with more cautious assumptions; we delay launch to 2022 and reduce the upfront payment to £10m. We have also lowered EU sales trajectory in 2021/22 reflecting the need for further launches. We include unaudited net cash at 31 December 2020 of £2.9m, which gives a cash runway to Q221 and could be extended until end 2021 through two loan facilities agreements totalling c £4.4m. Our NPV calculation is based on Feraccru/Accrufer achieving peak sales of €130m in Europe, $410m in the US and $126m in China, through partners. 

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1164752  02-Feb-2021