Shield Therapeutics plc (STX) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Shield Therapeutics plc Q2 Trading presentation. [Operator Instructions] The company might not be in a position to answer every question submitted today. However, we will review all questions and where appropriate, share responses following today's presentation. The webinar today is also being recorded, and we will publish this to the Shield Therapeutics Investor website after today. I'd now like to hand over to Shield Therapeutics CEO, Anders; CCO, Andy; and Bryon, Senior Director of FP&A.

Thank you so much, and good afternoon, good morning, and welcome to the Shield Therapeutics Second Quarter Trading Update. So my name is Anders Lundstrom, I'm the CEO. And as mentioned, together with me today is Andy Hurley, our Chief Commercial Officer; and Bryon Kallert, our Financial Planning and Analysis Senior Director. So we can take the next slide, please. So this is our disclaimer. And as usual, we will -- today's presentation will be available on our website later. And again, we will try to answer all the questions that has come in. And for those questions we may not have time to answer, we will provide written answers. And again, we will publish all of that on our website as well. So we can go to the next slide. So we are -- with Shield Therapeutics, we have one product. It's for iron deficiency and iron deficiency anemia. It's called FeRACCRU in the U.K. and Europe, and it's called ACCRUFeR in the U.S. And in the U.S., it's the only market where we directly sell and market the product on our own. Iron deficiency is a very large market. And in the U.S. alone, we estimate there is about 14 million patients at any given point. The challenge for many of these patients when they treat them -- when they are being treated with an oral iron is that many of the traditional oral irons are dissociated in the stomach and thereby leads to gastrointestinal side effects, which unfortunately then leads to discontinuation of the actual therapy. ACCRUFeR is different, and I'll come back to that in just a few seconds. We have very strong IP for ACCRUFeR through 2035, and we estimate that our peak revenues are around $450 million. ACCRUFeR is different, as I said, because it's a different formulation. It makes the product not dissociated in the stomach, but rather in the upper intestine. And that takes away many of the gastrointestinal related side effects that you could see with traditional oral iron salts. It is absorbed in the upper intestine and the part that is not absorbed continues down the gastrointestinal tract in an undissociated form. So our aim in the U.S. is really to make ACCRUFeR the oral iron of choice. And we have so far seen a great uptake, and we continue to see very strong growth. This, we will come back to also in a second. We can have the next slide, please. So I will then summarize here the key business indicators for the quarter and the first half year. Bryon will follow me and give you more color to the financial part, and Andy will give you more color on the U.S. commercial business. So we posted sales of $10.3 million in the second quarter, which is a 4% increase versus the first quarter of this year and a 20% decrease versus the same period of last year. The total number of prescriptions is about 49,000, which is 9% lower than the first quarter of this year and a slight increase versus the same period of last year. All of this is related to the change we faced with New York Medicaid on April 23. So what you see in the second quarter is 2 months of stricter criteria for getting a prior authorization approved in the New York Medicaid situation. So what have we done? So we immediately in April, pivoted in the sense that we directed our sales force to go after the commercial segment. What do we mean with the commercial segment? So commercial insurance is employer-sponsored insurance, but Medicaid is typically, it's state supported insurance, but also the federal government subsidized a part of Medicaid as well. The commercial segment of the market has always been our largest segment. So what we see already with only -- with this change in focus 2 months of the 3 in the second quarter, we see prescription growth. It's 8% versus the first quarter. We see a same period as last year, second quarter this year versus the second quarter last year, we see 14% growth. And in June alone, we grew about 6% month-over-month. So as I said, Andy will come back and break this down even further what we see in the different states. But the growth is there, the growth is back, and there's a lot of growth still to be had in this marketplace. Changing gears, what do we see from our commercial partners outside the U.S. So in China, we filed for approval earlier this year, and we anticipate an approval in 2027 and a subsequent launch. Same in Korea, where we did receive an approval and are now in the process of applying for price and reimbursement, we anticipate a 2027 commercial launch in Korea. In Canada, by KYE Pharmaceuticals, we've seen really strong sales momentum and the royalties, we think we will -- we have an estimation of royalties from there. We will announce those results when we present the full H1 financials in about a month. And we see the same in -- by Norgine. They have grown nicely in volume and especially that growth comes from the U.K. I have the next slide, please. It's my great pleasure to introduce to you our new CFO, Michael Jensen, that will join us on September 1. Michael is a perfect fit for us at Shield and comes with a really strong record as a CFO. We have had several CFO positions from the past, but also had leading financial positions at very strong and reputable companies as Novo Nordisk, Novartis and also work in the diagnostics business with Siemens Healthcare. We think Michael will be a key contributor to our executive leadership and will help us steer the company into future success. So by that, I give the word and slides over to Bryon.

Thanks, Anders. Next slide, please. So we're continuing to focus on 3 strategic priorities in 2026, growing ACCRUFeR net revenues, driving to achieve profitability and diversifying our revenue beyond the adult IDA in the United States. For the first half of 2026, we reported $30.4 million, which is a 41% growth over last year. This includes a $7.9 million milestone from our Chinese partner, ASK, a $600,000 pediatric milestone from Norgine and royalties by Norgine in Europe and KYE in Canada. ACCRUFeR net revenues represent $20.1 million of this in H1 2026, a 5% increase over last year. The revenues were generated by 102,000 total prescriptions at a net price of $199. Second, we are driving to achieve profitability. We reported EBIT profitability in the first half of the year. Cash and cash equivalents of $8.3 million as of June 30, compared to $12.4 million in Q1 2026. This was driven by a continuous focus on our working capital and cost management. And then third, we continue to focus on diversifying our revenue streams beyond adult IDA in the U.S. We had the Chinese NMPA submission, putting both China and Korea on track for launch in 2027. Our Canadian business is seeing double -- is seeing strong growth with double revenue in the first half of the year, and Europe is also seeing double-digit volume growth. Next slide, please. I'll now jump into our quarterly figures. These are the 3 key metrics that we've been sharing on a consistent basis, total prescriptions, net selling price per script and ACCRUFeR net revenues. As you can see on the left side, ACCRUFeR prescriptions in Q2 were approximately 49,000, 28% of which was a consignment business. The Q2 total prescriptions saw a slight increase compared to Q2 2025, but a slight decline compared to the prior quarter due to the Medicaid prior authorization impact that Anders has discussed earlier in the presentation in New York. But the team did pivot to commercially focused patients in New York to partially offset this loss. Net selling price increased to $208 compared to $190 in Q1 and ACCRUFeR net revenues grew 4% to $10.3 million versus Q1. At this point, I'll pass it on to Andy to provide a commercial update.

Thanks, Bryon. And my goal today is to talk about what Anders and Bryon have already alluded to is how are we doing in the first half of the year, taking into account the New York Medicaid situation, talking about what we're doing to pivot to the commercial segment and how well we've done within that commercial segment. So I'll start with an update on how we performed in the first half of the year, which is total prescription growth across the commercial and Medicaid channels. Let's go to the next slide. So if you compare the first half of this year to the first half of last year, we had 27% TRx growth in the commercial channel. And this is meaningful because the commercial channel represents about 2/3 of our total prescriptions for ACCRUFeR. And when we compare those same time frames within the Medicaid channel, we saw 2% growth. Now this was largely due to the New York Medicaid change that happened in late April, and that was requiring now going from a no PA situation to a much more tightly controlled process for approving ACCRUFeR prescription. So I'll talk a little bit more about New York in subsequent slides, but you can see that, obviously, that did impact our Medicaid business, but we saw a really good growth on our commercial segment. When you put the 2 together, we had a first half of the year that was 17% growth year-over-year, fueled by the commercial channel. Next slide. And when we look at new prescriptions, we saw a 34% increase in commercial new prescriptions comparing first half of last year to first half of this year, but we are flat in Medicaid for the same time frame for the same reason due to New York Medicaid. But when we look at the overall growth of 19% in driving new prescriptions in those time frames year-over-year, this was a healthy number considering the setback that we saw within New York Medicaid. And when we look at the second half of the year, we usually see the second half outpacing the first half, as you can see on this chart, and we anticipate the exact same thing happening in 2026. Next slide. So when we break out growth in TRx volume from first half of last year to first half of this year by state, we saw an average of 28% growth across our top 6 states. And those 6 states represent about 2/3 of our overall prescription volume nationally. And those states in order of highest volume are Texas, New York, California, Georgia, Florida and North Carolina. And you look at this chart and you see the states from left to right, you can see how much each grew within the commercial and Medicaid channels. So for instance, Texas, our largest commercial state, grew its TRx volume by 30% in comparing first half of this year versus first half of last year. And I'll get into Texas a bit more just because of how important that state is. But while losing New York Medicaid had significant impact on our overall volume in Q2, the New York commercial business still represented our second biggest state for commercial volume for ACCRUFeR and our New York commercial volume grew 32% in comparing those 2 time frames, which is really good. So not only did we see that as a rebound and a pivot once the Medicaid situation came to bear, but we quickly pivoted and was able to really get to that commercial business, which was already discussed. And when we look at California, that had our highest commercial growth at 62% year-over-year, first half of the year versus first half of the year, '26 versus '25. And the 3 remaining states to the right, all had 15% growth or higher, which is fantastic. Next slide. So what's driving this prescription growth is a combination of 2 things: one, gaining new records; and secondly, driving depth of prescribing amongst existing prescribers. And the sales force has been focused on calling on our highest value targets and growing their ACCRUFeR patient base. So from 1H '25 to 1H '26, we saw 20% growth in depth of prescribing amongst our highest value targets. So this highlights the increased value that providers see ACCRUFeR having for their patients and also the ability of our sales force to pivot their focus as changes happen in the marketplace. Next slide. So as I mentioned, I want to talk about Texas a bit more as this illustrates how well we've been able to drive commercial business following a change in Medicaid. Now we had a very favorable situation in Texas Medicaid as there was no PA for ACCRUFeR for 2023 and 2022 before it, much like what we had in New York for the past 3 years. Then in Q1 of '24, the state put a PA in place for ACCRUFeR, and we immediately pivoted to drive our commercial business in Texas. And you can see the results on the right, the orange line is our commercial business and the blue line is our Medicaid business. We were able to pivot our promotional efforts to the commercial channel, and the result was 116% growth for the past 2 years. And this is exactly what we're doing in New York, and we expect big results to follow within the commercial channel in New York and all big states for ACCRUFeR. Next slide. And we have a new opportunity in Texas as we've contracted ACCRUFeR to be available to all McKesson Specialty oncology clinics. And that means over 400 clinics statewide and 700 physicians who will all be new to ACCRUFeR. So this partnership with McKesson Specialty now gives those providers discounted access to ACCRUFeR within the McKesson Specialty GPO, and we anticipate this contributing to a strong second half of the year for ACCRUFeR. Next slide. So once again, going back to our big 6 states, this is showing how well we've grown our prescriber base. And you can see that we've had significant growth across every one of our top 6 states. The states are shown left to right by growth in total prescribers and above each state is the growth rate from 1H '25 to 1H '26. And you can see that New York had the highest number of added prescribers and grew writers by 29% even with the loss of New York Medicaid in late April of this year. So these numbers reflect a focused targeting strategy and doctors continuing to see a difference in ACCRUFeR amongst the other branded and generic iron products. Next slide. So continuing on the topic of growing new writers, this slide shows how we are growing new writers through our digital marketing efforts. Our digital marketing to both HCPs and to patients has grown new writers in a very meaningful way from first half of last year to first half of this year. So this slide shows a monthly breakout with the yellow part of the bars being direct-to-consumer spend and the purple part of the bar being provider spend. And the black line above it represents month-over-month new writer growth. And we saw a nice increase in new writer growth in the first half of this year, and we saw much of that increase come from our direct-to-consumer efforts that got patients walking into offices asking for ACCRUFeR. And you can see on the right, a box that highlights the digital marketing approach that we will be taking in the second half of this year. We plan to have a higher proportion of spend going to consumers based on the high ROI that we've seen from our direct-to-consumer tactics. So we think this should have a direct result in not only driving new writers and prescription growth, but also really getting the providers to feel even more comfortable with more messaging that's coming their way and patients getting more messaging as the year goes on. So I'll wrap it up with this slide that summarizes the key metrics regarding ACCRUFeR performance. In comparing first half of the year of '25 to first half of the year of this year, we saw a 27% increase in total prescription volume. a 34% increase in commercial new prescription volume, and we added approximately 3,200 new writers of ACCRUFeR to our prescriber base. And then lastly, we had over 350,000 ACCRUFeR website visits from providers and patients in the first half of this year. So in summary, we're really encouraged by the momentum that we're seeing and having right now, and we anticipate strong performance across our sales and marketing teams in the second half of this year. And with that, I'll turn it back over to Anders.

Thank you, Andy. Can we go to the next slide, please. So then in summary, so what we tried to share with you this morning is that the iron deficiency market in the U.S. is a very, very large market and with a very significant revenue potential. Yes, we do see growth outside New York Medicaid. It is really -- what we're trying to explain to you is that there's a lot of prescriptions to be had outside Medicaid in general. And as Andy has explained in great detail, actually, the bigger opportunity is in the commercial segment. So just to be clear here, a clinic or a physician can have patients who have -- who are insured by Medicaid, Medicare or commercial. So it's -- when we pivot, we still call on some of the same doctors because they cannot have all these patients, but we have also added new target physicians in so to really capitalize on the bigger commercial opportunity. Our global partnerships continue to progress very nicely. Canada has really nice growth, as mentioned by Bryon, and Norgine as well. Norgine has, as we mentioned, double-digit volume growth and especially in the U.K., where we have had a very nice impact since they started working more with [indiscernible] in the last couple of years. We have a new CFO. We're very happy about that. Michael is joining us starting September 1. We continue to drive towards profitability by the end of this year. And we continue to look for product or partnership opportunities to expand the portfolio. So we are basically having the same strategy as we had in the past, and we have pivot and we do see growth coming back as well. So that concludes our formal presentation, and we are happy to answer all the questions that we've already seen you guys have submitted. So we can go to the questions, please.

Yes. I was just going to say thank you all for the presentation today. And if we start with some of the investor questions that come through. ACCRUFeR data showed an all-time high for U.S. ACCRUFeR prescription in Q2 2026. Yet the uplift to Shield's reported sales figures was just 5%, well below the usual 25%. How do you explain that gap?

Yes. I mean the explanation is very simple. It's due to New York Medicaid, where we have seen fantastic growth in that particular segment, that growth was taken down to a large part by June 23. But as Andy has explained, we are pivoting and then instead focusing on capturing more of the commercial growth. So that is the -- that's what you see. That's what you have. And I think we've hopefully been able to show to you that we have very, very -- the growth is there. It's just a matter of focus and that we have changed focus. And our sales force has been very resilient and I sort of answered what we've asked them to.

Does the company have sufficient funding to navigate this commercial reset without returning to market?

Yes, it's a short answer. We continue to invest behind the product as we plan to do this year and in the same fashion as we've done in previous years.

Okay. Is the company considering adjusting pricing or shifting channel focus, for example, away from Medicaid towards private clinics? And if so, why isn't that approach being replicated in other markets?

Well, yes, so it's not a private clinic or a public clinic, and that's why I said what I said in my summary, patients with different type of insurance come into the same clinic, the same prescriber. What we've done historically is always gone after where we could potentially have the highest growth potential. The highest growth potential was in Medicaid. But as you also have seen, Medicaid is limited to a number of few states. The commercial access is broader. And you could say, in a way, it's more stable because the commercial healthcare, which is then, again, employer sponsor is not affected by what the federal government does. So when the federal government decides to save money, it affects the states with Medicaid and it also affects Medicare, which is actually not an important segment to us. So that -- there is sort of -- private and public like you would have in the U.K. or in other parts of Europe.

And are the long-term peak sales targets for ACCRUFeR still realistic? What milestones to maintain confidence?

Yes, it is. It's still realistic. I mean we have -- as I said, we have very solid IP in 2035. So we have quite a few years still to grow. We -- as you trying also to explain, this is a very vast market opportunity. We are still the #1 prescribed branded oral iron. But having said that, if you look at our market share, it's still relatively low in the market, it's around 4% to 5%. So there's a lot more to be had. And as we continue to invest in the market, and as you can see, especially on the marketing side, on the digital side, we keep adding new prescribers. We keep adding patients go to the prescribers and ask for ACCRUFeR. And importantly enough and very importantly, too, is what Andy has shared with you, the number of new prescribers will keep increasing. The depth for those who we focus on, they keep prescribing more. So yes, it's a realistic target.

Great. Thank you. We hear very little about Norgine's commercial performance in the U.K. and EU. Presumably, because the contribution is low, should investors expect similarly modest returns from other markets where Shield doesn't control distribution directly, such as Korea and Canada. If not, what makes these partnerships different?

It makes them different in the way that for Norgine, ACCRUFeR is a relatively small product. They've done some targeted activities, especially in the U.K. They continue to invest in the markets where they're active, U.K., Germany, a couple of the Nordic markets, but that's really where they are. It starts to pay off now, even though on a small base. Canada is growing very nicely. And as I said, we will be able to share those numbers in when we do the first half year update because then we have the solidified numbers. Korea, again, it will -- depending on price, which we don't know yet, price and reimbursement will know next year. Korea is the largest pharmaceutical market in the world, but it will be a key contributor for us. China, of course, it could be potentially a very large market. So it all depends on, in my view, the importance of ACCRUFeR in the portfolio of the company. We make sure when we license out ACCRUFeR to other partners that it is a key product for them and then would invest behind it subsequently.

Great. Thank you, Anders. And when do you expect the launch? And what milestone payment will Shield receive on that event?

So I referred to Bryon, I said in 2027 and the milestone for the first commercial sale, Bryon, is...

Over $1 million.

$ 1 million, right? That's what it is.

Yes.

Perfect. And was the average net price compression to $208 from $231 purely due to New York Medicaid tightened prior authorization requirements.