Announcement PDF RNS Number : 4592J Shield Therapeutics PLC 13 December 2022 THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR IN OR INTO ANY OTHER JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION. THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF SHIELD THERAPEUTICS PLC IN ANY JURISDICTION. THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF REGULATION (EU) NO 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF 16 APRIL 2014 ON MARKET ABUSE (MARKET ABUSE REGULATION) AS RETAINED AS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN. 13 December 2022 Shield Therapeutics plc ("Shield", the "Group" or the "Company") Placing and Subscription to raise approximately US$18 million, Open Offer to raise up to £3.9 million Extension of existing convertible debt facility by US$10 million and Notice of General Meeting London, UK - 13 December 2022: Shield Therapeutics plc (LSE: STX), a commercial stage pharmaceutical company, announces a proposed equity fundraising by way of a subscription (the "Subscription") and placing (the "Placing") of new ordinary shares to raise approximately £14.7m in aggregate at a price per share of 6 pence (the "Issue Price"). The Company also announces it will be making an Open Offer to Qualifying Shareholders of up to 64,346,927 new ordinary shares at the Issue Price to raise up to a further £3.9m (the "Open Offer", and together with the Subscription and the Placing, the "Equity Fundraising"). The Issue Price of 6 pence per share represents a discount of approximately 11.1 per cent. to the closing price per Ordinary Share on 12 December 2022 (being the latest practicable date prior to this Announcement). Shield also announced today a US$10 million extension of its existing convertible shareholder loan facility with AOP Health International Management AG ("AOP") and a collaborative sales agreement with Viatris Inc. ("Viatris"), a global healthcare company, which includes an up-front cash payment to Shield of US$5 million. When combined with the Equity Fundraising, that results in additional financing to Shield of approximately US$37.7m (before expenses but assuming full take up under the Open Offer), which the Directors believe will enable Shield to, among other things, drive significant growth in sales of Accrufer® in the US. Shield has agreed to extend its existing convertible loan agreement with AOP, the Company's largest shareholder, as first entered into on 1 August 2022. AOP has conditionally agreed to provide a further US$10m loan facility (the "Extended Shareholder Loan Facility") which will be interest free for the first twelve months and the Company has agreed to grant AOP warrants to subscribe for 5,147,754 new Ordinary Shares at a price of 6.75p per share in connection with that agreement (the "Warrants"). As a result of the Extended Shareholder Loan Facility being convertible into Ordinary Shares, it is subject to shareholder approval at a general meeting of the Company proposed to be convened for 5 January 2023 (the "General Meeting"). Authority to issue the Warrants will also be sought at the General Meeting. The Extended Shareholder Loan Facility is, however, not conditional on completion of the Equity Fundraising. Shield has announced separately today terms of a multi-year collaborative sales agreement with Viatris, whereby Viatris and Shield will combine resources to drive sales of Accrufer® in the United States (the "Viatris Partnership"). Viatris has agreed to pay Shield US$5m in cash within five business days of the date of this Announcement and Shield will be eligible to receive sales milestones of up to US$30m. The Viatris Partnership is not conditional on completion of the Equity Fundraising or the Extended Shareholder Loan Facility. Shield estimates that Accrufer® has the potential to generate combined net product revenues in excess of US$150m by the year ending 31 December 2025 with the Group expected to turn cash flow positive in Q4 2024 (subject in each case to achievement of Company forecasts). The Subscription, the Placing and the Open Offer AOP has indicated it intends to subscribe for 57,096,248 Subscription Shares at the Issue Price pursuant to the Subscription. Further, certain Directors and employees of the Group who are existing shareholders and/or option holders have indicated they intend to subscribe for an aggregate of 11,459,213 Subscription Shares at the Issue Price pursuant to the Subscription. Peel Hunt LLP ("Peel Hunt") and finnCap Ltd ("finnCap") are acting as joint bookrunners, and Peel Hunt is acting as nominated adviser, in connection with the Placing. The placing of such number of new Ordinary Shares as are conditionally subscribed for pursuant to the Placing (the "Placing Shares") will be conducted by way of an accelerated bookbuild (the "Bookbuild"), which will be launched immediately following this Announcement, in accordance with the terms and conditions set out in Appendix II to this Announcement. The final number and allocation of Placing Shares will be agreed by Peel Hunt, finnCap and the Company at the close of the Bookbuild and the result will be announced as soon as practicable thereafter. It is envisaged that the Bookbuild will be closed no later than 6.00 p.m. on the date of this Announcement. Neither the Placing nor the Subscription will be underwritten. The Company reserves the right, with the agreement of the Joint Bookrunners, to increase the size of the Placing to accommodate additional demand. The gross proceeds of the Placing and the Subscription in aggregate are expected to be up to approximately £14.7m. In addition, in order to provide Qualifying Shareholders with an opportunity to participate in the Equity Fundraising at the Issue Price, the Company will also be conducting an Open Offer, on the basis of 1 Open Offer Share for every 4 Ordinary Shares held on the Record Date, to raise gross proceeds of up to approximately £3.9m for the Company. The Open Offer will be made to Qualifying Shareholders pursuant to the terms and conditions set forth in the Circular (as defined below). Shareholders subscribing for their full entitlement under the Open Offer may request additional Open Offer Shares through the Excess Application Facility. The Open Offer is primarily aimed at those Qualifying Shareholders who are not given the opportunity to participate in the Placing. The Open Offer is not underwritten, so if there is no take up by Qualifying Shareholders, no additional proceeds will be received by Shield pursuant to the Open Offer element of the Equity Fundraising. The Equity Fundraising will be conditional inter alia on shareholder approvals to be sought at the General Meeting. Details of the General Meeting will be set out in the Circular proposed to be sent to shareholders shortly following the date of this Announcement (the "Circular"). Posting of the Circular will be confirmed by way of public announcement. The Circular will also contain the terms and conditions of the Open Offer and further details of the Extended Shareholder Loan Facility. The Circular will be available on the Company's website: https://www.shieldtherapeutics.com/. Neither the Subscription Shares nor the Placing Shares are being made available to the public and are only available to Relevant Persons. The Open Offer Shares will only be available to Qualifying Shareholders. Set out below in Appendix I is an extract from the draft Circular that is proposed to be sent to Shareholders in due course. This Announcement should be read in its entirety. In particular, your attention is drawn to the detailed terms and conditions of the Placing in Appendix II to this Announcement. Further information relating to the Equity Fundraising and use of proceeds is set out in Appendix I to this Announcement. By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement in its entirety (including the Appendices), and to be making such offer on the terms and subject to the conditions of the Placing contained herein, and to be providing the representations, warranties and acknowledgements contained in Appendix II. Unless otherwise indicated, capitalised terms in this Announcement have the meaning given to them in the definitions section included in Appendix III. The ticker for the Company's ordinary shares is STX. The Company's LEI is 213800G74QWY15FC3W71. An exchange rate of £1:US$1.226 has been used in this Announcement. Enquiries: Shield Therapeutics plc Greg Madison, (CEO) Hans-Peter Rudolf, (CFO) +44 (0) 191 511 8500 Peel Hunt LLP - Nominated Adviser, Joint Broker and Bookrunner James Steel / Oliver Duckworth (Investment Banking) Sohail Akbar / Jock Maxwell Macdonald (ECM) +44 (0) 20 7148 8900 finnCap Ltd - Joint Broker and Bookrunner Geoff Nash / Fergus Sullivan (Corporate Finance) Alice Lane / Nigel Birks / Harriet Ward (ECM) +44 (0) 20 7220 0563 Walbrook PR - Financial PR & IR Adviser Paul McManus / Lianne Applegarth / Alice Woodings +44 (0) 20 7933 8780 or shield@walbrookpr.com About Accrufer®/Feraccru® Accrufer®/Feraccru® (ferric maltol) is a novel, stable, non-salt based oral therapy for adults with iron deficiency, with or without anemia. Accrufer®/Feraccru® has a novel mechanism of action compared to other oral iron therapies and has been shown to be an efficacious and well-tolerated therapy in a range of clinical trials. More information about Accrufer®/Feraccru®, including the product label, can be found at: www.accrufer.com and www.feraccru.com About Shield Therapeutics plc Shield is a commercial stage specialty pharmaceutical company with a focus on addressing iron deficiency with its lead product Accrufer®/Feraccru® (ferric maltol). The Group has launched Accrufer® in the US and Feraccru® is commercialized in the UK and European Union by Norgine B.V., who also have the marketing rights in Australia and New Zealand. Shield also has an exclusive license agreement with Beijing Aosaikang Pharmaceutical Co., Ltd., for the development and commercialization of Accrufer®/Feraccru® in China, Hong Kong, Macau and Taiwan, with Korea Pharma Co., Ltd. in the Republic of Korea, and with KYE Pharmaceuticals Inc. in Canada. Accrufer®/Feraccru® has patent coverage until the mid-2030s. Accrufer®/Feraccru® are registered trademarks of the Shield Group IMPORTANT NOTICES AND DISCLAIMER This announcement including its appendices (together, this "Announcement") and the information contained in it is not for publication, release, transmission distribution or forwarding, in whole or in part, directly or indirectly, in or into the United States, Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction in which publication, release or distribution would be unlawful. This Announcement is for information purposes only and does not constitute an offer to sell or issue, or the solicitation of an offer to buy, acquire or subscribe for shares in the capital of the Company in the United States, Australia, Canada, Japan or the Republic of South Africa or any other state or jurisdiction where to do so would be unlawful. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions. This Announcement has not been approved by London Stock Exchange or by any other securities exchange. The new Ordinary Shares, have not been, and will not be, registered under the US Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold, pledged, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, in or into the United States absent registration under the Securities Act, except pursuant to an exemption from the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. The Placing Shares are being offered and sold by the Company outside the United States in offshore transactions as defined in, and pursuant to, Regulation S under the Securities Act. This announcement is being directed to persons in the United Kingdom only in circumstances in which section 21(1) of the Financial Services and Markets Act 2000, as amended ("FSMA") does not apply. This announcement is for information purposes only and is directed only at persons who are: (1) in Member States of the European Economic Area, qualified investors as defined in article 2(e) of the Prospectus Regulation (EU) 2017/1129 (the "EU Prospectus Regulation"); (2) in the United Kingdom, qualified investors as defined in article 2(e) of Prospectus Regulation (EU) 2017/1129 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended ("EUWA") (the "UK Prospectus Regulation"), who (A) fall within article 19(5) ("investment professionals") of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or (B) fall within article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc.") of the Order; or (3) are persons to whom it may otherwise be lawfully communicated; (all such persons together being referred to as "relevant persons"). This announcement and the terms and conditions set out herein must not be acted on or relied on by persons who are not relevant persons. Persons distributing this announcement must satisfy themselves that it is lawful to do so. Any investment or investment activity to which this announcement and the terms and conditions set out herein relates is available only to relevant persons and will be engaged in only with relevant persons. The new Ordinary Shares have not been approved, disapproved or recommended by the US Securities and Exchange Commission, any state securities commission in the United States or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of new Ordinary Shares. Subject to certain exceptions, the securities referred to herein may not be offered or sold in the United States, Australia, Canada, Japan or the Republic of South Africa or to, or for the account or benefit of, any national, resident or citizen of the United States, Australia, Canada, Japan or the Republic of South Africa. No public offering of securities is being made in the United Kingdom, the United States or any other jurisdiction. Offers of the new Ordinary Shares will either be made pursuant to an exemption under the EU Prospectus Regulation and the UK Prospectus Regulation (as such terms are defined above) from the requirement to produce a prospectus or otherwise in circumstances not resulting in an offer of transferable securities to the public under section 102B of FSMA. This Announcement has been issued by, and is the sole responsibility of, the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the directors or the Company, or by any of its or their respective partners, employees, advisers, affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed. This Announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the EUWA ("UK MAR"), encompassing information relating to the Placing described above, and is disclosed in accordance with the Company's obligations under Article 17 of UK MAR. In addition, market soundings (as defined in UK MAR) were taken in respect of the Placing with the result that certain persons became aware of inside information, as permitted by UK MAR. This inside information is set out in this Announcement. Therefore, upon publication of this announcement, those persons that received such inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities. Peel Hunt, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority is acting as nominated adviser and joint bookrunner to the Company and no one else in connection with the Placing and is not acting for and will not be responsible to any person other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing. Peel Hunt's responsibilities as the Company's nominated adviser under the AIM Rules for Nominated Advisers are owed solely to London Stock Exchange and are not owed to the Company or to any Director or to any other person in respect of his decision to acquire shares in the Company in reliance on any part of this Announcement. finnCap, which is authorised and regulated by the FCA for the conduct of regulated activities in the United Kingdom, is acting as joint bookrunner to the Company and no one else in connection with the Placing and is not acting for and will not be responsible to any person other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing. Except as required under applicable law, neither Peel Hunt, finnCap nor any of their directors, officers, partners, members, employees, advisers, affiliates or agents assume or accept any responsibility whatsoever for the contents of the information contained in this Announcement or for any other statement made or purported to be made by or on behalf of Peel Hunt, finnCap or any of their affiliates in connection with the Company, the new Ordinary Shares or the Placing. Peel Hunt, finnCap and each of their directors, officers, partners, members, employees, advisers, affiliates and agents accordingly disclaim all and any responsibility and liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above) in respect of any statements or other information contained in this Announcement and no representation or warranty, express or implied, is made by Peel Hunt, finnCap or any of their directors, officers, partners, employees, advisers, affiliates or agents as to the accuracy, completeness or sufficiency of the information contained in this Announcement. The distribution of this Announcement and/or the Equity Fundraising in certain jurisdictions may be restricted by law. No action has been taken by the Company, Peel Hunt, finnCap or any of their respective affiliates that would, or which is intended to, permit an offering of the new Ordinary Shares in any jurisdiction or result in the possession or distribution of this Announcement or any other offering or publicity material relating to new Ordinary Shares in any jurisdiction where action for that purpose is required. This Announcement does not constitute a recommendation concerning any investor's option with respect to the Equity Fundraising. Each investor or prospective investor should conduct his, her or its own investigation, analysis and evaluation of the business and data described in this Announcement and publicly available information. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this Announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult with his or her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice. Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement. Product Governance Requirements Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended, as it forms part of UK domestic law by virtue of the EUWA ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II, as amended, as it forms part of UK domestic law by virtue of the EUWA; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of: (a) retail investors; (b) investors who meet the criteria of professional clients; and (c) eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Peel Hunt and finnCap will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares. Forward Looking Statements This Announcement contains "forward-looking statements" which include all statements (other than statements of historical facts) including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations, and any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. These forward-looking statements speak only as at the date of this Announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based unless required to do so by applicable law or the AIM Rules for Companies. The following text has been extracted from the draft Circular: Appendix I - EXTRACTS FROM THE CIRCULAR LETTER FROM THE CHAIRMAN BACKGROUND TO AND REASONS FOR THE EQUITY FUNDRAISING AND USE OF PROCEEDS Overview Shield's lead product is Accrufer®/Feraccru®, a novel oral therapy for the treatment of iron deficiency. The active ingredient of Accrufer®/Feraccru® is a molecule called ferric maltol. Feraccru® is the brand name in Europe where the product was approved for the treatment of iron deficiency in adults in 2018. In the US the product is marketed as Accrufer® and it was approved by the FDA in 2019 and has NCE status until 2024, with the same broad indication of the treatment of iron deficiency in adults. The product is protected by a range of patents extending to 2035. Shield launched Accrufer® in the US in July 2021 and since then has been focused on building awareness among targeted health care professionals ("HCPs") as well as payers and reimbursement agencies. Rates of positive awareness among targeted HCPs have been increasing and Accrufer® payer coverage now exceeds 100m lives across commercial and Medicaid segments. Accrufer® prescriptions dispensed in the US have grown from 2,152 in H2 2021 to 8,477 in H1 2022 to 15,872 to the end of Q3 2022 with approximately 50% of prescriptions from Women's Health HCPs and approximately 43% from general practitioners. In the nine months to 30 September 2022, in the US, Accrufer® generated unaudited net revenues of US$2.4m and has achieved over 1,600 first-time prescribers of Accrufer®. Shield estimates that total prescriptions for Accrufer® in H2 2022 will increase by approximately 100% compared with H1 2022 and is forecasting that Q4 2022 prescriptions will exceed 9,700. This progress has been achieved with a 30-person contracted sales team in the US calling on 3,500 HCPs and limited digital marketing and direct-to-patient initiatives as well as limited presence at medical congresses. Overview of the Viatris Partnership (see separate announcement issued today) Shield has announced separately today terms of a multi-year collaborative sales agreement with Viatris, a global healthcare company, whereby Viatris and Shield will combine resources to drive sales of Accrufer® in the US. Viatris has agreed to pay Shield US$5m cash up front and total milestone payments of up to US$30m, based on achievement of annual net revenues between $100m and $250m. The companies will operate under a shared net revenue and cost model, with Shield retaining a slightly higher percentage of overall net sales and contributing an equivalent amount in shared costs. Each company will pay for their respective sales teams and selling costs. The two companies will prepare and agree upon the appropriate levels of shared marketing expenses on an annual basis. The Directors believe that the Viatris Partnership will drive upside for Shield through increased adoption and revenues for Accrufer®, reducing the time it would take Shield to reach a positive cash flow position while also reducing Shield's capital requirements. It also validates the oral iron market opportunity and Accrufer®'s position within that. The Directors further believe that the partnership with Viatris will increase reach and awareness of Accrufer® beyond the 12,000 high volume prescribing health care professionals that Shield has identified which are predominately operating in Women's Health and Primary Care, which are a key driver for the growth of Accrufer®. The partnership with Viatris also caters for the potential improvement of terms on distribution agreements, which in turn may have a positive gross-to-net adjustment impact. The net proceeds of the Equity Fundraising, the Viatris Partnership upfront payment of US$5m and the Extended Shareholder Loan Facility will provide additional finances for Shield to accelerate the revenue growth of Accrufer® in the US. Shield estimates that Accrufer® has the potential to generate combined net product revenues of in excess of US$150m by the year ending 31 December 2025 and the Directors expect the Group to turn cash flow positive in Q4 2024 (subject in each case to achievement of Company forecasts). Iron Deficiency Iron deficiency is the most common and widespread nutritional disorder in the world. Significant iron deficiency and anaemia have historically been treated initially with prescription oral iron salt products and subsequently, if necessary, with intravenous (IV) infusions of iron. Oral iron salts are mostly generic products and therefore inexpensive, but their chemical composition means that they dissociate rapidly when ingested which can cause a range of adverse effects in patients. These adverse effects result in oral iron ferrous salts typically being poorly tolerated and ultimately in non-compliance by patients. There has been little to no innovation among oral iron therapies over the past decade, which has driven complacency from healthcare providers. Accrufer® (ferric maltol) has been shown to be well tolerated and effective which therefore makes it a credible alternative to traditional oral ferrous iron salt products. Accrufer® is FDA appro