Shield Therapeutics : Investor Meet Presentation

Investor Presentation

16 December 2020

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Disclaimer

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Agenda

Company Overview & Investment Highlights

How is Feraccru®/Accrufer® distinguished from competitors

US commercialisation - Summary of last 18 months

US Market Opportunity

Europe/China

Cash

Summary

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Company Overview & Investment Highlights

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Introduction to Shield Therapeutics plc

• AIM-listedbiotech company (STX.L)
• • Market capitalisation ~£71m (@15Dec2020)
• Primary focus is on developing and commercialising Feraccru®/Accrufer®
• • A novel oral therapy for treating iron deficiency (ID) in adults
  • Approved in the USA and EU
  • Patent protection until 2035
  • Three positive phase 3 clinical trials have confirmed effectiveness and tolerability
  • Commercialisation out-licensed to
  • • Europe, Australia, New Zealand - Norgine in Q4 2018
    • China, Taiwan, Hong Kong, Macau - ASK Pharm in Q1 2020
• Development pipeline
• • PT20 (a phosphate binder for treatment of hyperphosphatemia), requires one phase 3 study to submit a MAA in Europe and NDA in the USA
• Semi-virtualUK-based company
• • Out-sourceclinical trials, manufacturing and Europe/China commercialisation
  • Experienced management team
  • 15 employees

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Investment Highlights

1

Current £71m valuation underpinned by commercialisation licence deals in Europe and China

• Europe - commercialisation by Norgine BV, currently marketed in Germany, UK and Scandinavia. Launches in France, Italy and Spain expected in 2021/2022
• China - licensed to Beijing Aosaikang Pharmaceutical Co. Ltd ("ASK Pharm"). One further Phase III study required; approval expected 2023

2

Very substantial valuation upside from US opportunity

• ~10 million ID patients suffering from anaemia
• ~10 million monthly prescriptions per year of oral iron salts; ~2.3 million doses annually of IV Iron
• Existing 1st line generic oral iron salts are poorly tolerated; 2nd line IV iron is inconvenient for patients and expensive
• Substantial unmet need

3 Feraccru®/Accrufer® is a NOVEL ORAL product with broad indication for treatment of ID in adults:

• Phase III studies in inflammatory bowel disease (IBD) and chronic kidney disease (CKD)
• Further application in e.g. chronic heart failure, women's health, oncology, and care of elderly
• Patent protection until 2035

4 Feraccru®/Accrufer® is effective and well tolerated:

• Three phase 3 clinical trials have confirmed safety and effectiveness
• In head-to-head Phase 3 study against Ferinject/Injectafer (market leading IV treatment) Accrufer® demonstrated comparable effectiveness over 52 weeks and could be a more cost-effective alternative to IV iron

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How is Feraccru®/Accrufer® distinguished from competitors

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Iron deficiency (ID)

• Iron is a key component of haemoglobin (Hb)
• • ID is the most common cause of anaemia (iron deficiency anaemia or "IDA")
• ID is caused by malnutrition or bleeding and is associated with many diseases, in particular:
• • Inflammatory bowel disease (IBD), Chronic kidney disease (CKD), Womens' health,
    Congestive heart failure (CHF), oncology, ageing

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Iron replacement therapy

Typically initiated with oral, followed by IV therapy if needed

Patient diagnosed with iron deficiency

1st line treatment

Oral

• Iron salts
• Inexpensive and convenient to take but…
• Not well tolerated = poor compliance = unable to restore iron levels
• Poor absorption = slower to restore iron levels and…

2nd line treatment

Intravenous (IV)

• Used mainly in patients intolerant of oral therapies

• Up to 1,000mg iron infused into blood stream

• Requires hospital administration due to safety risk

• Resource heavy, inconvenient & costly

The poor tolerability of salt-based oral iron therapies and the cost/inconvenience of IV iron together create significant unmet need and commercial opportunity for Feraccru®/Accrufer®

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Feraccru®/Accrufer® is a novel and different oral formulation

®	mechanism of action:	•	Feraccru® is a low dose oral formulation of a non-salt
Feraccru		complex of Fe3+, which is stable in the GI tract
			- 30mg capsules, 2x daily
			- Other oral irons are salts and require the Fe to
			dissociate to be absorbed (e.g. 65mg, 3x daily)
			- This causes formation of insoluble products in the
			GI tract, causing intolerance in patients
		•	The Fe3+ in Feraccru® remains in complex with maltol
			until absorbed in the duodenum and the iron is
			delivered to the bloodstream where it binds to
			transferrin
			- Maltol gets metabolised and excreted in urine
			- Unabsorbed Feraccru® passes through the digestive
			system in the benign complex and is excreted in
			faeces
		•	Feraccru® is a well tolerated oral iron replacement
			therapy
			- Potential for use as a first line treatment for
			patients with iron deficiency or as an alternative to
			IV iron in patients failing existing oral iron salts

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Source: Shield Therapeutics Investor Materials, 2017; MedScape; EMA; Stallmach et al. 2015; Abbaspour et al. 2014; L.E.K. research

Regulatory clinical studies used for approval of Feraccru®/Accrufer® in Europe and USA

AEGIS-IBD (Inflammatory Bowel Disease)

• Feraccru provides rapid results - met primary end-point (change in Hb from baseline) at 12 weeks
• delivered 2.3g/dL rise in 12 weeks with 1g/dL in only 4 weeks
• Works over long term
• Well tolerated

AEGIS-CKD (Chronic Kidney Disease)

• met primary endpoint (change in Hb from baseline) at 16 weeks
• Hb levels increased and maintained over 52 weeks
• Well tolerated
• NB - protocol barred ESAs* so Hb increase limited by patients' endogenous erythropoietin.
  Iron not used for Hb production was stored
• • Erythropoietin stimulating agents

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Head-to-head study - comparison with leading IV therapy

• 79% of the 122 IV patients who were actually dosed received more than one infusion before the Week 12 visit
• 68 patients received further infusions from Week 12 visit onwards - although note that by Weeks 24, 36 and 52 the number of IV patients remaining in the study had reduced to 85, 62 and 53 respectively meaning that a high proportion of these were reinfused.
• No ferric maltol patient received rescue IV iron during the study

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Feraccru®/Accrufer® positioning to address both oral and IV segments

Patients

diagnosed with iron deficiency

With its broad indication and its efficacy and tolerability,

Feraccru®/Accrufer® can target multiple therapy areas and capture

prescriptions from both older oral iron salts and IV products

Oral
Iron	Up to 70%
	with gastro
	side effects

	Oral
		Oral Iron
	Iron
		Intolerant
	Tolerant

Feraccru®/Accrufer®

• Low dose oral iron (30mg)
• Credible alternative to IV iron therapy
• Taken 2x daily without food
• High iron availability
• Effectively raises Hb and iron levels
• Well tolerated

IV Iron

• Up to 1,000mg iron directly into the blood but:
• • Potential allergic reactions
  • Iron overload
  • Hospital only
  • Inconvenient
  • Risk of infection
  • High cost

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US commercialisation

Summary of last 18 months

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Summary of last 18 months' outlicence activities

• FDA approval - July 2019
• Intent to out-licence US commercialisation - contacted >100 companies
• Strong interest in Accrufer® from many companies
• • Particularly from smaller/mid-size companies focused on one therapy area, typically seeking to licence Accrufer® to build out their own sales and marketing presence
  • Minimal interest from "Big Pharma" companies which are focused on products to address underlying disease rather than associated iron deficiency
• Multiple term sheets discussed in depth but ultimately not pursued
• • Financial terms not sufficiently attractive - especially smaller companies unable to offer large enough upfront payment to create "skin in the game" and justify taking control of Accrufer®
  • Concerns that counter-parties would not deliver Accrufer® sales across the broad range of therapy areas where iron deficiency is common
• Two potential transactions reached very late stage (full legal documentation almost completed) but failed due to issues arising in counter-parties' businesses
• • Company A's own product was under-performing so they changed strategy in a way that undermined their economic analysis of the Accrufer® licence opportunity
  • Company B was seeking to licence Accrufer® to build its own US commercial presence ahead of bringing its own Phase III product to market. When their Phase III product failed, it proved impossible to complete the transaction.
• A number of credible potential licensees currently engaged but at early stages

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Learnings and opportunities arising over last 18 months

• Detailed discussions with many potential out-licence counterparties provided us with a wide variety of information about the US market and how counterparties proposed to launch and promote Accrufer® - e.g.
• • Pricing and interactions with insurance company payers
  • Physician/prescriber and payer market research
  • Sales force sizing
  • Prescriber targeting
  • Competitive landscape
• A number of potential counterparties were proposing to use Accrufer® as their first product, to build a commercial presence ahead of either bringing their own Phase III product to market or licensing in further products
• Helped us to understand that there is no reason in principle why Shield should not also contemplate launching Accrufer®

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US Market Opportunity

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~10M Patients suffer from iron deficiency anaemia1 across multiple therapeutic areas in the US

~10 million oral Rx annually; ~2.3 million IV doses annually

• Chronic Kidney Disease (CKD)
• • 37m patients (dialysis & non-dialysis)2
  • ~50% of patients at risk3
  • ~2.5m patients have Stage 3 or 4 CKD with IDA3
• Women's Health
• • 1 in 5 women of childbearing age4
  • Heavy uterine or post partum bleeding
• Gastrointestinal Disorders
• • Inflammatory Bowel Disease (IBD)
  • • Affects up to 36%-76% of patients5
  • Celiac Disease
  • • 10%-20%of patients at risk6

	5%
17%	29%

16%

10%

8%

15%

• Oncology
• • Solid tumors & hematological malignancies
  • 32%-60%of cancer patients at risk7
• Cardiology
• • 17% of chronic heart failure patients maybe affected8

Chronic Kidney Disease		Chronic Heart Failure
Women's Health		Inflammatory Bowel Disease
Celiac Disease		Cancer
Other

Sources: 1) "Iron Deficiency Anemia" Cold Spring Harb Perspect Med 2013; 3 :a011866 2) Centers for Disease Control and Prevention. Chronic Kidney Disease in the US, 2019. Available at: https://www.cdc.gov/kidneydisease/publications-resources/2019-national-facts.html3) Stauffer ME, Fan T (2014) "Prevalence of Anemia in Chronic Kidney Disease in the US" PLoS ONE 9(1); e84843. doi:10.1371/journal.pone.00849434) Your Guide to Anemia. National Heart, Lung and Blood Institute website.https://www.nhlbi.nih.gov/files/docs/public/blood/anemia- yg.pdf. September, 20115) Stein J, Hartmann F, Dignass AU. "Diagnosis and management of iron deficiency anemia in patients with IBD" Nat Rev Gastroenterol Hepatol.2010; 7(11):599-6106) Daya H, Lebwohl B, Lewis S, and Green P. (2013) "Celiac Disease Patients Presenting with Anemia Have More Severe Disease Than Those Presenting with Diarrhea" Clinical Gastroenterology and Hepatology 2013;11:1472-14777) Lima J, Gago P, Rocha M, et al. "Role of intravenous iron in the treatment of anemia in patients with gastrointestinal tract tumors undergoing chemotherapy: a single-center, observational study" Int J Gen Med 2018 Aug 22;11:331-336. doi: 10.2147/IJGM.S165947. collection 2018 8) Klip IT, Comin-Colet J, Voors AA, et al. "Iron deficiency in chronic heart failure; an international pooled analysis" Am Heart J. 2013; 165(4):575-582.e3.

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Market research confirms the unmet need

Physicians believe there is an unmet need in the market…..

• Iron replacement therapy is generally considered an area of unmet need
• Key needs are effectiveness and GI tolerability

….and see Product X (Accrufer®) as delivering

a high level of clinical improvement over existing therapies

• Accrufer® was viewed favorably as a significant clinical improvement
• • Good tolerability profile and efficacy data are key benefits
  • Potential first line use if allowed by insurance plans

Existing Therapy Avg. Value Ratings

IV Branded Iron Therapy
IV Generic Iron Therapy
Oral Branded Iron Therapy
Oral Generic/OTC Iron Therapy
1	2	3	4	5	6	7
1=Not at all valuable					7=Very valuable

Level of Clinical Improvement Rating

Product X (Accrufer)

1	2	3	4	5	6	7
1=No Clinical						7 = Major
Improvement				Clinical Improvement

Payer research indicates

• Accrufer® would have few restrictions at tested price points ensuring good patient access
• Net sales price $200-$250 per pack is achievable (after discounts e.g. patient co-pay, insurance chargebacks, distribution fees, etc)

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Other factors supporting use of Accrufer®

COVID-19

Many ID/IDA patients have an underlying condition making them more susceptible to COVID-19 including:

• Chronic kidney disease
• Cancer
• Heart failure
• Those taking immunosuppressant drugs
• The elderly

COVID 19 is changing healthcare delivery and recommendations for the care of at-risk patients

• Taking extra precautions for clinic visits
• Consider providing home treatments
• Switching patients from IV to oral therapies to minimize exposure

Nearly 1 in 3 chronically ill patients report being afraid to leave their home because of COVID-19

The efficacy, safety, tolerability and convenient dosing of Accrufer® make it the ideal iron replacement therapy for higher risk ID/IDA patients

Launch of HIF inhibitors

A new oral class of agents for the treatment of anaemia in CKD

Stimulate endogenous erythropoietin production, a necessary agent for production of Hb

Iron replacement will still be required in many patients - oral iron therapy likely to be preferable as HIFs are orally administered

Suggests an increasing place for the tolerability and effectiveness of Accrufer®

The 1st HIF inhibitor is expected to launch in the USA in 2021

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US commercialisation options

Out-licence to 3rd party

Financial terms

• Licence upfront - one-off receipt on signing
• Sales royalties based on annual sales - typical royalty rates ranging from 10%-25% depending on sales tiers
• Sales milestones - one-off receipts when annual sales reach specified targets for 1st time

Key issues

• Is the upfront big enough to ensure licensee is committed and has skin in the game?
• Will the licensee commercialise successfully? In particular, will they exploit the full breadth of
  Accrufer®'s potential
• Will the licensee be committed for the long term - e.g. until 2035 patent expiry

Current activities

• Ongoing early stage discussions with a number of potential licensees

Shield-led launch

Summary

• Shield retains full control over Accrufer® in US
• Also retains full ownership of Accrufer® profits
• Although potential to sub-licence to 1-2 companies for broadening reach into specific therapy areas
• Shield clearly 100% committed

Key issues

• Overcome doubts that Shield can execute commercialisation as well as a potential licensee
• Finance required - estimated $30m-$40m to reach Group cash breakeven, expected during 2022

Current activities

• Detailed planning underway (see later slide)

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Accrufer® US sales and profit potential

• On average, patients assumed to take 4-5 months' Accrufer® to allow time for restoration and maintenance of normal Hb levels
• At $200-$250 net sales price per pack => $1,000 per patient per year

Potential Year 5 sales

• Sales of $200m pa therefore require 200,000 patients treated annually
• • only 2% of 10 million US IDA patients
  • ~10% of current total oral prescriptions without any expansion of the market
  • <10% of the 2.3 million IV infusions

Shield launch scenario - potential profit/cash flow by Year 5

• 90% gross margin, after manufacturing costs and Vitra 5% royalty
• • $180m gross margin
• US SG&A costs 2021 forecast to be ~$25m-$30m, rising to ~$40m-$45m by Year 5
• • Year 5 US profit and cash generation ~ $130m

Licence scenario (Year 5) - royalty flow

• Assume average royalty of 20% => $40m royalty
• Less 5% net sales ($10m) payable to Vitra => net income to Shield $30m

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Planning for successful Shield US launch

• Shield has recruited 4 experienced US commercial executives to plan and lead US launch
• • Currently on fixed term consultancy contracts pending firm decision for Shield to launch in US, at which point the intention is that they will become Shield US employees
  • Specific areas of expertise cover market access, marketing, medical affairs and operations/supply chain logistics
  • Each has 20+ years pharmaceutical experience
  • Extensive knowledge of Accrufer® built while working for a company which was seeking to licence Accrufer®
• Detailed planning underway for Q2 2021 launch covering:
• • Supply chain and operations e.g.
  • • Planning supply of packs from Europe to pharmacies throughout USA, identifying warehousing and wholesalers, logistics providers
  • Market research and marketing e.g.
  • • Brand planning, assessing agencies, developing further market research requirements
  • Sales force recruitment and training
  • • Planning to target the top 30% of iron prescribers - about 15,000 physicians who in aggregate write at least 70% of all iron prescriptions
    • Likely to need 30-60 sales reps to reach these prescribers, utilising both face-to-face and on-line meetings
    • Assessing whether to recruit in-house or outsource
    • Developing training materials
  • Market access e.g.
  • • US Government pricing & managed services, insurance pricing and contract strategy, co-pay/patient assistance strategy,
  • Medical affairs e.g.
  • • KOL Advisory Boards, scientific message platform, pharmacovigilance
  • Exploring potential to sub-licence to, or co-promote with, one or two therapy area specialists

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Europe/China

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Feraccru® in Europe & China

Europe

Licensed to Norgine

• Sales royalties 25%-40% (Shield pays cost of goods)
• Sales milestones - up to €50m
• On market in Germany, England & Scandinavia
• Pricing & reimbursement negotiations in France, Italy, Spain expected in 2021

China

Licensed to ASK Pharm

• Likely to require only one Phase III study in
  IBD
• Potential approval & launch in 2023
• $11.4m milestone due on approval
• Sales royalties 10%-15% (ASK pays cost of goods)
• Sales milestones - up to $40m

On assumption that aggregate net sales in Europe + China rise to $150m- $200m by 2030, Shield's current market valuation is supported entirely by Europe and China licence deals

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Cash position

&

Summary

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Cash position

• Cash at 30 November - £3.8m
• • Cash runway extends into Q2 2021 (assuming minimal US expenditure)
• Convertible loan facilities agreed with shareholders AOP (10.7%) and Dr Christian Schweiger (3.5%, also a board member)
• • ~£4.4m in total
  • 1st 50% tranche available 1 February 2021, 2nd 50% tranche available if needed during rest of 2021
  • Interest of 10% payable on tranches drawn down
  • Arrangement fee of 2%
• Loans extend cash runway (excluding substantial US spend) until end 2021
• • Protects the company if no licence deal or other fundraise in short/medium term
  • Shows commitment of significant shareholders

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Summary

• Feraccru®/Accrufer® has unique attributes of efficacy, tolerability and breadth of application in ID
• ID is a large global market, including in the USA
• These positive attributes, perversely, have contributed to the reasons why it has proved difficult to secure an out-licence transaction
• Evidence gained throughout the US process, supported by consequences caused by the pandemic, has given Shield the confidence to consider launching Accrufer® in the US
• Although we continue to have out-licence discussions with 3rd parties
• To help prepare for a Shield launch scenario, we have been able to recruit 4 experienced US commercial managers who are planning the proposed launch in detail
• Clarity as to course of action likely during Q1 2021
• The shareholder loan facilities extend our cash runway (excluding substantial US spend) until end 2021

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