Shield Therapeutics : Shares Magazine/AJ Bell Webinar

Investor Presentation Shares Magazine/AJ Bell webinar

20 January 2021

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Agenda

Company Overview & Investment Highlights

How is Feraccru®/Accrufer® distinguished from competitors

US Market Opportunity

Europe/China

Cash

Summary

Company Overview & Investment Highlights

Introduction to Shield Therapeutics plc

• • AIM-listed biotech company (STX.L)

  • • Market capitalisation ~£64m (@15Jan2021)

• • Primary focus is on developing and commercialising Feraccru®/Accrufer®

  • • A novel oral therapy for treating iron deficiency (ID) in adults, with or without anaemia

  • • Approved in the USA and EU

  • • Patent protection until 2035

  • • Three positive phase III 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

  • • Feraccru®/Accrufer® Phase III paediatric study under way

  • • PT20 (a phosphate binder for treatment of hyperphosphatemia), requires one phase III study to submit a MAA in Europe and NDA in the USA

• • Semi-virtual UK-based company

  • • Out-source clinical trials, manufacturing and Europe/China commercialisation

  • • Experienced management team

  • • 15 employees

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Investment Highlights

1

Current 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 intravenous (IV) iron

• • Substantial unmet need because existing 1st line generic oral iron salts are poorly tolerated; 2nd line IV iron is inconvenient for patients and expensive

3

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

• • Three phase III studies confirmed safety, tolerability and effectiveness

• • Advantages over both other oral products and intravenous iron therapy

• • Patent protection until 2035

4

Accrufer® will be launched in the US

• • EITHER via a commercialisation out-licence arrangement

• • OR via a Shield-led launch

How is Feraccru®/Accrufer® distinguished from competitors

Current ID treatment paradigm: significant unmet need

Patient diagnosed with iron deficiency 1st line treatment

• ▪ >80% of the Rx iron market volume comes from orals which are primarily generic*

• ▪ ~10m-11m TRx annually for oral products*

• ▪ Annual net sales ~ $0.1bn

2nd line treatment

• ▪ >90% of the Rx US$ market value comes from IV iron*

• ▪ Annual sales ~$1.2bn

  • ▪ Comprised of primarily branded products:

    • • Injectafer®, Feraheme®, Monoferric®, Venofer®,

Unmet Need

• • Oral:

• • Mostly salt-based iron compounds

  • + Inexpensive generics

  • + Convenient to take

  • - Poor tolerability in the gut

  • - Less efficient absorption

  • - Slower efficacy

  • - Poor compliance

• • Intravenous (IV):

• • Used mainly in patients intolerant of oral therapies

  • + Increases iron levels quickly

  • + Better bioavailability/absorption

  • + No compliance issue

  • - Risk of iron overload

  • - Risk of allergic reaction

  • - Risk of infection

  • - Requires hospital administration

  • - Inconvenient

  • - Expensive

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®

* Source:IQVIA/IMS

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

Feraccru® mechanism of action:

• • Feraccru® is a low dose oral formulation of a non-salt 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

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

* Source: AEGIS-H2H clinical study

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

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

Up to 70% with gastro side effects

• • Low dose oral iron (30mg)

• • Credible alternative to IV iron therapy

• • Taken 2x 30mg capsules daily without food

• • High iron availability

• • Effectively raises Hb and iron levels

• • Well tolerated

Feraccru®/Accrufer®

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

US Market Opportunity

~10M Patients suffer from IDA1 across multiple therapeutic areas in the US

~10-11 million oral Rx annually; ~2.3 million IV doses annually

• • Chronic Kidney Disease (CKD)

  5%

  • • 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)

    • • IDA affects up to 76% of patients5

  • • Celiac Disease

    • • 10%-20% of patients at risk6

• • Oncology

  • • Solid tumors & hematological malignancies

    Chronic Kidney Disease

  • • 32%-60% of cancer patients at risk7

  Women's Health

• • Cardiology

  Celiac Disease

  Chronic Heart FailureInflammatory Bowel DiseaseCancer

  • • 17% of chronic heart failure patients may be affected8

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.html 3) 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.0084943 4) Your Guide to Anemia. National Heart, Lung and Blood Institute website.https://www.nhlbi.nih.gov/files/docs/public/blood/anemia-yg.pdf. September, 2011 5) Stein J, Hartmann F, Dignass AU. "Diagnosis and management of iron deficiency anemia in patients with IBD" Nat Rev Gastroenterol Hepatol.2010; 7(11):599-610 6) 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;11:1472-1477 7) 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…..

Existing Therapy Avg. Value Ratings

IV Branded Iron Therapy

• • Iron replacement therapy is generally considered an area of unmet need

  IV Generic Iron Therapy

• • Key needs are effectiveness and GI tolerability

Oral Branded Iron Therapy

Oral Generic/OTC Iron Therapy

….and see Product X (Accrufer®) as delivering a high level of clinical improvement over existing therapies

1

• 2 3

  4

  5

  6 7

  1=Not at all valuable

  7=Very valuable

  Level of Clinical Improvement Rating
  •	Accrufer® was viewed favorably as a significant
  clinical improvement	Product X (Accrufer)

  1

  • • Good tolerability profile and efficacy data are key benefits

    2

• 3 4

5

6 7

• • Potential first line use if allowed by insurance plans

1=No Clinical Improvement

7 = Major

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)

* Source: MME market research

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Other factors supporting use of Accrufer®

COVID-19

Launch of HIF inhibitors

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

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

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

• • 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)

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

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 IDA patients*

  • - ~10% of current total oral prescriptions without any expansion of the market

  • -<10% of the 2.3 million IV doses*

  • -<20% of current $1.2bn market* size BUT market likely to grow significantly

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

* Source: IQVIA/IMS

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Europe/China

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

• • 2020 sales volumes in Germany/UK up 70% vs 2019 - £0.7m royalties

• • Pricing & reimbursement negotiations in France, Italy, Spain expected in 2021

China

Licensed to ASK Pharm

• • IND application submitted - likely to require only one Phase III 12-week study in 120 IBD patients

• • 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

Cash position &

Summary

Cash position

• • Cash at 31 December 2020 - £2.9m

• • 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

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

• • We are evaluating both out-licence and Shield-led launch alternatives

• • To prepare for a Shield launch scenario, we have recruited 4 experienced US commercial managers who are planning the proposed launch in detail

• • Clarity as to course of action likely during Q1 2021

• • Today's market capitalisation does not reflect any value for US commercialisation

• • Announcement of either a US licence deal or Shield-led launch is likely to lead to a rapid re-rating

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