Key Takeaways:
Shares of Shield Therapeutics PLC (AIM:STX) fell 12 percent to 7.71p after the company announced the departure of its finance chief and flagged potential sales headwinds in the US, overshadowing a swing to first-quarter profitability.
"The results were driven by strong prescription growth for ACCRUFeR and a significant milestone payment from our partner in China," Chief Executive Officer Anders Lundstrom, who will take on the CFO role on an interim basis, said in a statement. "We are managing the business to cash flow breakeven and profitability."
The pharmaceutical company’s group net revenues rose to $18 million in the first quarter, a significant increase from $7 million in the same period a year earlier. The performance included a $7.9 million milestone payment from its Chinese partner ASK Pharm and drove earnings before interest and taxes (EBIT) to approximately $2.5 million, reversing a $4.4 million loss from the prior year. Sales of its lead iron deficiency treatment, ACCRUFeR, increased 54% to $9.9 million.
Despite the strong financial results, the company announced that Chief Financial Officer Santosh Shanbhag will step down on June 1. Shield also warned that new prior authorization requirements under New York’s Medicaid program could impact future sales, as the state currently accounts for about 19% of ACCRUFeR revenues.
The headwinds in New York prompted the company to shift its commercial focus more heavily toward commercially insured patients to offset any potential decline in Medicaid sales. The full impact of the policy change is not yet clear. Shield’s cash position improved slightly to $12.4 million at the end of March.
The company also noted positive regulatory developments. China’s National Medical Products Administration accepted a marketing application for ACCRUFeR, known as FeRACCRU outside the US. In Europe, the European Medicines Agency expanded the drug's label to include children over the age of 12, broadening its potential patient base.
The departure of the CFO adds a layer of uncertainty for investors. The decline puts the stock at its lowest point since late April, testing recent support levels. Shield Therapeutics' next catalyst will be its second-quarter results and any updates regarding the search for a new permanent CFO.
This article is for informational purposes only and does not constitute investment advice.
