Good afternoon, and welcome to the Shield Therapeutics plc investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll, and I'd now like to hand you over to the management team from Shield Therapeutics plc . Anders, good afternoon, sir.
Thank you so much. Thank you so much, and a warm welcome to all of you to our presentation of the first half 2024 interim financials. My name is Anders Lundstrom. I'm the Interim CEO since the end of July of this year. By way of background, I've been in the pharmaceutical industry for over 35 years, half of the time in Europe, and the last 18 years here in the U.S. Important to note is that I've been on the board for Shield Therapeutics for over three and a half years, so since the setup of the commercial operations here in the U.S. and our initiation of the collaboration with Viatris about, you know, five quarters ago.
My role on the board is to be the commercialization expert, although it is also, I've been a CEO for a public trading company before. With me today is Santosh Shanbhag , our CFO, and I will let Santosh introduce himself.
Thank you, Anders. Hello, everyone. As Anders said, my name is Santosh Shanbhag . I'm the CFO. I've been with the company since the start of the year, and I'm excited about the growth that we're seeing today, as well as potential growth in the future. Been in the industry for about a couple of decades right now. Prior to coming into Shield, I was a CFO of a public company here in the U.S. We took them public here. We were a leading digital therapeutic company, and prior to that, I spent about a decade at Vertex Pharmaceuticals, both here in the U.S., leading their finance teams, as well as the CFO of the international business, all of Europe, based out of U.K., responsible for Europe, Australia, and Latin America. Looking forward to this discussion today.
Thank you, Santosh. Here is the disclaimer. So now when everybody read that, let's just move into today's presentation. So today's presentation is divided in two parts before we come to your questions. So I will start by presenting, so the opportunity in the iron deficiency, with or without anemia market, and Santosh will follow up with our first half financials. And then, as I said, then we will take your pre-submitted questions. Oh, sorry, sorry. Now, my bad, guys. Sorry, now I'm too quick. So let me then just introduce you to Shield Therapeutics. So Shield, we operate, as I said, in the iron deficiency market. It's a very big market, and I'll come back and show you some numbers, so you can get the feel for the size of the market here in the U.S.
Our reason for being is that most traditional oral iron salts often leads to discontinuation because they irritate your stomach. You do get, actually, tolerability problem, and stomach side effects, and thereby they stop taking the therapy and also leading to insufficient efficacy. ACCRUFeR, as the brand name here, is here in the U.S., or Feraccru, as it is ex- U.S. in Europe, is the only. Well, it is FDA approved, it is approved in Europe, and now by Health Canada, has a very broad indication for use in adults, suffering from iron deficiency, with or without anemia. We are lucky to have a very experienced executive team with extensive U.S. commercialization expertise, but also extensive expertise when it comes to manufacturing, regulatory, R&D, and so forth.
I have a slide describing that for you as well. As I said, we are co-commercializing in the U.S. with Viatris, and that has really catalyzed our commercial expansion and growth for ACCRUFeR in the U.S. We're lucky to have such a established company as our partner when we are on the journey on the U.S. market. We estimate the peak revenue potential of ACCRUFeR to be around $450 million, and I'll show you some numbers later on, you know, in the presentation, so you see how we come to such a large number. Very importantly, we have very strong intellectual property through 2035. So this is the management team, where.
So Santosh and myself and Lucy and Andy are, like, stationed here in the U.S., and David and Jackie are in our Newcastle office. So we spread across both countries, and then we cover different things, as you see. And as I said, we're very fortunate to have such a strong, experienced, and capable management team to lead our efforts. And as we are a small company, many of us wear very many different hats. So iron deficiency is a very common and can be serious condition, and that has a significant impact on patients' quality of life. So as you can see, symptoms can be that you feel very tired, you have headache, you're dizzy, and you can even suffer from cognitive impairment.
It's most common in women of childbearing age, and also in patients with inflammatory conditions such as Crohn's disease or ulcerative colitis. It can be caused, as you can see on the slide, by malnutrition, malabsorption, or bleeding. To describe the problem for you a little bit is that most oral iron salts, as I said initially, they dissociate in the stomach, and that leads to that they irritate the stomach lining, and that is where the gastrointestinal sort of side effects appear. What happens then is that quite large portion of the patients cannot tolerate this, and they stop therapy. So of course, if they stop therapy, the therapy wouldn't do what it's supposed to do. So that is where we come into play.
So our solution is a very elegant solution on how to avoid these gastrointestinal side effects, by having the actual iron protected by a maltose shield, so it can pass through the stomach and be released and absorbed in the small intestine instead. That gives us a very nice place, segment in the market. So many of these patients have tried and, you know, tried other oral iron salts before, either, you know, typically many are available as OTC products, and since they don't work, they try them again, and they don't work, they try them again. It can get very serious, and then you would need an IV infusion.
But we are sort of smack in the middle there, and as I said, our reason to be is that our product, ACCRUFeR or Feraccru, is very well- tolerated. It also effectively normalizes and maintains hemoglobin levels. So this position, having the position we have, presents a large market opportunity, and I'll share that in a few slides when I describe the U.S. market opportunity for you. But let's before we get there, let me share with you where do we have our global partnerships and how do we continue to progress? I come back to Viatris, and I mentioned it already. We have, since a year, 100% sales force here in the U.S.
What we do here, we have a revenue sharing agreement, and we also have some milestones at some revenue levels that we can collect in the future as well. So that's the U.S. market, and I'll come back to that more in a little bit. In Europe, we have Norgine as our partner, and as we will see soon from the number, they've continued to do well. They've done really well the first half of this year. Here we get royalties, and we have a milestone payment upon the approval of the pediatric label in Europe as well. In Canada, we have Kye Pharmaceuticals. They just got approved, which we're really, really happy about, and Canada is a significant market.
I used to say that if Canada, compared to the U.S., is of course very small, but if you compare Canada to the top markets in the U.S., in Europe, I mean, sorry, it would typically be ranked sixth or seventh. So it is a significant market opportunity. Here, again, we have revenue-based milestones and payments, and milestone payments and double-digit royalties on net sales. In Korea, we filed an application, we know it's being reviewed, and if everything goes well, which we, of course, hope it will do, we anticipate an approval next year in 2025. Same setup here. We have royalties in the mid-teens, on net sales. And then in China, finally, we have a phase III study ongoing. We hope the study concludes late this year or very, very early next year.
We can file then in 2025 and expect an approval in the second half of 2026 . Again, the same setup with a Chinese partner. We have approval milestones. We have double-digit royalties on net sales. Now then to the U.S. So we are co-commercializing in the U.S. with Viatris. Let me give you a sense of the size of the market here. So there are estimates about 20 million individuals have iron deficiency. It's a large and well-defined market. We see about 12 million prescriptions per year. The great majority of these prescriptions are then prescribed by either a practitioner or by OB/GYN specialists. So at this moment in time, we are in the dark blue circle we call current.
We call on about 12,500 HCPs, and they represent about 1.8 million prescriptions. As you can see there, we have about 3% market share in that market segment. There's a lot more we can achieve already where we are sort of focusing right now. What we call the expanded market is the market where we see that we could go into in the future. This is, you can see that half of the addressable market are in the expanded market, with 6 million yearly prescription out of the 12 million in total. And this segment has about 50,000 HCPs, and that is something we could reach when we expand the business further in the future.
This is the rationale and background, how we can get to our sales potential, which is around $450 million a year. By that, let us continue with the first half-year financials with Santosh.
Thank you, Anders. I'll go through the details of the press release from this morning. As you can see on this slide, we have got three key big priorities. The first one, obviously, is growing ACCRUFeR here in the U.S. on all three fronts, revenues, prescriptions, and gross to net. Making sure that we have a strong balance sheet and backed financially to support our near-term and long-term priorities, and then obviously making sure that ferric maltol is available to patients across the globe, especially through the partnerships that we have in different geographies. On the very first [bullet there], the growth in ACCRUFeR, we reported this morning $11 million ACCRUFeR net revenues in the first half of this year. Now, that represents about a 3.5x growth compared to the first half of last year.
Obviously, ACCRUFeR, the growth in revenues is driven by two elements, the demand as well as the pricing. On the demand side, we reported 65,200 prescriptions for the first half. Now, that represents about a 25% quarterly growth since the launch of the product with Viatris earlier last year, in the first half of last year, where we had 100 reps in the field. On the pricing side, we reported first half of $158 net price realized per prescription. Now, that's a 33% growth versus the first half of last year. That continues to grow steadily on a quarterly basis.
As an example, there you can see, in Q2 of 2024, it was $171, compared to the $158 that you saw, for the full first half. From a balance sheet perspective, we exited the quarter, Q2, with $8.1 million cash and cash equivalents on hand. We have implemented an accounts receivable financing that's already in place. That was implemented in April. And then, since the close of the quarter or the close of the half, we added another $5.7 million in cash that we got from the monetization of the Chinese milestone. This was done with our largest shareholder, AOP. This was done in Q3 2024. So to be clear, the $5.7 million is not included in the $8.1 million that we reported in cash.
On last but not least, from a global perspective, as Anders mentioned, Kye Pharmaceuticals received a Health Canada approval in August, so we just reported on that recently. We are excited about that. Earlier this year, Korea Pharma , our partner in Korea, filed a new drug application in Korea. Pending successful review, we expect an approval of that in 2025. We are also anticipating the data from our pediatric study later in 2024. We are expecting that pretty soon, actually. Digging a little deeper into the details of the financials. From a revenues perspective, we reported $ 12.1 million for the first half of this year.
As I mentioned earlier, $11 million of the $12.1 million was from ACCRUFeR, and you can see on the slide the two key drivers there, prescription and pricing. The remaining $1.1 million was revenues driven primarily from our global partners. These are for product sales in Europe, and these are royalties that we receive on those product sales. The $1.1 million compares to $600,000 that we saw in the first half of last year. So we are excited about the growth both in ACCRUFeR as well as ex-U.S. revenues. Operating loss, we reported $15.5 million in operating loss. The components of those loss are, you can see, gross profit increased to $5.5 million, compared to $1.7 million in the first half of last year.
The growth in profit was driven primarily by the increase in ACCRUFeR revenues. Selling, general, and administrative expenses was $18.8 million, compared to $17.1 million in the first half of last year. The increase was primarily driven by the U.S. sales force expansion, obviously supporting the launch and scale of ACCRUFeR. R&D was $800,000 for the first half of this year, compared to $400,000 for the first half of last year. From a balance sheet and cash perspective, cash and cash equivalents, like I said, was $8.1 million. The year-end number, comparatively, was $13.9 million. So you can see we are looking to manage our burn on a quarterly basis over here. We have added a $10 million accounts receivable financing with Sallyport.
That was basically a receivable of ACCRUFeR that can fund the $10 million line of credit that we have with them. This was put in place in, on 30 th April 2024. In the first half, we also amended the $20 million debt facility that we have with SWK. This was amended to make the terms more favorable, the covenant terms more favorable towards the company. And then, like I said, post-period, we also added the $5.7 million monetization of the Chinese milestone with AOP Health, one of our large, one of our largest shareholders. Here, double-clicking a little bit further into the prescriptions on a quarterly basis. You can see we have a good Q2 2024, with 36,400 prescriptions.
This is a 26% growth over Q1, so we like the fact that we have rebound there from Q1. Obviously, this is a testament to the Shield and Viatris field sales teams that have done a great job in kind of bringing this back on track. Our average quarterly growth right now, like I said, is about 25%, following the field sales expansion with Viatris in Q2 2023. The growth has come primarily driven in the large states such as California, Florida, New York, and Texas. Obviously, this translates then into revenues and pricing. You can see on the left-hand side a 69% quarter-over-quarter growth in revenues. So Q2 2024 was $6.9 million in ACCRUFeR revenues. This excludes the global revenues from a global perspective.
And then on the right-hand side, you can see the pricing. It continues to remain, you know, a bit volatile, but it's going in the right direction. You can see $171 net realized price per prescription, which is a 23% growth, quarter- over- quarter. Then last but not least, we talked about the $8.1 million. I wanted to make sure that everyone had a view into the different components of how we are strengthening our balance sheet. We have a $20 million term loan with SWK. You can see the details on the slide. We added another $10 million of accounts receivable factoring. You can see the details on the slide. This was done, as I said, in April.
Think of it as a line of credit that we can use the ACCRUFeR receivables to fund that line. And last but not least, the AOP Health deal that we just announced, which is the $5.7 million milestone monetization that we added after the close of the period. So with that, I'll hand it back to Anders.
Ready to take the questions.
Anders, Santosh, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by the Q&A tab situated on the top right-hand corner of your screen. Just while the company takes a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Guys, as you can see, we have received a number of questions, and Alice, at this point, if I could hand over to you to chair the Q&A with the team, and I'll pick up from you at the end.
Great. Thanks very much, Lily. So we'll start working through the pre-submitted questions first. So first question is: When do you aim to break even?
Yeah, maybe I can take that. What we have said in the past is we're looking at the growth of ACCRUFeR, and based on our internal assumptions and based on our internal forecast, we do expect to break even in the second half of 2025 . What I mean by that is we expect to be cash flow positive in the second half of 2025.
Thanks, Santosh. Second question: does management have any internal forecasts or expectations for three to five-year forward revenues? What plans do you have for additional products and timeframe?
Anders, I can maybe take the first half, and maybe-
You do the forecast, yeah. Yeah.
We obviously have our internal forecasts and expectations. We manage ourselves, and the board manages us through those forecasts and expectations. We have not made that public, and we have not provided guidance on, in terms of near-term forecasts. What we have said, though, is we do look at this as a peak revenue opportunity of $450 million, and we stand focused on trying to get there as quickly as we can.
On additional products, I think it's worth reminding everybody. We're one year into the launch here in the U.S., where we together with Viatris have 100 people sales force. Yes, we would at the right time add another product. I mean, it's also worth mentioning that we're only scraping the surface of the potential of this market where we, you know, we are active in right now. The right product that would fit into our core targets, which would be primary care physicians or general practitioners or with OB/GYNs, yeah, that would of course be something we would be interested in adding at the right time.
But as Santosh said already, you know, a couple of times, what we're focusing on right now is the ACCRUFeR in the iron deficiency market.
Thank you. Next question is: why did none of the Directors buy shares, especially when the share price was quite low?
So first of all, I mean, none of us can really comment on what each Director, how they invest their money. So that's number one. Number two is that we've been in a close period for quite some time. That period ends today, so that's where we are at.
Thank you. What progress is being made in the U.K.? Is ACCRUFeR available on the NHS?
I mean, Norgine is our partner in Europe and also in the U.K. They, we've had some struggles with reimbursement in the U.K. I know they are working hard to sort of improve the situation. The label we have in Europe is the same label we have in the U.S., so it's really up to them to make that comment, what you know what efforts they are you know deploying in the U.K. to get to improve the situation. But we are in constant talks to them, and every year we have an approved commercial plan that then they execute on. So that's what I... Santosh, anything to add there?
No, I think, I think you covered it.
Okay. Yeah.
Thank you. Please, can you state the exact reason for Greg Madison's departure from the CEO? Was this influenced by institutional shareholders? And I'll also follow that up with a second part from another question, which is: where are you in the process of hiring a full-time CEO, or what's the trajectory for that?
When it comes to Greg Madison's departure, it was a mutual decision between himself and the board. That's what we stated, and that's our comment on that. The search for a new CEO, no, we have not initiated a new search as of yet, so I'll be here until we do that.
Great. You've previously mentioned challenges in Texas, and the Q2 statement mentioned a rebound. Today, Texas is quoted as one of the large states behind the growth. Can you tell us a bit more about the profile of recovery in Texas and how trading is there now?
Do you want me to take that, Anders, and then-
Yeah, yeah. Let me start by saying w hat happened in Texas earlier this year is actually that the plan that paid for Medicaid prescriptions, so the provider, you can say, actually went away. That's what happened, which kind of sounds like an odd thing, especially if you have a European perspective, that all of a sudden your product is not available any longer if you have a certain plan. That is really what happened. It is odd. It's back again. It's back since April of this year, and that's why we see a rebound in the second quarter, you know. But that disrupted, for us and for the patients, the availability of ACCRUFeR to Medicaid patients.
Thank you. Now there's a little water under the bridge in regards to the third-party data provision, how has your conviction in the prescription data evolved? Are you back to full conviction in it?
Yes, yes, yes, we are. Yeah. It was another... Yes. No, that was last year, where one of the providers that then sort of did not provide the data to IQVIA first, and then did provide the data to IQVIA, so it was double reporting for a while. That's all over. I mean, that happened in the third and fourth quarter of last year. So, the data we have today is very solid and there's no doubt that what you see is what it is.
Great. Is it possible to extend the patent, and what would you need to do for this?
Well, one thing that is happening, actually, is when we get the pediatric approval in Europe, for instance, and as Santosh mentioned, we hope to see the study concluded before the end of this year, is that we will get the six-month patent extension in Europe. We're constantly sort of reviewing intellectual property, because that's the most important thing you have, protecting your product, of course. Now we have a very, we - I mean ou r IP doesn't expire till 2035, so. But we would, you know, have a, you know, not every day, but a yearly review to see what could potentially be done to further strengthen our intellectual property.
Thank you. When talking about net selling price, does the average drift up gradually over time, or is it stepwise on the back of targeted discussions with formulary networks and payers, et cetera? And if the latter, how much scope is there to continue driving this with existing customers, given the improvements already achieved?
Do you want to start, Santosh, or?
Sure. Yeah, sure. I can start with that.
Yeah, sure.
Obviously, it's a concerted effort to make sure that we continue to increase our net selling price. It is not a very straightforward pricing model here in the United States. There are different payers, and you have to negotiate with each one of them to ensure that the patients get access, and then the insurance companies cover those patients. So we work with each one of them on a regular basis and try and maximize as much coverage as we can. So it's really a function of how much coverage we can achieve and how fast we can do that.
Over the last 12 months since our partnership with Viatris really began, we have had good success and good progress on that front, which is why you have started to see that the pricing is steadily increasing, so I think we should expect to continue to see that. In areas where insurance does not cover or there are certain plans that do not cover the patient, Shield tries to help those patients by providing that medication at a subsidy or in some cases free, and as that coverage continues to improve, we can start to see that by the work that is being done by both the Viatris team as well as Shield, you should expect to see that price goes up.
So that is really without getting into the excruciating detail, that's at a high level, how I would describe the pricing, and so we should expect to see that price go up as time progresses. Anything to add there, Anders?
No, I think it was very well said. I mean, the system is complicated, as you said, Santosh, and it's really people have just different insurances and different level of coverage. But it is something we can actively work on on our side as well. We can influence this, and that's also, that is what we have been doing, we are doing, and we will continue to do, to the large extent ever possible. There will always be a portion that we would give away for free or give away heavily subsidized. It's just the nature of the market here. Unfortunately, everybody doesn't have good coverage. But typically at the provider, at the physician's office, they see people from all walks of life.
So that is what you do as a pharmaceutical company in the U.S. market.
Thank you. Please, could you explain the delay in the pediatric study?
Hmm.
Yeah, I mean, I would say, you should expect to see the data from the pediatric study, soon. I think we just leave it at that.
Okay. Who are your main rivals in the iron deficiency market?
Yeah, it's a good question. Here in the U.S., it would be any oral iron you can go to the pharmacy and buy. So there's, we are unique in the sense with the label we have and the approval we have, but as you probably are aware, there are oral iron salts that you can just go buy without a prescription in the market. So that is, I mean, what would be our biggest competitor at the moment.
Thank you. Is the strategy stretched too much, and should focus remain on building the U.S. market share rather than trying to expand into other markets?
Oh, so we really only focus on the U.S. market from our, you know, with our own, on our own, having our own people. Every other market we are either in or plan to be in, we do with partners. And typically, when you have a partner doing it, then we can use Canada as the latest example, with Kye Pharmaceuticals , they will do all the heavy lifting, they will do the investment in the local market. We provide guidance, we provide product, and we, of course, help them to get through the regulatory process and potentially a reimbursement process. But that is where it stops. So even if we were to expand into even more markets or when Korea or China becomes approved, it typically doesn't require many more resources on our side. So our resources are focused on the U.S. market.
Almost everything of the resources, people, money, whatever it is, is focused on the U.S. market. So we wouldn't. We are not, and wo uld not be that thin, even if we continue to expand our geographical footprint.
Thank you, Anders. We've had several questions along the lines of this, but will there be any need for further cash from shareholders prior to breaking even?
Yeah, I mean, I think maybe I can take that, Anders.
Yeah.
As you've seen, we constantly are looking to strengthen our balance sheet, and you've seen we've continued to do that. We do that by managing our expenses, we do that by managing our working capital, and accessing new capital. So having said that, you know, do we need more money? If there is an opportunity to bring in additional capital into the company so that we can further invest in growing and scaling ACCRUFeR, I think that would be. We would evaluate each of those opportunities on the benefit of the terms and make sure that we can bring in the right money at the right value. So that's probably what we would want to say on that. Anything to add there, Anders?
No, I would agree with you 100%.
Yeah.
Thank you. Santosh, could you talk about churn and repeat orders?
Sorry, say that question again?
Could you talk about repeat orders?
Oh, you mean like-
Repeat prescriptions.
Prescriptions? Yeah, I mean, what? The way we do this, so if every salesperson has, you know, roughly 125 targets each, of those, what we do, we focus in on, like, the top 25 or top 30 physicians they have in each territory, and those will typically be your largest prescribers, so yes, we see a good amount of people prescribing again and again, and then again, and again, like you would like it to be. Very few are one-offs, right, so that is why we focus our effort. I don't have a number here to say, oh, you know, our average physician prescribe X amount of prescriptions per month, per year, or something like that.
But our absolute focus is on those healthcare professionals that prescribe as the most amount of patients, and that is how we run our operations.
Thank you, Anders. Revenues from Norgine seem to have grown solidly in H1. Are they doing anything different, and do you think this will continue?
Norgine has done a good job in this, in the first half of this year compared to last year. There are several different contributors to that, but at the highest level, I would say Germany seems to be doing well for them. They are expanding their focus areas, you know, into women's health in Germany as well. And I'm sure the reimbursement landscape there is slowly improving. So I think those would be the top drivers from our perspective. There are a lot more intricacies, probably not worth getting into the call right now.
Yeah.
Thanks, Santosh. Given the degree of discounting and discounts that insurance companies require, should we model a higher gross to net at, say, $200 or higher? I know today it's at $171.
Yeah, I think what we have guided previously, and we still believe in that, is we do think that this can get north of $200 . I think we may have said $220 is the number that we may look to target. We definitely see lots of levers in the model right now that we can use and pull to get to that number. So, $200 , $220 is a reasonable assumption to have over the next eight, 12, 18 months, I would say.
Yeah.
Great. And just following on from that, could you talk about insurance coverage? Which states do not have coverage at the moment, and why?
Okay, fine. So on the commercial side, we have about 60% of everybody covered, right? On the Medicare side, we have zero, basically, coverage. And on the Medicaid side, we have very good coverage across all 50 states. So it depends on where the patient is really, where they are insured to sort of give you a full answer. It becomes a bit complicated, actually. I don't have each channel, the percentage of each channel and so forth. But what I can tell you is that a salesperson, they have that data available for them when they go see a provider or providers. They can see what the mix of patients are, who's covered, who's uncovered, and so forth.
So that is part of how you operationalize your territories, and so forth. So the challenge is, of course, you cannot always, "Oh, we are only gonna go after patients who are covered," because for one physician, they have a whole mixed bag of different patients with different type of insurances. So if you, for instance, have Medicare, where we charge a cash price or they can buy the product from us because they don't have coverage, you cannot say: Oh, we're just gonna walk away. You still have to be able to provide them with some type of help to get on the product, because as I said, that prescriber have all types of commercial Medicaid, Medicare patients. So that's why it...
I would need several slides to sort of answer that question in a very precise way.
Thanks, Anders.
Yeah.
Santosh, probably one for you.
Mm-hmm.
The corporate presentation outlines minimum revenue targets for the term loan. Are the revenue targets cumulative?
Yeah. So, the revenue targets are a rolling 12-month revenue target. So every month that goes by, you look at the last 12 months, and that's the rolling target that you're looking at. So it's cumulative from that perspective, yes.
Yeah.
Thank you. And then I think this is probably the last one, unless we have some more come through. I think I saw in the performance slide, increased sales and margins, but in the same period, a significantly increased operational loss. If that was correct, please could you explain?
Yeah, so you can see that our gross margins increased on ACCRUFeR, and that's primarily driven by the fact that ACCRUFeR is growing. So gross margins on the product continues to increase because of the revenue growth. We did see an increase in operating expenses, same period over period, so first half 2024 versus first half 2023. And that was driven primarily by the fact that we have a full sales force right now.
So keep in mind, we launched our sales force in Q2 of last year, so the 100 people that are in our sales force came in really in the second part of last year, in the first half of last year, versus in the first half of this year, we had the full sales force for the entire six months. So there's a driver there as well. There are additional sundry items that get added into the G&A, so the expenses related to the financings also get added within the general and administrative expenses. You should also expect to see that, you know, as we wrap down the pediatric trial, those costs will start to go down as we see into the second half of this.
Fantastic. And just following on from that, what would need to happen to the size of the U.S. sales force in order to address the expanded market size as opposed to just the current market size?
Oh, well, we would need a larger sales force to do that. And that would probably. The way we view that, it would happen in increments. You wouldn't jump from covering 12,500 HCPs to 50,000. That is like, that's a 4x jump, which would technically mean you would have, like, a 400-person sales force. We will do that in increments. But that is sort of the plan, how we would grow ACCRUFeR in the U.S.
Yeah, maybe I can add there, too, Anders. I think if you take a step back, you can think about the go-to-market in really two large buckets. There's the feet on the ground, which is a sales force, which is a fixed cost that, you know, companies can incur, or it could be marketing spend that you know, opportunistically take an advantage of certain times of the year and spend a little bit more in marketing, which is a little bit more variable, and we can control that cost on an ongoing basis. So to address that expanded market, you know, we don't have to put all of our chips in one basket, which would be the sales force expansion. We could leverage some of those investments in marketing.
Yeah.
And so it's kind of a mixed resource allocation or capital allocation. But to Anders's point, yeah, if we really want to go after the full 6 million prescriptions of 50,000 physicians, you would have to expand the sales force, but that would be massive, and we wouldn't want to do that. It would be a well-thought-through expansion into that space.
Yeah.
Perfect. And then I've just actually had another follow-up to that question. Can you give us an idea of how an individual salesperson drives sales over time? I assume there's a settling-in period, but are sales continuing to grow with the most long-standing salespeople?
It does. And it's a matter of how breadth and depth, right? So how many do you call them? And then, as I explained before, you typically have your, you know, your whatever number of top prescribers you have in your territory. You work on those who have the largest accounts. So that's what you do. And you can see that, which we look at, for instance. So what does it look like from time point zero and you move ahead into two months ahead? What does that look like in that territory? What targets would they need to reach and so forth? And it is something we measure very closely, because we would expect to see a growth, and then as...
We would expect now to continue to see that grow, growing as well, since we have only penetrated 3% into our current market. But that is how we go about that, and it's measured very, very closely, because we have very good data that we can follow the penetration into a territory, but also when it comes to breadth and depth in calling on your targets.
Thank you. And then just one last question: how do you intend to improve shareholder value?
Yeah, I mean, that is what I think. What we've seen now over the last, I think, again, in the perspective, sometimes we forget it ourselves, but we've only really been active for four quarters with the full strength here in the U.S., which is really the biggest driver of our revenues. Of course, other markets will help us as well, but U.S. is the key market. And by continue to execute according to the plan we have in place, that is going to be the biggest driver for shareholder value going forward. Anything else, Santosh, you want to add to that?
No, I think you said it perfectly. I think we are, as a company, we're hyper-focused on operational execution and growing ACCRUFeR-
Yeah.
growth in ACCRUFeR. Whether it's revenues, prescription or pricing, that's what we are focused on, and we are seeing that happen. Over the last 12 months, we have seen that happen. We expect that to happen going forward, and that should hopefully translate into shareholder value, as we see in the future.
Yeah.
Thank you, Anders. Thank you, Santosh. Lily, I'll hand back to you now.
Anders, Santosh, thank you for answering all those questions you can from investors, and of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Anders, could I please just ask you for a few closing comments?
Yeah. First of all, thank you for all the listening, and thank you for all your very mindful questions. We've had a great first half of this year, and we're very excited to see the strong quarterly over quarter growth over the last four quarters. And this growth is seen since we launched our co-commercialization effort with Viatris, so that is what... So, Santosh, that is what we focused on, continue to be very efficient with our commercial operations here in the U.S.
Anders, Santosh, thank you for updating investors today. Can I please ask investors not to close this session, as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Shield Therapeutics plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.
Thank you all.