A deal to sell Shield Therapeutics' iron deficiency drug in Asia helped the company boost sales to £10m last year, putting the firm in a position where it will soon begin to generate cash.
The Gateshead pharmaceutical company struck a licensing deal with Jiangsu Aosaikang Pharmaceutical Co. Ltd (ASK Pharma) that will allow the Chinese firm to sell Shield's Feraccru drug in China, Hong Kong, Macau and Taiwan.
While Feraccru has yet to be approved for use in China, Shield received an upfront payment of $11.4m when the deal was signed. Following testing, it is expected that Feraccru will launch in Asia in 2023.
The multimillion-dollar deal help boost Shield's revenue figures to £10.4m for the year ending December 31, 2020. The figure is a huge improvement on the £719,000 of revenue generated in 2019. The boost in turnover also allowed the company to greatly reduce its operating losses from £8.8m to just £2.6m last year.
Shield's CEO Tim Watts said the licensing deal, along with a similar agreement that licenced Feraccru in Europe to Norgine in 2018, helped the business to survive through 2020, allowing it to focus on its US growth.
"It was very helpful, the $11.4m gave us the money to get through 2020 which was important to us as we needed to sort out what we were doing in the US," he said.
"Without that money, we could have had a problem."
Shield's upcoming US launch - where the lead drug is called Accrufer - was originally planned to have been carried out through a licencing deal with a firm in America.
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The company came close to signing a deal with two different partners but the deals ultimately fell through when, Mr Watts said, "on both occasions the counter-party pulled out at late stage for reasons unrelated to Accrufer's potential".
Instead, Shield made the decision to build its own US team and launch its products in the US itself. The company has raised more than £29m from investors to fund the launch, which it hopes to carry out later this year.
Shield is now close to launching Accrufer in the US and is about to carry out a paediatric study to see if the drug is effective at treating children with iron deficiency.
Once the product launches in the US, Shield believes the company will soon begin to make money.
Mr Watts said: "Within 15 to 18 months of the product launch we could be in a position where the sales revenues are covering the costs of the group on a monthly basis and from that point on we will be generating cash rather than burning it.
"We are now working very hard in the US to put everything in place to launch the product in the US by June this year and by the middle of 2022 we will be in a position to start to generate cash."
While 2020 saw Shield focus on its international expansion plans, the business, like many, was also hit by the coronavirus pandemic and forced to adapt.
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Since March 2020 most of the company's staff have been working from home, which Shield said presents clear "disadvantages" when it comes to meeting external business partners face-to-face and maintaining good relationships with them.
The North East office briefly reopened in September 2020 but was forced to close within a couple of weeks due to lockdown restrictions.
The company was also forced to close its London office due to the pandemic and senior management changes and has since made the decision that it will not reopen the office. The team in London is now permanently working from home.
Shares in Shield Therapeutic were trading 7% up at 48.73p following the morning announcement.