Market volatility prompts Shield Therapeutics to pull plug on £110M IPO

Shield Therapeutics picked a bad time to try to go public. Since it unveiled its plans on September 7, the NASDAQ Biotechnology Index has slumped 10% and confidence on the London Stock Exchange has seesawed as well. Faced with such conditions, Shield has decided to postpone its listing in London.

Shield Therapeutics CEO Carl Sterritt

The decision follows a weekend of emergency talks, at the end of which management decided it is impossible to smoothly transition to public markets at this time. Shield CEO Carl Sterritt pointed to the "dramatic increase in volatility" and "significantly negative market conditions for the biotech and pharma sector" in a statement to explain the decision. Actions far beyond the control of Shield--such as the pricing debate in the U.S. and swings in the stock price of blue-chip London stocks--that may ultimately have relatively little impact on its long-term prospects have scuttled the IPO plan.

Gateshead, United Kingdom-based Shield is now left with two late-stage development programs and a £110 million ($169 million) shortfall in its financing plans. A spokesperson for Shield told FierceBiotech the firm is backed by "supportive investors," but declined to answer questions about when it will need to raise more money, whether an IPO is still its first choice and what it will do if markets remain too choppy for it to go public. "For the time being we will continue on our path to commercialization as a private company," Sterritt said in the statement.

Shield raised €8.2 million from Inventages Venture Capital in 2011 and went back to the same source for another €10.5 million the following year. Media reports suggest Shield has quietly pulled in cash outside of these events--a Financial Times article from 2012 put its total financing at €25 million--but reserves had dwindled by the end of 2014. At that time, the two subsidiaries into which Shield was reorganizing its business collectively held £453,000 in cash. The holding company had an operating loss of £3.4 million last year.

If all goes according to plan, the days of Shield being a loss-making enterprise will end soon. The company's lead product is already awaiting approval in Europe. And if the drug can clear that hurdle and take off as Shield expects, the company is predicting it will evolve into a self-sufficient business.

- read the statement