Commercial stage pharmaceutical company Shield Therapeutics plc (LSE: STX) announced on Wednesday that it has entered into a USD5.7m milestone monetisation agreement with AOP Health International Management AG, its largest shareholder with a 39.8% stake. AOP's founder, Dr Rudolf Widmann, will join Shield's board as a non-executive director with immediate effect.

Under the agreement, AOP will provide Shield with USD5.7m in cash for the right to receive the USD11.4m China approval milestone payment from Jiangsu Aosaikang Pharmaceutical Co, Ltd. (ASK Pharma), Shield's commercial partner in China. ASK Pharma is conducting a Phase 3 study expected to complete by late 2024, with potential milestone payment by 2026 upon successful completion and regulatory approval.

If the milestone is not achieved by 31 December 2026 or if the agreement is terminated, Shield must repay the advance with interest (SOFR + 9.25%) and an exit fee of 6.5%. The advance is secured by AOP's right to the milestone payment.

The transaction is considered a related party transaction under AIM Rules due to AOP's substantial shareholding. Shield's directors, after consulting Peel Hunt LLP, believe the agreement terms are fair to shareholders.

Dr Rudolf Widmann, a veteran pharmaceutical scientist and entrepreneur, founded AOP Health in 1996. He holds degrees in pharmacy and pharmacology from the University of Innsbruck and has no direct shareholding in Shield. As a non-executive director, Dr Widmann will receive a base fee of GBP40,000, with additional fees for any board committee chairmanships, and is not eligible for the company's incentive arrangements.

Shield's Accrufer/Feraccru (ferric maltol) addresses unmet needs in iron deficiency treatment. It is FDA-approved and marketed in the US through Viatris Inc, with various licensing agreements for international markets, including China, Europe, Australia, New Zealand, South Korea and Canada.