Santhera Reports 2020 Annual Results
A conference call will be held today at 14:00 CEST, 13:00 BST, 08:00 EDT. Details are at the end of this statement.
Pratteln, Switzerland, April 29, 2021 – Santhera Pharmaceuticals (SIX: SANN) announces the Company’s audited financial results for 2020 and reports on progress in advancing its lead compound for the treatment of Duchenne muscular dystrophy (DMD), vamorolone, towards regulatory submission.
“Santhera started 2021 with the strong foundation of a refreshed clinical and operational strategy focused on vamorolone, which we believe can provide significant value to patients, caregivers, and ultimately shareholders. It represents the key foundation for the future of Santhera, which continues to focus on Duchenne muscular dystrophy (DMD) and other rare diseases.,” said Dario Eklund, CEO of Santhera. “Vamorolone is currently being developed for early stage DMD patients and recent encouraging data leads us to conclude that vamorolone could emerge as a foundational therapy in DMD for all patients irrespective of gene mutation and as a promising alternative to existing corticosteroids. Based on the collective clinical experience so far, we look forward to the readout of the 6-month top-line data from the pivotal VISION-DMD study, the next value enhancing inflection point. Subject to a positive outcome in Q2-2021, we will push ahead with the filing of a New Drug Application (NDA) with the US FDA and will step up preparations for market entry.”
2020 full-year net revenues in line with expectations
Cost of goods sold
During the year, the Puldysa development program was terminated which necessitated an organizational restructuring. During 2020, cost of goods recorded an inventory impairment of CHF 6.0 million and operating expenses included Puldysa related costs of CHF 11.4 million which are both non-recurring. In addition, the organizational restructuring, resulting in a reduction of headcount by over 50%, is expected to reduce staff costs by approximately CHF 10.0 million in future periods. Together, these represent costs incurred in the year of CHF 27.4 million not expected to occur in future periods. Going forward, the Company continues to reduce cost in other areas, however, in the event of positive upcoming vamorolone results, the Company expects to increase certain costs to support approval and pre-commercialization activities. Other costs incurred to carry out post-marketing study obligations for Raxone which are expected to be completed during 2021 and support the ongoing development of lonodelestat, which announced positive Phase 1 results in March 2021.
Financial income and expenses
Cash flow and cash balance
The cash and cash equivalents at December 31, 2020 were CHF 12.4 million (2019: CHF 31.4 million).
Currently, the Company has a limited cash runway to the third quarter 2021 and thus material uncertainties remain as to the Company’s ability to continue as a going concern until December 31, 2021. Ongoing development activities and increase in pre-commercialization activities relating to vamorolone will require substantial additional funding, particularly in the latter part of 2021. Executing the Company’s strategy depends on further funding to ensure the continuation of its operations through December 31, 2021.
As reported in the 2019 annual report, released in March 2020, Santhera had sufficient funds to mid-2020. The Company entered into financing arrangements with IRIS and Highbridge Capital which provided additional funding. As a result of the termination of the Puldysa program in 2020, the Company ended 2020 with a limited cash run-way and the anticipation to raise additional finance in the event of positive vamorolone 6-month study results expected in the second quarter of 2021. Following the initiatives taken during the fourth quarter of 2020, cash flow from operating activities had been significantly reduced and in February 2021 an amendment to the agreement with Highbridge was entered into which provided additional funding and extended the cash runway further into the third quarter of 2021.
Given the overall liquidity position and the requirement to raise additional funding during 2021, the Company commenced a restructuring of the CHF 60 million convertible bond maturing in February 2022. The process for this is in the final stages and is expected to result in an exchange of approximately 75% to a new bond with an extended maturity to August 2024, thereby reducing the amount maturing in February 2022 to approximately CHF 15.2 million.
Cash and cash equivalents as at April 27, 2021 were CHF 11.7 million, in addition CHF 6 million, subject to certain drawdown conditions being met, is available for drawdown under the Highbridge agreements.
Previously, the Company held an Extraordinary General Meeting on March 18, 2021, where the shareholders approved additional authorized and conditional share capital that would be required in the event of conversion of the convertible bond as per the new terms as well as to allow for some additional financing.
Santhera is currently evaluating a number of different options to secure additional financing of the Company which besides equity-based funding also includes debt financing, royalty financing, standby equity distribution agreement as well as the monetization of receivables. Potential requirements and sources will be further evaluated following the outcome of the upcoming vamorolone 6-month results. At the forthcoming Annual General Meeting on June 22, 2021, the Board plans to make corresponding proposals.
PIPELINE MILESTONES AND PROGRESS
Santhera’s pipeline priorities for 2021 continue to focus on advancing vamorolone towards regulatory submission and progressing lonodelestat:
Vamorolone—Santhera’s strategic near- and mid-term pipeline priority
Lonodelestat—positive results in early phase cystic fibrosis trial
Partnering for platform-like molecules and early stage pipeline
Further information about Santhera’s development pipeline is available in the Annual Report 2020 which can be viewed here.
Statement on the impact of the COVID-19
2020 Full-year Financial Information
Santhera’s 2020 Annual Report see www.santhera.com/investors-and-media/investor-toolbox/financial-reports.
Notice of a Repurchase Offer and Preliminary Issuance and Listing Prospectus Regarding the New Bonds: https://www.santhera.com/investors-and-media/investor-toolbox/bond-exchange-offering
Forms to cast bondholder votes are available here.
Invitation to the Bondholders’ Meeting (March 8, 2021), the EGM (March 18, 2021) and accompanying documents: http://www.santhera.com/investors-and-media/investor-toolbox/share-bondholder-meetings
Raxone® is a trademark of Santhera Pharmaceuticals.
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Disclaimer / Forward-looking statements
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