Santhera Announces First Half-Year 2021 Financial Results and Updates on Corporate Progress
“Our achievements in the first half of 2021 have moved us significantly closer to accomplishing key goals. The highlights in the period under review were undoubtedly the positive results of the Phase 2b VISION-DMD study at 24 weeks with vamorolone compared to placebo in Duchenne muscular dystrophy, paving the way for an NDA submission in the U.S. We are equally excited about the favorable tolerability profile of vamorolone versus prednisone, potentially addressing the high medical need for steroid efficacy with a safety profile differentiated from steroids on some key clinically meaningful parameters. On the financing side, we successfully restructured the Company’s balance sheet and secured adequate funding to take us to mid-2022 or beyond key upcoming milestones,” said Dario Eklund, Chief Executive Officer of Santhera. “These successes are crucial for both patients who are in great need of a better tolerated steroid therapy suitable for chronic treatment and for Santhera as they lay the foundation for renewed future growth. We are grateful for the continued support of patients and their caregivers, health care staff and investors, which will allow us to move forward with our strategy and execute our plans and ambitions.”
Vamorolone—nearing regulatory submission to the US FDA
Already in April 2021, Santhera and ReveraGen announced new clinical data of 2.5-year treatment outcome with vamorolone in patients with Duchenne muscular dystrophy (DMD). These Phase 2a long-term treatment data demonstrated a maintenance of treatment effect, equivalent to a delay of about two years in decline for time to stand (TTSTAND) velocity, and confirmed safety and tolerability benefits of vamorolone over the 2.5-year follow up period. In comparison to reports from clinical trials with other corticosteroids, long-term treatment with vamorolone resulted in fewer of the side effects that are typically observed with those drugs.
Based on clinical trial results, including long-term safety data up to 30 months, vamorolone at doses up to 6 mg/kg/day was generally well-tolerated. Vamorolone treatment has been shown to preserve height trajectory and had a significantly lower adverse impact on measures of bone health and behavior changes compared to prednisone.
On the basis of the positive 24-week efficacy results from the pivotal VISION-DMD study and the demonstration of long-term benefits of vamorolone, Santhera is preparing for submission of a New Drug Application (NDA) in the US in Q1-2022, for which fast track designation was granted by the FDA.
In Q4-2021, the 48-week data readout delivering supplementary safety and tolerability data for vamorolone is expected upon completion of the VISION-DMD study. During the second period of the study, where all participants receive vamorolone treatment on either of the two dose levels, additional longer-term tolerability data is captured. The 48-week data will support the submission of a marketing authorization application in Europe in Q2-2022.
In September 2021, the FDA awarded a USD 1.2 million grant to ReveraGen under their “Clinical Studies of Orphan Products Addressing Unmet Needs of Rare Diseases (R01)” grants program to initiate a clinical trial of vamorolone in adults and children with Becker muscular dystrophy (BMD), a progressive muscle wasting disease similar to DMD, but usually milder. The mechanisms of actions, which provide the basis of vamorolone’s efficacy as demonstrated in the pivotal VISION-DMD study in the more severe DMD, are hypothesized to be relevant to BMD too.
Santhera intends to commercialize vamorolone for the treatment of DMD through its own organization in the United States and main markets in Europe, and is seeking collaborations outside those regions for DMD and for additional indications worldwide. Santhera estimates the peak product sales potential for vamorolone in the indication DMD alone to be in excess of USD 500 million in the US and the largest five European countries combined.
Lonodelestat—positive results in early phase cystic fibrosis trial
The results from the safety analyses and the confirmed effect on the hNE biomarker by lonodelestat are very encouraging for further development in CF and other inflammatory lung diseases. On this basis, Santhera will now be refining the further clinical development program to advance lonodelestat for the treatment of CF and potentially for other inflammatory pulmonary conditions, whether acute or chronic.
Post-authorization measures (PAMs) with Raxone successful and nearing completion
The study, which was designed with guidance and approval from the European Medicines Agency (EMA), was part of a post-authorization commitment. The strong evidence of efficacy is expected to support market access in countries where this is not yet the case, allowing patients who have no therapeutic alternative to benefit from treatment with Raxone.
Santhera holds the EU marketing authorization for Raxone (idebenone) and out-licensed rights to the product outside North America and France for the treatment of LHON to Chiesi Group. Santhera is still commercializing Raxone for LHON in France in a transitional phase and, as previously communicated, is supplying the product free of charge since August 2021 following its removal from the list of reimbursed products and while reimbursement discussions are ongoing. The Company is entitled to contingent variable near- to mid-term milestone payments from Chiesi Group of up to EUR 49 million subject to the achievement of certain commercial milestones for Raxone.
Corporate restructuring completed and organization realigned to future priorities
On the back of the positive VISION-DMD study results, paving the way for an NDA submission to the US FDA, the Company has defined operational and organizational measures to allow for a successful first launch of vamorolone in the US which is expected earliest at the beginning of 2023. Attraction of key talents with a focus on the US market for pre-commercialization activities will begin as soon as additional funding has become available.
Prioritization of the development pipeline
Capital restructuring and share capital increases implemented to enable adequate funding to execute strategy
On May 4, Santhera announced completion of the exchange offer in respect of its CHF 60 Million Convertible Bonds due 2022 (SIX: SAN17) and the issuance of CHF 30,270,375 Senior Unsecured Convertible Bonds due 2024 (SIX: SAN21). The restructuring of the 2017/22 Bonds enabled Santhera to proceed with raising additional financing and was therefore crucial to preserve the Company as a going concern until after such subsequent financing.
Santhera’s shareholders gave consent to various capital increases in the first half-year 2021. At the Extraordinary General Meeting (EGM) held on March 18, the Board of Directors (BoD) proposed to shareholders the authorization and issuance of the shares for the upsized financing from a fund managed by Highbridge Capital Management, LLC, and the restructuring of its CHF 60 million Senior Unsecured Convertible Bonds. At the Annual General Meeting (AGM) held on June 22, the BoD proposed various capital increases to Santhera’s shareholders to give the Company sufficient flexibility to raise additional capital to fund ongoing development activities, increase pre-commercialization activities and expand the organization in view of a US market launch of vamorolone as early as the beginning of 2023, subject to approval by the US FDA. Santhera’s shareholders approved all motions by the BoD at both the EGM and the AGM, allowing the Company to proceed with its strategy and plans as foreseen.
On September 20, 2021 the Company announced a financing of up to CHF 45 million gross or CHF 42 million net of fees and expenses to provide funding through to mid-2022 past the NDA filing planned for Q1-2022. The financing comprised CHF 20 million in equity, CHF 15 million in a new 2021/24 convertible bond to be used for settlement of the CHF 15 million nominal value outstanding on the 2017/22 convertible bond maturing February 2022, together with a CHF 10 million in new senior secured exchangeable notes. A first tranche of CHF 2 million may be drawn after closing, on October 14, 2021, subject to certain customary conditions. A further tranche of CHF 5 million may be drawn if and when the FDA supports an NDA for vamorolone in DMD in the United States upon which a USD 5 million milestone payment to licensor ReveraGen becomes due. The remaining tranche of CHF 3 million is available subject to investor consent. The maturity of the term loan will be May 2024.
However, considering the Company’s current planned strategy for the next 12 months, additional funds will be required to fund operations and material uncertainties remain as to the Company’s ability to continue as a going concern until June 30, 2022.
KEY FINANCIALS AS OF JUNE 30, 2021
Financial liquidity as of June 30, 2021
Net cash used in operating activities was CHF 18.6 million for the six months ended June 30, 2021, compared to CHF 19.8 million for the six months ended June 30, 2020.
Following financing activities, including the convertible bond 2017/22 exchange for 2021/2024 convertible bond overall net equity at June 30, 2021 increased to CHF 8.4 million from a deficit of CHF 6.4 million as at December 31, 2020.
Financial results for the six months ended June 30, 2021
Total revenue was CHF 4.5 million and CHF 7.8 million for the six months ended June 30, 2021, and June 30, 2020, respectively. The majority of this revenue reflects sales of Raxone for the treatment of LHON in France where Santhera continues to supply the product following the outlicensing and transfer to Chiesi Group in 2019. The decrease in revenues is mainly attributable to a CHF 2.0 million adjustment to defer revenues recorded in the first half-year 2021 due to uncertainties around pricing and reimbursement in France, as well as an agreement with the regulatory authorities in France to supply Raxone free of charge from August 2021 while reimbursement discussions are ongoing.
Development expenses were CHF 13.6 million and CHF 17.7 million for the six months ended June 30, 2021, and June 30, 2020, respectively. The decrease in expenses was primarily due to lower contract research organization expenses and other third-party clinical trial expenses following the termination of the Puldysa Phase 3 SIDEROS study, offset by increased expenses to support the development of vamorolone to the recently announced 24-week, in addition to a reduction in staff costs following organizational restructuring.
Marketing and sales expenses were CHF 2.0 million and CHF 6.8 million for the six months ended June 30, 2021 and June 30, 2020 respectively. The decrease was primarily a result of the ceasing of Puldysa activities following the termination of the program announced in October 2020. Ongoing expenses relate to pre-commercialization activities for vamorolone and meeting ongoing obligations in relation to Raxone out-licensed to Chiesi Group.
General and administrative expenses were CHF 6.3 million and CHF 7.2 million for the six months ended June 30, 2021 and June 30, 2020 respectively, the decrease was primarily related to the organization restructuring announced in October 2020.
2021 Half-year Financial Information
Santhera’s 2021 Half-year Report see www.santhera.com/investors-and-media/investor-toolbox/financial-reports.
Raxone® is a trademark of Santhera Pharmaceuticals.
Disclaimer / Forward-looking statements
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