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Santhera Announces Preliminary Unaudited 2023 Annual Results and Provides Corporate Update Ahead of Full Report Publication in May
A conference call will be held on April 25, 2024, at 14:30 CEST / 13:30 BST / 08:30 EDT. Details are at the end of this news release. Santhera Announces Preliminary Unaudited 2023 Annual Results and Provides Corporate Update Ahead of Full Report Publication in May
Pratteln, Switzerland, April 25, 2024 – Santhera Pharmaceuticals (SIX: SANN) announces the Company’s preliminary unaudited financial results for the year ended December 31, 2023, reports on business progress achieved in 2023 and extending into 2024, and provides updates on its strategic and financing initiatives. As permitted by SIX Exchange Regulation, the Company will publish the full 2023 Annual Report in May. “The last 15 months were a pivotal phase for Santhera, characterized by remarkable successes and important milestones. We have successfully navigated the regulatory landscapes and secured approvals for AGAMREE in key territories and across continents within just three months. Our collaboration with Catalyst Pharmaceuticals has strategically positioned us to enable product availability to patients in North America as well as to explore strategy of joint development of AGAMREE in indications beyond DMD. In addition, by divesting non-core assets and focusing on AGAMREE, we have streamlined our operations and strengthened our financial base,” said Dario Eklund, CEO of Santhera. “Looking ahead, we are poised to continue this momentum, driving forward our mission to improve care for the DMD community and enhance the quality of life for patients. I am incredibly proud of our team's dedication and innovative spirit and am optimistic about the future as we move toward profitability and expand AGAMREE's therapeutic reach.” In 2023 and into 2024, Santhera achieved critical milestones, securing regulatory approvals for AGAMREE in DMD across the U.S., EU and UK, and submitting the product for approval in China. Strategic moves included licensing AGAMREE to Catalyst Pharmaceuticals in North America and focusing operations on Europe, culminating in AGAMREE's first global market launch in Germany in January 2024. Financially, Santhera reported a 2023 revenue of CHF 103.4 million and net income of CHF 54.8 million, driven by the Catalyst licensing deal. With CHF 30.4 million in cash reserves at year-end, and anticipated revenue from product sales, this is expected to support operations into 2025. Additional funding will be necessary to meet debt obligations (maturing convertible bonds) and support further market launches, aiming for cash breakeven by the first half of 2026. REVIEW OF PIPELINE AND BUSINESS PROGRESS 2023 key events and post-period updates
AGAMREE (vamorolone) approved across the U.S., EU and UK The EMA and the MHRA acknowledged clinically important safety benefits of AGAMREE with regards to maintaining normal bone metabolism, density and growth compared to standard of care corticosteroids, while demonstrating similar efficacy. In March 2024, the Center for Drug Evaluation (CDE) of China’s National Medical Products Administration (NMPA) accepted the NDA for vamorolone, granting priority review. Subject to a positive outcome, this could lead to approval by Q1-2025. North America license for AGAMREE granted to Catalyst Pharmaceuticals After closing of the transaction in July 2023, Santhera received an upfront payment of USD 90 million (USD 75 million in cash and USD 15 million equity investment). Upon U.S. FDA approval of AGAMREE in DMD on October 26, 2023, Santhera received an additional USD 36 million from Catalyst, of which Santhera paid contractually agreed third-party regulatory milestone obligations (USD 26 million). Furthermore, Catalyst may pay Santhera sales-based milestones of up to USD 105 million as well as up to low-teen percentage royalties and will assume corresponding third-party royalty obligations of Santhera on AGAMREE sales in all indications in NA. In March 2024, following the U.S. FDA approval on October 26, 2023, Catalyst announced that AGAMREE is now available by prescription and dispensed throughout the United States through a specialty pharmacy network. Santhera and Catalyst have made considerable progress to define the strategic framework of a joint clinical development program and shared funding of AGAMREE for global indications, in addition to DMD. First launch in Germany in early 2024—pre-commercialization measures advancing across Europe Santhera plans to make AGAMREE available to patients in additional key geographies in Europe (France, UK, Italy, Spain, Benelux and Switzerland), and is in the late stages of negotiations with distribution partners for commercialization in other European countries. Activities surrounding market access, stakeholder and key opinion leader engagement in the target countries progressed throughout the period under review. After Germany, the build-up of a core commercial organization is well underway in the UK, France, Italy and the Benelux countries. Full divestment of RAXONE/idebenone business to Chiesi Group Santhera retains contingent value for LHON in the U.S. and other indications worldwide. Santhera is eligible to participate in a potential marketing approval of RAXONE in LHON in the U.S. through variable payments in the single-digit percentage range on net sales or milestone payments of up to USD 10 million. In the event that Chiesi chooses to pursue idebenone in non-ophthalmological indications, Santhera would be eligible for an additional milestone payment of USD 10 million related to the approval in the US for the first non-ophthalmological indication and variable payments in the high single-digit percentage range on net sales. Lonodelestat development terminated and compound to be returned to Spexis Santhera’s next steps—outlook Within the next five years, the Company estimates it will achieve annual sales in excess of EUR 150 million in Europe in DMD alone (the first indication for AGAMREE) with additional revenue expected to be generated through sales milestones and royalties from its partners in the U.S and China. Beyond that, Santhera is seeking to widen geographic access to AGAMREE through additional distribution partnerships in yet uncovered regions. Together, Santhera and Catalyst aim at expanding AGAMREE into additional indications with a focus on rare pediatric diseases. Santhera has successfully reduced near-term liabilities and extended its cash reach into 2025, excluding maturing convertible bonds. Santhera continues to evaluate options for additional financing, to meet bond requirements and support market growth and pipeline development with AGAMREE, and will prioritize debt financing and monetization of royalties over equity options. The Company expects to start breaking even on a cash basis by the first half of 2026. PRELIMINARY UNAUDITED 2023 FINANCIAL RESULTS & FINANCING
2023 full-year revenue boosted by licensing income Cost of goods sold Operating expenses and result Development expenses amounted to CHF 18.7 million (2022: CHF 30.5 million). The decrease of 39% stems from lower third-party clinical and regulatory services which were largely related to the support of marketing authorization dossiers for AGAMREE in DMD with the authorities in the U.S., EU and UK up to approval. Marketing and sales expenses were CHF 9.8 million (2022: CHF 10.9 million). On a comparable basis, i.e. excluding the nonrecurring accrual of CHF 2.1 million in relation to the reimbursement dispute for RAXONE in France in the prior year, this represents a slight increase due to higher pre-commercialization activities for AGAMREE in the U.S. during the first half of the year prior to licensing and in Europe. General and administrative expenses amounted to CHF 21.2 million (2022: CHF 14.6 million), for which the increase year-on-year reflects the costs related to licensing activities and addition of personnel in key functions in view of market readiness preparations for AGAMREE in the U.S (prior to the Catalyst outlicensing) and Europe. The operating result amounted to an income of CHF 68.8 million (2022: loss of CHF -52.0 million). Financial income and expenses 2023 financial expenses rose by 36% to CHF 33.4 million (2022: CHF 24.6 million), primarily driven by higher net negative changes in fair value of financial instruments and in (un)realized foreign exchange losses. The largest expense item, interest and make-whole expenses remained steady year-on-year (2023: CHF -21.3 million vs 2022: CHF -20.1 million). In summary, this resulted in a net financial expense of CHF 14.0 million, a reduction of 25% on the previous year (2022: CHF 18.6 million). Cash balance and cash flows Net cash flow from operating activities amounted to CHF 47.6 million (2022: net cash outflow of CHF 29.8 million). Main contributors to the positive cash flow from operating activities were the out-licensing income reflected in net income before taxes and the total financial result, partially offset by a negative change in noncurrent provisions. Net cash flow used in investing activities was higher year-on-year and amounted to CHF 18.0 million (2022: CHF 3.9 million). This mainly consisted of regulatory-based milestone payments for AGAMREE from Santhera to its licensing partners (classified as intangible assets) of CHF -23.7 million (2022: CHF 3.9 million) which were partially offset by cash proceeds from the sale of financial assets. Net cash flow used in/from financing activities in 2023 was CHF -0.1 million (2022: CHF 14.0 million). This was the net result of proceeds from financing transactions (involving shares, warrants and exchangeable notes) totaling CHF 26.3 million which was offset by cash used for financing, above all the repayment of exchangeable notes in the amount of CHF 25.5 million. In summary, the net increase in cash and cash equivalents in 2023 amounted to CHF 29.0 million (2022: net decrease of CHF 19.9 million). Assets and liabilities Total liabilities decreased by CHF 58.3 million to CHF 49.2 million mainly due to debt repayments and liabilities transferred on the sale of idebenone. Shareholders’ equity Settlement reached on pricing/reimbursement for RAXONE in France – business sold to Chiesi Group On July 28, 2023, Santhera completed the full divestment of its RAXONE/idebenone business worldwide and for all indications to Chiesi Farmaceutici S.p.A., an international research focused healthcare group (Chiesi Group). The transaction replaced the license agreement between the two companies entered into in 2019. Under the terms of the agreement, Chiesi Group acquired the idebenone intangible asset, its associated inventory, and assumed the responsibility for the settlement agreed between Santhera and the French reimbursement authorities. The net gain on the sale of the disposal group in the amount of CHF 17.7 million has been recognized in the consolidated income statement for the year ended December 31, 2023. The net gain is mainly due to the derecognition of the noncurrent provision (CHF 24.8 million), which was partially offset by the loss on the derecognition of the idebenone intangible asset (CHF 6.6 million). The agreement simplified the RAXONE business significantly for both companies with Chiesi becoming the marketing authorization holder for RAXONE/idebenone in Europe and the global brand owner while enabling Santhera to focus on the launch of AGAMREE in Europe. Equity-linked financings and share capital Bond instruments. During 2023, Santhera reduced debt (convertible bonds and exchangeable notes) from a total amount of CHF 43.2 million (December 31, 2022) by CHF 22.3 million, and has currently convertible bonds outstanding in the carrying amount of CHF 20.9 million, maturing in August 2024. Of the senior unsecured convertible bonds (2021/24 Bonds), CHF 1.5 million were converted during the year 2023 and an aggregate amount of CHF 11.0 million was outstanding on December 31, 2023. For the 2021/24 Private Bonds, in February 2023, Santhera and Highbridge agreed on a new conversion price of CHF 5.00 for a CHF 5 million tranche and to CHF 10.00 for the remaining outstanding tranche. The nominal value of convertible bonds maturing August 2024 outstanding at December 31, 2023 total CHF 24.5 million, comprising CHF 13.6 million (Public 2021/24), CHF 7.0 million (Private 2021/24 conversion price CHF 10.00) and CHF 4.0 million (Private 2021/24 conversion price CHF 5.00) Share capital and treasury shares. In February 2023, Santhera completed the ordinary capital increase resolved by its shareholders on November 29, 2022, by issuing 40 million shares. Thereof, 3 million shares were delivered in the context of the Highbridge financing, and the remainder held in treasury. Additionally, during the period a further 0.5 million new shares were issued for financing transactions and share-based compensation. At the Annual General Meeting (AGM) held on June 27, 2023, the shareholders approved a reverse share split in the ratio of 10:1. The reverse share split was completed on July 3, 2023. Additionally, shareholders also gave their consent to the creation of a capital range which authorizes the Board to increase or reduce the share capital within a certain range and over a period of up to five years. Furthermore, shareholders endorsed the replacement of the existing conditional capital for financing purposes and for employee participation by a corresponding new, increased conditional apital. As of December 31, 2023, issued share capital consisted of 12,620,376 shares with a total nominal value of CHF 1,262,037 (nominal value CHF 0.10 per share), and the Company held 1,305,167 treasury shares with total nominal value of CHF 130,517 for future equity-based financings. Amendments of Highbridge facility to satisfy near-term cash requirements The Company had outstanding exchangeable instruments at nominal value as of June 30, 2023, of CHF 25.5 million, all amounts outstanding under exchangeable notes were settled during July 2023 post the closing of U.S. license transaction. Funding prospects Santhera keeps under review the need for further financing to support market growth, line extension development for AGAMREE and securing operations. The Company is evaluating potential royalty and debt financings and in addition has treasury shares, conditional and authorized capitals available for future placement, subject to market conditions. Q1-2024 TRADING UPDATE Revenue in the quarter to March 31, 2024, amounted to CHF 4.7 million and primarily includes initial product sales of AGAMREE in Germany and Austria (CHF 2.1 million) as well as milestone payments related to the regulatory progress in China and supply of product to partners (CHF 2.6 million). The first market launch of AGAMREE occurred on January 15 in Germany, where around 3,000 patients are affected by DMD. Furthermore, since February 15, AGAMREE has also become available in Austria. The reception has been very positive, evidenced by strong demand and proactive inquiries from patients and caretakers. Within only a few months of availability, AGAMREE has been prescribed to around 150 patients in Germany and Austria. Cash and cash equivalents as of March 31, 2024, totaled CHF 26.8 million. DECISION OF SIX EXCHANGE REGULATION SIX Exchange Regulation has permitted Santhera to publish its 2023 Annual Report by May 31, 2024, at the latest. Santhera is in the process of completing the 2023 Annual Report and the postponement enables Santhera and its auditors to complete the preparation and audit of the financial statements in the light of the material events outside the ordinary course of business during and after the end of the reporting period. As required by SIX Exchange Regulation, Santhera hereby reprints the following extract of the decision of SIX Exchange Regulation (translation from the German original): The exemption from the obligations for maintaining listing and thus the deferral of the publication of the annual report for the year 2023 as well as the filing of this report with SIX Exchange Regulation Ltd by Friday, May 31, 2024, at the latest is hereby approved subject to the following provision (lit. a) and conditions (lit. b): a. SIX Exchange Regulation Ltd reserves the right to potentially suspend trading in the securities of Santhera Pharmaceuticals Holding Ltd for a certain period of time if it does not publish its annual report for the year 2023 in accordance with the provisions on ad hoc publicity (art. 53 Listing Rules in conjunction with the Directive on Ad hoc Publicity) and submit it to SIX Exchange Regulation Ltd by 11:59 p.m. on Friday, May 31, 2024, at the latest. b. Santhera has to publish a media release regarding the present decision in accordance with the provisions on ad hoc publicity (art. 53 Listing Rules in conjunction with the Directive on Ad hoc Publicity) by 7:30 a.m. on Tuesday, April 30, 2024 at the latest. Such media release
Full-year Financial Information The preliminary unaudited figures presented in this press release are subject to change. The Company plans to publish its audited 2023 Annual Report in May 2024. Consolidated Income Statement
Consolidated Balance Sheet
Share Capital
1 2022 numbers are adjusted for the reverse share split in the ratio of 10:1, completed on July 3, 2023 Conference Call Switzerland/Europe: +41 58 310 50 00 A replay will be accessible at https://www.santhera.com/ad-hoc-news from about two hours after the call has ended. References Publications and applicable drug labeling to which this press release makes reference to: About Santhera AGAMREE® is a trademark of Santhera Pharmaceuticals. For further information please contact: Disclaimer / Forward-looking statements # # # Attachment |