By the end of March 2021, Santhera completed an organizational restructuring which reduced costs and prioritized the Company's resources for vamorolone as a consequence of the termination of the Puldysa(R) program in late 2020. The result is a lower cost base and streamlined organization, focused on bringing vamorolone to patients. In doing so, the core team will leverage its know-how in the DMD space, regulatory experience with the EMA and FDA, strong relationships with key clinical experts and the patient community as well as its proven track record of successfully commercializing a rare disease product.

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

Given the resource limitations, and in parallel to the alignment of its organizational structure, Santhera has conducted a pipeline review and prioritization. Going forward, the Company will focus on its lead clinical-stage projects vamorolone in DMD and lonodelestat in CF and has decided to abandon the further development of omigapil. In parallel, Santhera is proactively pursuing collaborations with partners to assess and exploit the potential of both clinical stage compounds in other disease areas, beyond DMD and CF, as well as for its undertakings in gene therapy for congenital muscular dystrophies (CMD).

Capital restructuring and share capital increases implemented to enable adequate funding to execute strategy

In the first half-year 2021, the Company implemented various measures to strengthen the capital structure of Santhera and to secure sufficient flexibility to continue operations and advance the pipeline as anticipated.

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 


   -- Cash and cash equivalents of CHF 8.0 million 
 
   -- Net revenue CHF 4.5 million (H1-2020: CHF 7.8 million) 
 
   -- Net result for period of CHF -20.5 million (H1-2020: CHF -31.8 million)

Financial liquidity as of June 30, 2021

As of June 30, 2021, the Company had cash and cash equivalents of CHF 8.0 million compared to CHF 12.4 million as of December 31, 2020. The decrease was primarily due to support of ongoing development and completion of organizational restructuring activities.

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

For the six months ended June 30, 2021, the Company recorded a net loss of CHF 20.5 million, or CHF 0.92 per share, compared to a net loss of CHF 31.8 million or CHF 2.78 per share for the six months ended June 30, 2020.

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.

Half-year Report

The Santhera Half-year Report 2021 is available for download on the Company's website at www.santhera.com/investors-and-media/investor-toolbox/financial-reports.

2021 Half-year Financial Information

Santhera's 2021 Half-year Report see www.santhera.com/investors-and-media/investor-toolbox/financial-reports. 


 
Condensed consolidated income statement 
 (reviewed, IFRS, for half-year ended June 
 30, in CHF thousands)                       1H-2021  1H-2020 
                                             -------  ------- 
Net sales                                      2,853    6,133 
Net sales to licensing partner                 1,639    1,642 
Revenue from contracts with customers          4,492    7,775 
                                             -------  ------- 
Cost of goods sold 
 (of which amortization intangible assets: 
 1H-2021 -1,519 / 1H-2020 -1,519)             -2,031   -2,114 
-------------------------------------------  -------  ------- 
Development                                  -13,592  -17,688 
Marketing and sales                           -2,008   -6,766 
General and administrative                    -6,307   -7,209 
Operating expenses                           -21,938  -31,911 
                                             -------  ------- 
Operating result                             -19,477  -25,893 
-------------------------------------------  -------  ------- 
Financial result                                -389   -5,573 
Income taxes                                    -653     -361 
Net result                                   -20,519  -31,827 
                                             -------  ------- 
Basic and diluted loss per share (in CHF)      -0.92    -2.78 
-------------------------------------------  -------  ------- 
 
 
Condensed consolidated balance sheet   June 30, 2021  Dec 31, 2020 
 (IFRS, in CHF thousands)                (reviewed)     (audited) 
                                       -------------  ------------ 
Cash and cash equivalents                      7,991        12,411 
Other current assets                           3,659         5,312 
Noncurrent assets                             68,567        70,964 
Total assets                                  80,217        88,687

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