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High-flying Santhera gets $15M in share sale


By Cormac Sheridan
Staff Writer

DUBLIN – Santhera Pharmaceuticals AG, the hottest turnaround story in European biotech this year, raised CHF13.4 million (US$14.8 million) from a sale of treasury shares, as it prepares for a crunch meeting with the FDA to map out a regulatory approval pathway for its Duchenne muscular dystrophy (DMD) drug, idebenone (Catena/Raxone).

"We have enough cash now to pursue regulatory filings and market entry in Europe, in certain countries," Thomas Meier, CEO of Liestal, Switzerland-based Santhera, told BioWorld Today. The company reported CHF5.3 million in cash at the end of the first quarter.

Product revenues from sales of idebenone in France, where the drug has a temporary approval for treating patients with Leber's hereditary optic neuropathy (LHON), a mitochondrially inherited condition that causes loss of vision, help to offset the company's cash burn. The company will disclose the extent of those sales when it reports its half-year results on Sept. 9.

Santhera's stock has increased almost 20-fold this year. Most of the rise has come in the past three months, after idebenone attained the primary endpoint in a phase III trial in 65 DMD patients. (See BioWorld Today, May 14, 2014.)

"The positive phase III trial in Duchenne muscular dystrophy is now really getting on people's radar," Meier said. "In the last few weeks, four U.S. specialist health care funds have bought into the stock, and there are more in the works." Those funds include ATP Early Harvest Fund LLC, Consonance Capital Management LP, Pura Vida Investments LLC and RTW Investments LLC, all of New York. According to filings at the Swiss Stock Exchange, collectively they now hold about 20 percent of the company, which is currently valued at more than CHF330 million.

The dramatic turnaround, which followed a number of earlier regulatory and partnering setbacks, has altered the company's prospects considerably and has eliminated the need to seek a buyer. (See BioWorld Today, March 25, 2013.)

"We should hold our horses for the time being and execute on the next steps." Meier said. It resubmitted a marketing authorization application for idebenone in LHON to the EMA in May, having withdrawn an earlier version and added more clinical data in the meantime. A decision on the dossier should arrive about 12 months later. If it's positive, the company plans to seek a line extension for the drug in DMD, a process that would take about six months. If the LHON review is negative, Santhera will be ready to file a full dossier for DMD, Meier said. It also plans to file for approval in LHON in the U.S.

A recent report from Valuationlab AG – which Santhera commissioned – forecast peak sales of CHF560 million for idebenone in DMD and another CHF70 million in LHON. The compound is also undergoing a phase II trial at the NIH in primary progressive multiple sclerosis.

Idebenone, a short-chain quinone, is strongly antioxidant and also acts a substrate for two NAD(P)H:quinone oxidoreductase (NQO) enzymes, NQO1 and NQO2, which are reducing enzymes that prevent the formation of toxic radicals. According to a study, titled "NQO1-Dependent Redox Cycling of Idebenone: Effects on Cellular Redox Potential and Energy Levels," which appeared in the March 2011 issue of PLoS One, NQO1-reduced idebenone can donate electrons into the mitochondrial respiratory chain and partially restore cellular adenosine triphosphate (ATP) levels when the function of mitochondrial complex I of the mitochondrion's electron transport machinery is impaired.

Santhera is keeping an open mind for now about how it will commercialize its pipeline assets, should they gain approval. It aims to participate in sales and marketing in some European countries, but it has not decided on its U.S. strategy at this point.

The company sold 200,000 shares, priced at CHF66.85 per share, a 4.3 percent premium to its closing share price on Thursday of CHF64.10. The stock (ZURICH:SANN) peaked at CHF69.15 shortly after trading commenced Friday before closing at CHF67.50, up 5 percent.