Press Release: Santhera Announces Preliminary Unaudited 2023 Annual Results and Provides Corporate Update Ahead of Full Report Publication in May

Ad hoc announcement pursuant to Art. 53 LR

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

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-- 2023 financial key figures:        Revenue from contracts with customers 
of CHF 103.4 million (2022: CHF 7.5 million)        Net result of 
CHF 54.8 million (2022: CHF -71.1 million)         Cash flow from 

operating activities of CHF 47.6 million (2022: CHF -29.8 million)

-- Regulatory approvals in key territories -- AGAMREE(R) (vamorolone)
approved for Duchenne muscular dystrophy (DMD) treatment in the U.S., EU
and UK, showcasing safety benefits over traditional corticosteroids

-- Strategic partnership -- licensing agreement signed with Catalyst
Pharmaceuticals Inc. (NASDAQ: CPRX) for North America, focusing on
commercialization of AGAMREE in DMD and exploring joint development of
indications beyond DMD

-- First launches -- first launch in Germany, followed by U.S. launch by
Catalyst, plans for gradual roll-out in larger European countries by
Santhera and partnering for other territories

-- Cash reach into 2025 -- significant financial gains from Catalyst deal,
divestment of RAXONE business, and product sales, overall strengthening
the balance sheet and securing financing of operations (excluding
maturing convertible bonds)

-- First quarter 2024 -- positive uptake with approx. 150 patients treated
with AGAMREE in Germany and Austria; revenue of CHF 4.7 million, cash on
March 31, 2024 of CHF 26.8 million

-- Outlook -- expected peak annual sales over EUR 150 million in Europe for
AGAMREE in DMD alone, with additional revenue from partnerships, aiming
for financial breakeven by mid-2026
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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

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-- AGAMREE approved in the U.S., EU and the UK for the treatment of DMD

-- European regulators acknowledged safety benefits of AGAMREE with regards
to preserving bone health and maintaining growth compared to standard of
care corticosteroids

-- China's regulatory authority accepted and granted priority review for
vamorolone NDA in DMD

-- Exclusive North America license for AGAMREE granted to Catalyst in deal
valued at up to USD 231 Million plus royalties

-- AGAMREE launched in Germany as first market for the treatment of DMD,
with encouraging early uptake

-- Santhera's partner Catalyst launched AGAMREE in the U.S. in Q1-2024

-- Divestment of RAXONE/idebenone business to Chiesi Group completed

-- Focusing on AGAMREE and following portfolio review, lonodelestat license
terminated by Santhera and asset to be returned to Spexis
===
AGAMREE (vamorolone) approved across the U.S., EU and UK

AGAMREE was approved by the U.S. FDA (on October 26, 2023), the European Medicines Agency (EMA) in the EU (on December 18, 2023) and the Medicines and Healthcare products regulatory agency (MHRA) in the UK (on January 11, 2024). Thereby, it became the first DMD treatment approved across these three territories. In the EU, AGAMREE is the first and only approved medication for treating all patients from age 4 years with DMD.

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

In June 2023, Santhera announced the signing of an exclusive license and collaboration agreement for AGAMREE in North America (NA) with Catalyst, a commercial-stage biopharmaceutical company focused on novel medicines for patients living with rare diseases. The agreement covers the development and commercialization of AGAMREE in DMD and rights to all potential future indications in NA. Total consideration to Santhera is up to USD 231 million (including equity investment) plus royalty payments from product sales.

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

On January 15, 2024, Santhera launched AGAMREE as a 40 mg/ml oral suspension for the treatment of DMD in Germany as the first market worldwide. Since February 2024, AGAMREE is also available in Austria. This significant milestone represented Santhera's commitment to fill a high unmet medical need by providing a safe and effective treatment for DMD patients. For Santhera, this launch signified a leap forward as the Company entered the commercial stage in the DMD space.

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

In a transaction closed on July 28, 2023, Chiesi Group acquired all assets and certain liabilities related to idebenone in all indications worldwide. This included RAXONE in Leber hereditary optic neuropathy (LHON), for which Chiesi already held exclusive license rights globally since 2019, except for North America and France. Under the terms of the agreement, Chiesi Group assumed the responsibility for the settlement agreed between Santhera and the French reimbursement authorities relating to RAXONE in LHON amounting to EUR 25.3 million. The transaction significantly reduced debt and strengthened Santhera's balance sheet. Furthermore, the cessation of RAXONE-related activities allowed Santhera to streamline business processes, reducing operating costs and freeing up resources for AGAMREE and its European launch.

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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 priority over the recent past was on advancing AGAMREE through the regulatory process towards approval and on preparations for market entry. As previously communicated, Santhera had paused the development of lonodelestat, stating that continuation of the program was dependent on additional funding and partnering. As part of the Company's portfolio review and the focus on AGAMREE, Santhera has terminated the development activities and license agreement relating to lonodelestat and will return the asset to Spexis. This has no further financial impact on the 2023 accounts, as an impairment was already recognized under development costs in the 2022 consolidated income statement.

Santhera's next steps--outlook

With the successful launch of AGAMREE in Germany, the company is set to introduce the product in the UK later in 2024, followed by France, Italy and Spain in early 2025, alongside launches in the Benelux region. Concurrently, Santhera has applied for the France early access program and is actively engaged in price negotiations, anticipating the commencement of launches in the UK post the completion of pricing reviews by the National Institute for Health and Care Excellence (NICE) in summer 2024.

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

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-- Revenue from contracts with customers of CHF 103.4 million (2022: CHF 7.5
million)

-- Operating result of CHF 68.8 million (2022: CHF -52.0 million)

-- Net result of CHF 54.8 million (2022: CHF -71.1 million)

-- Cash flow from operating activities of CHF 47.6 million (2022: CHF -29.8
million)

-- Cash and cash equivalents of CHF 30.4 million (Dec 31, 2023)

-- Cash runway into 2025, excluding convertible bond maturity in August 2024

-- 2024 update: revenue CHF 4.7 million (Q1 2024); liquid funds of CHF 26.8
million (Mar 31, 2024)
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2023 full-year revenue boosted by licensing income

In 2023, Santhera reported total revenue from contracts with customers of CHF 103.4 million (2022: CHF 7.5 million). Net sales amounted to CHF 0.8 million and constituted resumed RAXONE direct product sales in France (2022: CHF -5.6 million, net of CHF 0.4 million product sales and CHF 6.0 million non-recurring adjustment associated with the now settled reimbursement dispute for RAXONE in France). Revenue from out-licensing transactions in 2023 increased to CHF 99.9 million (2022: 11.2 million) mainly due to income from the exclusive licensing agreements with Catalyst (CHF 98.0 million) and Sperogenix Therapeutics (CHF 1.9 million) for the granted license rights to AGAMREE in North America and China, respectively. Net sales to licensing partners in 2023 amounted to CHF 2.7 million (2022: CHF 1.9 million) and were related to RAXONE sales in Europe.

Cost of goods sold

Cost of goods sold amounted to CHF 3.2 million and was slightly below the prior year level (2022: CHF 3.6 million), attributable to a lower supply of RAXONE and lower amortization of intangible assets.

Operating expenses and result

Operating expenses of CHF 32.0 million (2022: CHF 56.1 million) were 43% lower year-on-year, primarily due to lower development expenses and the net gain on the sale of the RAXONE disposal group, partially offset by higher general and administrative expenses.

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

The financial income in 2023 amounted to CHF 19.4 million (2022: CHF 6.0 million). The increase was predominantly related to net positive changes in fair value of financial instruments and in (un)realized foreign exchange gains.

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).

Net result

The net result in 2023 was an income of CHF 54.8 million, compared to a net loss of CHF 71.1 million in the year 2022.

Cash balance and cash flows

As of December 31, 2023, the Company had cash and cash equivalents of CHF 30.4 million compared to CHF 1.4 million as of December 31, 2022.

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

Intangible assets increased by CHF 14.7 million to CHF 74.0 million reflecting the milestones paid of CHF 23.4 million for approval of AGAMREE in the U.S offset by the sale of idebenone and amortization.

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

Total consolidated equity as of December 31, 2023, amounted to CHF 60.5 million compared to a total equity deficit of CHF -43.7 million as of December 31, 2022, as a result of the net gain for the period as well as the issue of equity during the year.

Settlement reached on pricing/reimbursement for RAXONE in France -- business sold to Chiesi Group

In February 2023, Santhera concluded the negotiations with the Comité économique des produits de santé (CEPS), securing a final pricing reimbursement, and resumed sales of RAXONE in France from April 2023. Since the new reference price was lower than the price applied under the temporary pricing scheme since launch in 2015, this entailed a staggered reimbursement obligation due 2024/25. For this purpose, Santhera had gradually accrued a total amount of CHF 24.8 million (as of December 31, 2022) in noncurrent provisions, recognized partially against net sales and as marketing and sales expenses.

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