February 26, 2010: Santhera Reports Strong 2009 Revenues of CHF 22.3m and Is Financed Beyond 2011

* { font-family: Arial, Verdana, Helvetica; font-size: 13px;} td { padding: 3px; } }

Liestal, Switzerland, February 26, 2010 - Santhera Pharmaceuticals (SIX: SANN) announced today the financial results for 2009 and updated on the development pipeline. The specialty pharmaceutical company recorded total revenues of CHF 22.3 million consisting of CHF 1.6 million net product sales with Catena® in Friedreich's Ataxia and CHF 20.7 million revenues from its partners Takeda and Biovail. The second half of 2009 was cash flow neutral, resulting in a cash position of CHF 53.3 million by year-end. Full year net cash burn was significantly reduced by 31% to CHF 21.7 million. Based on the financial planning and the current cash position, Santhera is funded beyond 2011. 

Main achievements in 2009 include

• Commercial success with Catena®: In Canada prescriptions continue to grow, in Europe first Named Patient Program sales in collaboration with Takeda

• Phase II development of fipamezole concluded and first partnership established: Following reporting of positive FJORD data, North American rights successfully licensed to Biovail for upfront payments of USD 12 million

• Milestone payment of EUR 5 million received from Takeda: DELOS Phase III study in Duchenne Muscular Dystrophy initiated in Europe and in the United States

• Phase III program in Friedreich's Ataxia near completion: MICONOS data expected in 1H 2010, subsequent filings in the United States and in Europe planned for 2H 2010

• Phase II study in Leber's Hereditary Optic Neuropathy near completion: RHODOS data available in 1H 2010

• Restructuring of drug discovery completed: Resources aligned to focus on key development and marketing activities and to safeguard strategic flexibility

 Key financial figures 2009

(IFRS, consolidated, in CHF thousands)	2009	2008	Changes
Total equity	83,512	104,474	-20%
Cash and cash equivalents	53,320	75,006	-29%
Net increase in cash and cash equivalents	-21,686	-31,612	+31%
Total revenues -         whereof net sales -         whereof revenue from partnering	22,339 1,643 20,696	48 48 0	nm
Operating expenses	-48,544	-45,642	+6%
Operating result	-25,895	-45,591	+43%
Net loss	-25,923	-44,656	+42%

Commenting on the year-end results, Klaus Schollmeier, Chief Executive Officer of Santhera, said: "Our commercial success in Canada confirms the large potential of Catena® in Friedreich's Ataxia and in other diseases. In Canada, almost half of the expected patient population is already on prescription. As we approach the end of our development work for Catena®/Sovrima® in Fried­reich's Ataxia, we prepare for the MICONOS data which are due within the next few months." He continued: "Last year, we were also able to position fipamezole as a second pillar in our drug development portfolio. We successfully concluded Phase II development and established a strong partnership with Biovail in the United Sates and Canada. The program has already produced and will continue to generate significant income over the next years from Biovail and from an additional partner seeking ex-North American rights. We anticipate signing such a deal later this year. The success with fipamezole is a significant milestone in the development of Santhera as it now allows us to build our Company on revenue streams from two late-stage product franchises."

Barbara Heller, Chief Financial Officer of Santhera, commented: "In 2009, Santhera showed a strong corporate and financial performance. We generated over CHF 22 million of total revenues and achieved the first ever operationally cash break-even half year in Santhera's history. Our net cash burn ended below our earlier guidance and was considerably reduced compared to the previous year primarily due to slightly higher Catena® sales, income from our partners as well as rigid cost controls. Based on the expected revenues from product sales and income from existing and new partnerships, we expect the monthly net burn to continue on the same levels as in 2009. Based on our current planning assumptions, Santhera is financed beyond 2011."

CHF 53.3 million cash reserves at year-end 2009 secure funding of operations beyond 2011
As of December 31, 2009, Santhera had cash and cash equivalents of CHF 53.3 million. Net cash burn in 2009 was CHF 21.7 million compared to CHF 31.6 million in the preceding year. Total equity at year-end 2009 amounted to CHF 83.5 million (2008: CHF 104.5 million). In 2010, Santhera continues to allocate funds primarily to the development programs of Catena®/Sovrima®, marketing and business development activities.

In October, Santhera acquired Oy Juvantia Pharma Ltd of Turku, Finland, thereby securing all rights and obligations to fipamezole. In connection with this all-share transaction, the Company issued 105,973 previously reserved shares from its authorized share capital to the investors of Juvantia. During the year 2009, 37,347 new shares were created through the exercise of employee stock options. As of December 31, 2009, the share capital of Santhera Pharmaceutical Holding AG consisted of 3,654,219 registered shares with a nominal value of CHF 1 each. Santhera remains to be fully equity-financed.

CHF 22.3 million revenues from product sales and partners, cash flow neutral 2H 2009
In 2009, Santhera generated total revenues of CHF 22.3 million (2008: CHF 0.05 million) consisting of net sales of CHF 1.6 million (2008: CHF 0.05 million) with Catena® in Friedreich's Ataxia as well as CHF 20.7 million (2008: CHF 0) income from partnered development programs including EUR 5 million milestone payment from Takeda for the initiation of the Phase III study in Duchenne Muscular Dystrophy and USD 12 million upfront and first milestone payments from Biovail for US and Canadian rights to fipamezole. Gross profit amounted to CHF 22.1 million (2008: CHF 0.03 million).

Operating expenses increased by 6% to CHF 48.5 million (2008: CHF 45.6 million). The expenses in Research and Development (R&D) remained unchanged at CHF 31.5 million reflecting higher clinical costs associated with the Company's expanded clinical programs offset by the savings recognized as a result of the restructuring of research operations that was announced in July 2009. R&D represented 65% of total operating expenses. Marketing and Sales (M&S) slightly increased to CHF 3.8 million (2008: CHF 3.5 million) and accounted for 8% of total operating expenses. General and administrative expenses (G&A) amounted to CHF 13.2 million (2008: CHF 10.6 million) or 27% of total operating expenses and contained expenses for business development activities as well as restructuring costs.

In July 2009, Santhera announced plans to focus its resources and to discontinue early stage drug discovery activities resulting in a reduction in headcount by 26 employees. Total restructuring costs amounted to CHF 0.8 million, whereof CHF 0.6 million were noncash-relevant expenses.

For the year 2009, Santhera reported a considerably lower net loss of CHF 25.9 million or an improvement of 42% compared to the previous year (CHF 44.7 million). 

Cash runway secured beyond 2011
In line with its strategy, Santhera continues to focus all financial and human resources on its key value drivers. For 2010, the Company expects its average monthly net cash burn to stay on current levels. Additional income is anticipated from partnering of fipamezole outside North America. According to its current financial planning, Santhera is well funded beyond 2011.

In the upcoming months, Santhera will report data from three clinical studies, most notably the MICONOS Phase III study with Catena®/Sovrima® in Friedreich's Ataxia. Current planning foresees subsequent filings for marketing approvals with the US Food and Drug Administration (FDA) and the European Medicines Agency (EMA, formerly EMEA) in the second half of 2010. Additionally in the first half of 2010, data from the RHODOS Phase II study in Leber's Hereditary Optic Neuropathy will become available, which could be the basis for regulatory filings. Finally, the proof-of-concept Phase IIa MELTIMI study in MELAS syndrome is expected to be completed with top-line data to be reported in the second half of 2010.

Update on Products and Pipeline

Catena® in Friedreich's Ataxia: Sales in Canada and under Named Patient Program (NPP)
Sales in Canada increased linearly throughout 2009 exceeding expectations. Since its launch in October 2008, Catena® has been prescribed to almost 50% of the expected patient population of 300 individuals in Canada. The large majority of private insurance carriers in Canada provide coverage for Catena®. Publicly insured patients often are not able to secure coverage for a new drug in the first year of approval, particularly for a drug approved under conditions such as Catena®. However, in the Province of Québéc, where the majority of Friedreich's Ataxia patients live, a number of publicly insured patients have received reimbursement via a special exception process. The average annual ex-factory price achieved in Canada currently amounts to approximately CAD 45,000. The commercial success in Canada suggests a larger global market potential for Catena® in Friedreich's Ataxia than initially expected.

In August 2009, Santhera and Takeda signed an agreement under which Catena® can be made available to European patients under a NPP. This program allows healthcare professionals to prescribe Catena® to individual patients in countries where the drug has no approval yet, thereby bridging the time until a full registration is received.

Catena®/Sovrima® in Friedreich's Ataxia - MICONOS Phase III study
The last patient recently completed the study, and results are due in the next few months. In meetings with the FDA and EMA, Santhera extensively discussed the insights from the Phase II NICOSIA and Phase III IONIA studies and, derived thereof, the intended analysis plan for the MICONOS data. As a result of these discussions, a responder analysis was introduced as key secondary endpoint, which can be used as primary analysis for ICARS, the study's primary efficacy variable. Another key aspect of the data analysis will be a combination of the mid- and high-dose groups for comparison to the combined placebo and low-dose group. Furthermore, Santhera intends to submit a meta-analysis for all children enrolled in the Company's three clinical Phase II and Phase III studies. The final statistical analysis plan for the MICONOS study incorporates learnings from the previous NICOSIA and IONIA studies and includes a number of pre-specified subgroup analyses. Santhera intends to file a New Drug Application for Catena® in the United States and a Marketing Authorization Application for Sovrima® (Takeda's brand name for the drug) in the European Union in the second half of 2010.

Catena®/Sovrima® in Duchenne Muscular Dystrophy - DELOS Phase III study
Since the start of the study in Belgium in late July 2009, six additional study centers in Europe and one in the United States have been initiated. The primary endpoint of this 12-month, double-blind, placebo-controlled study is the change in respiratory function measured by peak expiratory flow. Additional respiratory parameters, muscle strength and motor function tests as well as quality of life assessments are secondary efficacy variables. In the first stage of the study's group sequential design only patients not using glucocorticoid co-medication will be enrolled. The study protocol foresees a first interim analysis testing for futility after 40 patients have been treated for six months. Such interim analysis is expected towards the end of 2010 and was encouraged by both the EMA and the FDA. Furthermore, both regulatory authorities agreed that a single pivotal study could suffice for approval.

Catena® in Leber's Hereditary Optic Neuropathy - RHODOS Phase II study
The study will be closed in the forthcoming months and top-line data are expected in the first half of 2010. Given the high unmet medical need for this devastating disease, positive results from the RHODOS study could form the basis for an early filing for marketing authorization in the European Union. Santhera is in the process of opening an IND in the United States to discuss the regulatory strategy with the FDA once the data become available.

Catena® in MELAS syndrome - MELTIMI Phase IIa study
The Columbia University of New York City and Santhera are collaborating in a double-blind Phase IIa study investigating the efficacy of two doses of Catena® versus placebo over a treatment period of 28 days on changes of a disease-relevant biomarker. Recruitment for this proof-of-concept study is well advanced and top-line results are expected in the second half of 2010. The program already has been granted orphan drug designation in the United States.

Catena® in Primary Progressive Multiple Sclerosis - IPPoMS Phase I/II study
In summer 2009, the US National Institute of Neurological Disorders and Stroke (NINDS) and Santhera started a long-term collaborative Phase I/II study. Patients are currently recruited into the one-year observational period and the first individuals are expected to be rolled over and randomized into the two-year, placebo-controlled interventional part of the study in summer 2010.

Fipamezole in Dyskinesia in Parkinson's Disease - FJORD Phase IIb results and partnering
The results of the FJORD study demonstrate the drug's efficacy in reducing levodopa-induced dys­kinesia in Parkinson's patients. Importantly, this beneficial effect was not associated with a worsening of Parkinsonian features of the disease and the data additionally suggest that fipamezole reduces "off time" and improves cognitive function. Furthermore, the reduction in dyskinesia was found to be strongly correlated with the investigator's clinical global impression of improvement.

On the back of the positive FJORD data, in August 2009, Biovail acquired the US and Canadian rights to develop and commercialize the drug. Under the terms of the agreement Santhera received an upfront and a first milestone payment of USD 12 million and is entitled to up to USD 200 million in development and commercialization milestones plus royalties on future sales of 8 to 15%. Further development in North America is overseen by a Joint Steering Committee and preparation for the Phase III program is well underway.

Omigapil in Congenital Muscular Dystrophies
Santhera recently was awarded a CHF 1 million grant from the French patient organization Association Française contre les Myopathies. The grant supports the remaining nonclinical studies needed before the compound can enter clinical development in pediatric patients.

Melanocortin-4 receptor (MC-4R) antagonists in Cancer Cachexia
The preclinical activity spectrum of Santhera's latest generation of MC-4R antagonists indicates potential effects in all key aspects of cachexia. The compounds increase food intake and inhibit the development of cachexia in a disease-relevant tumor model. The preclinical candidate exhibits additional activities which could expand the therapeutic profile in cachexia patients and beyond.

2009 Financial Information
The complete financial statements of Santhera and the Company's report on corporate governance are available on the Company's Web site www.santhera.com.

Condensed Income Statements

(IFRS, consolidated, in CHF thousands)	2009	2008
Net sales	1,643	48
Other revenue	20,696	0
Total revenue	22,339	48
Gross profit	22,095	25
R&D	-31,536	-31,467
whereof noncash-relevant share-based payments	-600	-401
M&S	-3,752	-3,484
whereof noncash-relevant share-based payments	-350	-261
G&A	-13,206	-10,624
whereof noncash-relevant share-based payments	-880	-1,018
Other operating expenses	-50	-67
Operating expenses	-48,544	-45,642
whereof noncash-relevant share-based payments	-1,830	-1,680
Operating result	-25,895	-45,591
Financial result	39	814
Result before taxes	-25,856	-44,777
Income taxes	-67	121
Net loss	-25,923	-44,656
Basic and diluted loss per share (in CHF)	-7.31	-14.11

 Condensed Balance Sheets

(IFRS, consolidated, in CHF thousands)	December 31, 2009	December 31, 2008
Cash and cash equivalents	53,320	75,006
Noncurrent assets	36,824	31,641
Other current assets	4,557	6,300
Total assets	94,701	112,947
Equity	83,512	104,474
Noncurrent liabilities	2,654	263
Current liabilities	8,535	8,210
Total equity and liabilities	94,701	112,947

 

Condensed Cash Flow Statements

(IFRS, consolidated, in CHF thousands)	2009	2008
Gross operating/investing cash flow	-21,742	-46,484
Cash and cash equivalents at January 1	75,006	106,618
Cash and cash equivalents at December 31	53,320	75,006
Net change in cash and cash equivalents	-21,686	-31,612

 Share Capital

	December 31, 2009	December 31, 2008
Number of shares issued with a par value of CHF 1	3,654,219	3,513,899
Conditional capital for stock options	650,515	684,862
Conditional capital for convertible rights	490,182	490,182
Authorized capital	323,945	429,918

  Corporate Calendar 2010

Monday, April 26	Annual Shareholders' Meeting, Basel
Friday, September	Interim Report first half 2010

  Webcast/Teleconference

 * * *

About Santhera
Santhera Pharmaceuticals (SIX: SANN) is a Swiss specialty pharmaceutical company focused on the development and commercialization of innovative pharmaceutical products for the treatment of severe neuromuscular diseases, an area of high unmet medical need which includes many orphan indications with no current therapy. Santhera's first product, Catena® to treat Friedreich's Ataxia, is marketed in Canada and in a well-advanced Phase III development program. The drug is also investigated in a Phase III study in Duchenne Muscular Dystrophy and in three additional indications in proof-of-concept trials. Commercial rights in Europe for Friedreich's Ataxia and Duchenne Muscular Dystrophy are licensed to Takeda Pharmaceutical (brand name Sovrima®). A Phase IIb trial with Santhera's second compound fipamezole recently showed positive results in reducing levodopa-induced Dyskinesia in Parkinson's Disease. Phase III development and commercialization in the United States and Canada are partnered to Biovail. For further information about Santhera and its businesses, please visit the Company's Web site www.santhera.com.

Catena® is a trademark of Santhera Pharmaceuticals, Sovrima® is a trademark of Takeda Pharmaceutical.


For further information, contact
Klaus Schollmeier, Chief Executive Officer
Phone: +41 (0)61 906 89 52
klaus.schollmeier@santhera.com

Barbara Heller, Chief Financial Officer
Phone: +41 (0)61 906 89 54
barbara.heller@santhera.com

Thomas Staffelbach, Head of Public & Investor Relations
Phone: +41 (0)61 906 89 47
thomas.staffelbach@santhera.com


Disclaimer/forward-looking statements
This communication does not constitute an offer or invitation to subscribe for or purchase any securities of Santhera Pharmaceuticals Holding AG. This publication may contain certain forward-looking statements concerning the Company and its business. Such statements involve certain risks, uncertainties and other factors which could cause the actual results, financial condition, performance or achievements of the Company to be materially different from those expressed or implied by such statements. Readers should therefore not place undue reliance on these statements, particularly not in connection with any contract or investment decision. The Company disclaims any obligation to update these forward-looking statements.