Santhera Pharmaceuticals (SIX: SANN) has recently closed its exclusive licensing of vamorolone in North America to Catalyst Pharmaceuticals, Inc. (NASDAQ: CPRX), resulting in a major financial boost that will extend its cash reach well into 2025.
With the income from ongoing operations and this agreement, Santhera is now able to launch vamorolone in Europe and repay its debt to Highbridge Capital. Ultimately, this will strengthen Santhera’s financial situation and balance sheet.
Santhera has granted Catalyst commercialization rights for vamorolone in North America (NA) for Duchenne muscular dystrophy (DMD) and all potential future indications. For this privilege, Catalyst will pay Santhera a total consideration of up to 231 million USD, as well as royalties based on product sales.
In a landmark move to bring vamorolone to those with Duchenne muscular dystrophy (DMD) in Europe, Santhera Pharmaceuticals is proud to announce their partnership with Catalyst, providing the expert financial security they need to bring their much-needed therapy to those in need within the continent.
The collaboration opens the door to the potential of expanding vamorolone’s treatment into other potential indications, pending regulatory approval. To this end, Santhera is making strides to launch the therapy in Germany as early as late 2023.
While they are evaluating additional partnerships for markets outside of the five largest European countries plus Benelux, the team at Santhera is already excited to help bring vamorolone to the people of Europe.
At the close of the agreement, Santhera received a JPY 75 million upfront cash milestone payment from Catalyst and a further USD 15 million through the sale of treasury shares, with a further USD 10 million due upon U.S FDA approval of vamorolone for DMD (anticipated by October 26, 2023).
Not only is Santhera eligible to receive sales-based milestones, up to USD 105 million, but further royalty payments on vamorolone sales in North America, and Catalyst has also committed to pay USD 26 million to Santhera’s third-party obligations associated with FDA approval.
Debt repayment strengthens balance sheet and reduces future share dilution
With the upfront cash milestone and the equity investment amounting to CHF 78.6 million after transaction costs, the Company is set to benefit significantly. Not only have all of their current exchangeable notes to Highbridge Capital, worth CHF 29 million, been fully repaid, but their balance sheet has also been bolstered significantly.
Furthermore, as a result of the settlement of the exchangeable notes, the 3.9 million shares underlying them no longer need to be earmarked, leading to far less future dilution. Additionally, first lien security and covenant obligations under the exchangeable note facility have been eliminated.
Proceeds secure implementation of European commercial strategy for vamorolone
With CHF 49.6 million in cash and cash reserves, together with other expected milestone payments and some initial revenue from Europe, Santhera is fully equipped to realize their commercialization strategy.
The company plans to make vamorolone available in key European countries like Germany, France, UK, Italy, Spain, and Benelux; assuming the Early Access Programs applied for in France and the UK are granted, this could potentially allow the treatment of DMD patients as early as late fall this year.
Santhera anticipates a confirmation from the European Medicines Agency by the end of 2023 and, if approved, will launch vamorolone in Germany as the first market followed by a gradual rollout in the key markets thereafter. With these measures in place Santhera estimates it could reach sales of more than EUR 150 million over the next five years in DMD alone.
Santhera is taking the initiative to commercially launch vamorolone in core European countries, and is actively seeking out potential partners in other regions of the world. To ensure the best opportunities are available, Santhera has given Catalyst an exclusive right to the first negotiation of any such partnerships. With the potential to expand vamorolone’s reach to new places across the world, this could be an exciting partnership for both sides.
The long anticipated closing of the transaction was finally made official, as all customary closing conditions and the required antitrust review were satisfied. The agreement followed the expiration of the waiting period imposed by the Hart-Scott-Rodino Antitrust Improvements Act, paving the way for the successful completion of the deal.
About Vamorolone
Vamorolone, an investigational drug with a dissociative anti-inflammatory mode of action, has shown the potential to provide therapeutic efficacy without the steroid safety concerns. This is why it is being considered as an alternative to corticosteroids in subjects affected by Duchene Muscular Dystrophy.
Results from the pivotal VISION-DMD study showed that vamorolone met its primary endpoint Time to Stand (TTSTAND) velocity compared with placebo (p=0.002) at 24 weeks of treatment. The most commonly reported adverse events were mild to moderate cushingoid features, vomiting and vitamin D deficiency. Vamorolone may prove to be a promising approach to treating DMD, one with a safer and more effective outcome.
Vamorolone has received a green light from the U.S. FDA and the UK MHRA for the treatment of DMD, with the Orphan Drug status in the U.S. and Europe, Fast Track Designation, and Rare Pediatric Disease designations.
Furthermore, it has also earned the Promising Innovative Medicine (PIM) status from the UK MHRA, giving it immense potential for helping those affected by this disease. Despite this, Vamorolone is still an investigational medicine and not yet approved for use.