Santhera Pharms Hldgs Ltd

Ladies and gentlemen, welcome to this Althera Pharmaceuticals half year 2024 financial results and corporate update conference call. I am George, the chorus call operator. I would like to remind you that all participants will be listened on remote and the conference is being recorded. The presentation will be followed by Q&A session. You can register for questions at any time by pressing star N1 on your telephone. For operator assistance, please press star N0. The conference must not be recorded for publication or broadcast. This conference call may contain certain forward-looking statements based on current assumptions and forecasts made by Santera Pharmaceuticals. Such statements involve certain risks, uncertainties, and other factors which could cause the actual result, financial condition, performance, or achievements of Santera Pharmaceuticals to be materially different from those expressed or implied by such statements. Those factors include those discussed in the Comprehensive Risk Factor Disclosure in the company's website at www.santerra.com. Santerra disclaims any obligation to update any forward logic statements. This conference may be downloaded on Santerra's website during the two weeks following the call. At this time, it's my pleasure to hand over to Mr. Dario Eklund, CEO. Please go ahead, sir.

Thank you, George. Good afternoon and good morning to those following us in the U.S., and thanks for participating in today's conference call on the 2024 Half-Year Financial Results and Performance. I'm joined today by Andrew Smith, our CFO, and Dr. Shabir Hasham, who is our Chief Medical Officer. I'll start by sharing an overview of what Santera has achieved during the period, followed by the financial overview provided by Andrew. As always, you'll have the opportunity to ask questions at the end. The recent past has undeniably been a game-changing period across multiple fronts, especially commercially, regulatory, and financially. Let's start with the commercial review. We launched Agambri in Germany mid-January 2024, and a little later, in early February, we also launched in Austria. Catalyst, our partner for North America, launched the product in the U.S. market in mid-March this year. I'm delighted to say that the market response in both the first launch countries, Germany and Austria, was very strong and has outpaced our expectations. In both Germany and Austria, about half of patients living with Duchenne are on steroids at any given time. Today, we are already at more than 25% share of patients with DMD who are on steroids, and this after only eight months in the market. Clinicians are often cautious when switching patients to new treatments, especially if the existing standard, which in this case is prednisone, is well established. A more than 25% switch in eight months indicates rapid uptake and confidence in Agamri's clinical benefits, such as fewer side effects or better patient outcomes. To add to this picture, I want to mention that Germany, Austria had no prior experience with Agamri, as there were no clinical trial sites there during the pivotal trial, versus, for instance, six sites in the UK or seven sites in the US. This fact makes the uptake even more impressive in our view. Similarly, Catalyst reported a strong start to US commercialization of Agambri, exceeding also their expectations. Now let's move to review of regulatory progress. Building on regulatory successes in 23 in both the US and Europe, we've made further progress with approval from the UK's MHRA earlier this year. In China, our NDA is under priority review, and we are maintaining our timeline to approval and launch in Q1 of 2025 by our partner in China, Spirogenics. Now moving to financial status. We have recently secured funding that was non-dilutive to shareholders of up to 69 million Swiss francs, extending our cash runway into 2026 when we expect to reach cash flow breakeven, as mentioned on a number of calls in the past. Andrew will also shortly speak about the finances in more detail. Looking ahead, we refined our strategy based on the strong market response that we've seen for Agambrane DMD and the development perspectives for the product. With regard to development, we have had very constructive discussions with Catalyst and have agreed to defer the start of any additional pivotal trial in a new indication until at least late 2025, while Catalyst conducts additional exploratory clinical work in this interim period to inform the final decision on both the indication and on the trial design. Given the freed up resources resulting from the delay in initiating a pivotal trial for new indication, coupled with the encouraging early demand we've seen in Germany and Austria, we have realigned our commercial and development approach and decided to invest more aggressively and with greater focus in the DMV opportunity in Europe now. We have decided to expand our self-marketing strategy to include the Nordic countries, Portugal and Ireland, and here with Santera we'll cover all Western European markets through our own commercial organization to keep the attractive margins we have in-house. For the remaining markets of Central and Eastern Europe, we announced a few days ago the comprehensive distribution partnership with Genesis Pharma to cover part of the EU and some non-EU markets in Europe, a total of 20 markets, and we're currently in discussions with multiple potential partners for additional territories outside of Europe. We're also advancing preparations for market entry across Europe with HTA assessments or reimbursement discussions and submissions in Italy and Spain later this month as the last two of the so-called big five in Europe. As stated in our press release, the reviews and negotiations are already ongoing in Germany, UK, and France. By the end of September, by the end of this month, we'll have both Italy and Spain join those discussions. On the clinical front, we're reallocating resources to capitalize on further studies to strengthen the clinical evidence behind the GAMRI's differentiated safety profile in long-term use, as well as studies to highlight potential cardioprotective properties of the compound in DMDs. As we look to the future, our primary focus remains on fully realizing Agamben's potential in the treatment of DMD. This approach allows us to capitalize on our core strengths while remaining open to opportunities that align with our expertise in rare and orphan diseases. With this strategy, we believe we are well-positioned to build on our current momentum and drive long-term growth for Santera. I'll now hand over to Andrew for comments on the financial results and our financing initiatives. Andrew. Thank you, Dario.

I'll provide a top-line view of the unaudited financial results for the first half, which we released earlier today. I'll start with comments on the financial performance, followed by a status update on our financing activities and current position. Let me first turn to the half-year results. All amounts I mentioned in summary will refer to Swiss francs, even if not stated explicitly for verbal simplification. Revenue from contracts with customers amounted to 14.4 million compared to 3.9 million in the same period last year. The prior year period reflected residual revenue from Raxone, which was disposed of in the latter part of 2023. So the revenue for 24 this year is entirely attributed to Agamri, reflecting the launch in Germany and Austria and contributing around 6.5 million since the market introduction in January. 6.4 million came from milestones from our Chinese partner Spirogenics and royalties from North America partner Catalyst following their US launch in March. In addition, 1.3 million came from the sale of product to these markets to support planned demand. Operating expenses amounted to 26.7 million, a 4.2 million increase on the same period last year. The main contributing factors were additional development expenses related to longer-term extension studies and further CMC development costs. Also included were approximately 2 million one-off cost for product development that is expected to facilitate future benefits in the manufacturing process and unit costs. Overall, these resulted in a 4.1 million increase in the development costs during the period. On a comparable basis, marketing and sales expenses slightly increased by 0.4 million to 4.7 million, and this was in relation to the higher commercialization activities in Europe, offset by the reduction in US costs following the outlicense in the second half of last year. G&A expenses remained relatively unchanged at 8.3 million and were aimed at supporting European direct commercialization as well as ongoing development activities. In summary, This resulted in an operating loss of $17.7 million, which is $2.6 million lower than the first half of last year. The net financial income amounted to $2.6 million compared to an expense of $3.1 million in the prior year. This is primarily related to realized and unrealized foreign exchange gains, derivative changes, and interest income. Overall, we recorded a net loss of $15.3 million, or $1.35 per share, compared to a loss of $23.3 million, or $2.09 a share, in the previous period. Net cash outflow from operating activities amounted to $15.3 million, which remained relatively unchanged year on year, despite the shift in activities during the period towards a focus on commercial launches. Cash flow from investing and financing activities was minimal during the period, as the license income in the second half of 23 provided sufficient available cash, and this was further supplemented by additional funding announced in June and closed post the period end. In summary, this resulted in cash at June 30th of $16.5 million compared to $1.7 million at the same time last year. With this, let me move on to the financing. Coming into 24, despite having 30 million in available cash, we required additional funding to reach breakeven and address the convertible bonds that matured in August just gone. In June, we announced a combination of a term loan facility and royalty funding and further discussed the details in our call back then. As you may not have attended the call, I'd like to remind you of the highlights of the funding position following closure. We received a senior secured term loan of 35 million from Highbridge and an interest rate based on Saron plus 9.75%, currently bringing to 11.75% annually. No principal repayments are required in the first two years, followed by a 15% a year amortization and a final repayment on the fourth anniversary in August, 2028. In addition, we closed a royalty monetization agreement with Arbridge whereby US$30 million was advanced with a further US$8 million to be advanced based on sales achieved in China. In return, we're monetizing 75% of the net royalties on net product sales in China and US, meaning royalties received, less royalties paid to Riverogen and Eidosia, and also excluding milestones on amounts received from Catalyst or Spirogenics, which we would still receive in full. Repayments to our bridge occur until a capped level is reached, after which the full royalty income reverts back to us. On the public and private convertible bonds, we had at June outstanding an amount of $25 million maturing in August, and of this, listed bonds amounting $13.5 million were repaid on maturity. Of the private bonds held by Highbridge, $4 million with a strike price of $5 per share, were converted into shares, and the remaining $7 million had its maturity date extended to August 25. Following the financing and repayment of bonds, the cash at the end of August was approximately $52 million. In summary, it's been another transformational period where we've seen successful launches, as Daria already mentioned, and closing of additional funding post-period to provide a runway into 26, an expected cash break-even period without further dilution to shareholders. Further detailed financial information can be seen in the published press announcement and the interim results report released earlier today. And this concludes my summary of the detailed information announced today, so I'll hand back to Dario. Dario.