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Santhera Concludes Exclusive North American Licensing Deal with Catalyst Pharmaceuticals for Vamorol

Swiss pharmaceutical firm, Santhera Pharmaceuticals (ticker symbol: SANN) recently confirmed the finalization of its exclusive licensing contract for vamorolone in North America (NA) with Catalyst Pharmaceuticals, Inc. (ticker symbol: CPRX), a deal initially publicized on June 20, 2023. The financial benefits from this partnership will extend Santhera's cash runway well into 2025, providing the necessary funds for pre-commercialization and subsequent launch of vamorolone in Europe. This deal also enables Santhera to repay its outstanding debt to Highbridge Capital, thereby strengthening the company's financial position.

Catalyst Pharmaceuticals Gains Commercialization Rights

As part of the licensing agreement, Catalyst is granted the rights to commercialize vamorolone in North America for Duchenne muscular dystrophy (DMD) and any other potential future applications. The total consideration to Santhera for this agreement amounts to a staggering USD 231 million, plus additional royalty payments from product sales.

Dario Eklund, Chief Executive Officer of Santhera, commented on the partnership, "This collaboration with Catalyst allows us to execute our European strategy for vamorolone, supported by adequate funding and provides financial security for the Company's operations into 2025. It also opens up the possibility of expanding vamorolone's potential by jointly addressing additional indications beyond DMD, subject to regulatory approval."

Financial Details of the Agreement

Upon the closure of the agreement, Santhera will receive an upfront cash milestone payment of USD 75 million from Catalyst, along with an additional USD 15 million through the sale of treasury shares to Catalyst. Subject to U.S. FDA approval of vamorolone in DMD, a decision expected by the October 26, 2023 PDUFA date, Santhera will receive another USD 10 million from Catalyst.

Moreover, Santhera is also qualified to receive sales-based milestones of up to USD 105 million, along with royalties on sales. Catalyst will further pay USD 26 million of Santhera's third-party obligations at FDA approval and royalty obligations on vamorolone sales in all indications in NA.

Strengthening Balance Sheet and Reducing Future Share Dilution

The net receipts from the upfront cash milestone and the equity investment total to CHF 78.6 million after transaction costs. From this amount, CHF 29 million will be used to fully repay current exchangeable notes to Highbridge Capital, significantly strengthening the Company's balance sheet.

The settlement of these exchangeable notes means that the underlying 3.9 million shares (as of June 30, 2023, and adjusted for the reverse share split) no longer need to be earmarked, resulting in less future dilution than if the notes had been converted.

In addition, the first lien security and covenant obligations under the exchangeable note facility will be removed. An overview of Santhera's share capital after repayment to Highbridge and the share acquisition by Catalyst is provided here.

Implementation of European Commercial Strategy for Vamorolone

The remaining cash and cash equivalents of CHF 49.6 million, together with expected milestone payments from partners and initial revenue proceeds in Europe, are expected to fund Santhera's current operating plan into early 2025. The Company is currently planning to make vamorolone available to patients in key geographies including Germany, France, UK, Italy, Spain, and Benelux.

Santhera expects a decision from the European Medicines Agency (EMA) in late 2023 and, subject to approval, plans to launch vamorolone in DMD in Germany as the first market

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