Santhera Acquires up to CHF 69M in Financing to Reach Cash Flow Break-Even

Santhera Pharmaceuticals has secured significant financing to support its strategic growth and operational initiatives. The firm announced a committed funding arrangement amounting to approximately CHF 69 million. This financial injection aims to facilitate the roll-out and growth of AGAMREE® (vamorolone) in Europe, address near-term debt obligations, and extend the cash runway through the first half of 2026, by which time the company expects to achieve cash flow break-even.

The financing comprises up to USD 38 million from R-Bridge, an affiliate of CBC Group, through the partial monetization of royalty payments Santhera receives in North America and China. Additionally, Santhera has secured a CHF 35 million senior secured term loan from Highbridge Capital Management, LLC, subject to customary conditions. Furthermore, private convertible bonds maturing soon will either be converted or extended until August 2025.

Santhera aims to utilize the proceeds to repay existing convertible bonds maturing in August 2024 and to fund its strategic priorities. This includes launching AGAMREE across Europe and pursuing further development programs. The firm believes these steps will ensure they reach their goal of becoming cash flow positive by mid-2026.

Santhera's CFO, Andrew Smith, highlighted the benefits of the financing arrangement, noting its non-dilutive nature for shareholders and the alignment of the debt repayment schedule with the company's growth expectations. He emphasized that the funding addresses near-term debt and provides sufficient capital to drive AGAMREE's market launches and growth in Europe.

Part of the financing involves monetizing 75% of future royalty income streams from Santhera's licensing agreements for AGAMREE in North America and China. R-Bridge will provide an upfront payment of USD 30 million, subject to fees, with potential additional milestone payments totaling up to USD 38 million. Once the agreed threshold or duration of royalty payments is met, the royalty payments from North America and China will revert back to Santhera, which also retains buy-back rights for the royalty income stream.

This financing is expected to advance the commercialization of AGAMREE in Europe and supports further clinical development, including post-approval commitments for Duchenne muscular dystrophy (DMD) and expansion into additional indications alongside Catalyst Pharmaceuticals, Inc.

The CHF 35 million term loan from Highbridge will be drawn in a single installment, with a four-year maturity and annual amortization starting after 24 months. The loan will bear interest at a rate of 3-month SARON (with a floor of 2%) plus 9.75% per year. Santhera has agreed to an original issue discount and a redemption premium, with options for partial interest payments in kind and/or early loan redemption, subject to a premium.

As part of the Highbridge transaction, the maturity of private senior unsecured convertible bonds due in August 2024 will be extended by 12 months, and some bonds will be converted. Highbridge will also exercise its warrants and receive additional warrants exercisable for Santhera shares.

The net proceeds from these financings will primarily be used to repay the outstanding CHF 13.5 million public senior unsecured convertible bond due in 2024 and to support product commercialization and general corporate purposes. This funding extends Santhera’s operational cash runway to the anticipated cash flow break-even point.

Santhera Pharmaceuticals is a Swiss specialty pharmaceutical company focused on developing and commercializing innovative medicines for rare neuromuscular and pulmonary diseases. The company holds an exclusive global license for AGAMREE® (vamorolone), approved for treating DMD in the U.S., EU, and UK. The company has out-licensed AGAMREE rights for North America to Catalyst Pharmaceuticals, Inc., and for China to Sperogenix Therapeutics.