Year End Report January - December 2015

SANIONA IS MAKING TWO PROJECTS READY FOR PHASE 2 AND CONTINUES TO DEVELOP ITS BROAD PORTFOLIO

Financial highlights

Jan-Dec 2015 (Jan-Dec 2014)

  • Net revenues were KSEK 13,630 (21,718)
  • EBIT was KSEK -28,075 (-8,258)
  • Earnings per share were SEK -1.10 (-0.43)
  • Diluted earnings per share were SEK -1.10 (-0.43)

Q4 2015 (Q4 2014)

  • Net revenues were KSEK 1,827 (3,720)
  • EBIT was KSEK -5,327 (-6,243)
  • Earnings per share were SEK -0.23 (-0.32)
  • Diluted earnings per share were SEK -0.23 (-0.32)

Business highlights in Q4 2015           

  • Saniona and Ataxion extend their on-going drug discovery and development collaboration with the aim of identifying a development candidate.
  • Rights issue is subscribed to 80.4% and the company raises about SEK 48.8 Million before issue expenses, amounting to around SEK 5.3 million.
  • New pre-clinical efficacy data for AN363 published at the Society for Neurosciences 2015 Conference in Chicago along with new scientific data in relation to the AN346 program.
  • Saniona increased the shareholder base with more than 50% during the 4thquarter 2015 primarily due to a significant interest from Danish investors with a more than tenfold increase in number.
  • Saniona initiated manufacturing of tablets for the Phase 2a clinical study in type 2 diabetes with Tesomet after having completed the validation and release of drug substance for clinical studies in humans.

Significant events after the reporting period

  • Saniona and Upsher-Smith Laboratories, Inc., through its wholly-owned UK subsidiary Proximagen Ltd., sign collaboration agreement for the research and development of therapeutics for neurological disorders. Proximagen is granted exclusive worldwide rights to develop, manufacture and commercialize medicines identified through the collaboration. Saniona is entitled to pre-commercial milestone payments of up to US$30 million (about SEK 250 million) and tiered royalties on product sales.
  • Saniona and Productos Medix, S.A de S.V sign a drug development and commercialization collaboration. Medix is granted exclusive rights to develop and commercialize tesofensine and Tesomet in Mexico and Argentina. Medix will finance the clinical development in the two countries. Medix intends to initiate Phase 3 clinical studies for tesofensine for obesity later this year. Saniona retains all rights to tesofensine and Tesomet in the rest of the world including clinical data developed by Medix. Medix will pay Saniona an upfront payment of US$ 1.25 million (about SEK 10.5 million), regulatory milestone payments, and double-digit royalties on product sales.

Comments from the CEO                                    

”Saniona took a significant leap forward during Q4 by announcing that we now are planning for two Phase 2 studies during the first half of 2016. One for NS2359 and the other for Tesomet. We have made a flying start during the first two months of 2016 by signing two new partnership contracts with great financial potential. The new contracts clearly show that we are committed to our objective of financing most of our internal costs through partnerships,” says Jørgen Drejer, CEO of Saniona.

For more information, please contact

Thomas Feldthus, EVP and CFO, Saniona, Mobile: +45 2210 9957, E-mail: tf@saniona.com

Letter from the CEO

”Saniona finished 2015 strongly. We closed our finance round in November. We took a clear step forward towards initiating Phase 2 studies for Tesomet for type 2 diabetes in December. And a few days later we could report that the Phase 2 study for NS2359 for cocaine addiction will be initiated in 2016 together with our partner, TRC.

We also made a flying start in 2016 by signing a new Pharma collaboration agreement with Upsher-Smith's subsidiary Proximagen, where the pre-commercial milestone payments can reach around a quarter billion Swedish kronor (US $30 million). This new agreement relates to a project, which we have not communicated about previously. It clearly demonstrates the value and strength of our platform and broad portfolio of projects.

Yesterday, the flying start got even more momentum with the announcement of the Medix collaboration for development of tesofensine and Tesomet in Mexico and Argentina. This collaboration is completely in line with our strategy of combining high ambitions with a low burn rate. It brings us closer to the market and represents a significant leap for Saniona. Medix intends to initiate Phase 3 clinical trials for tesofensine and Phase 2 and Phase 3 clinical trials for Tesomet in obesity. Therefore, Medix may potentially be the first company to introduce one of Saniona´s product candidates to the market, which may lead to a stable income stream to Saniona through royalties on product sales in Mexico and Argentina in the medium term. Moreover, Saniona will have the exclusive rights to use the clinical data developed by Medix in the rest of world. Our objective is to finance a significant part of the internal costs through partnerships, which has been achieved with the two new collaboration.

We are confident that we will be able to deliver on the commercialization of our research efforts through all of our three business models in 2016.

  • New early stage partnerships – we are continuously in discussion with a variety of pharmaceutical companies about potential collaboration on our platform and research programs. The recent agreement with Proximagen is the outcome of such discussions. We see good opportunities to enter into additional agreements on our platform and early stage programs.
  • Own internal development – we expect to initiate two Phase 2 programs in 2016. Together with our partner TRC we plan to initiate Phase 2 studies for the potentially first effective treatment for cocaine addiction. Saniona has all the commercial rights to NS2359. It is our intentions to apply for additional public funding together with TRC for the continued development of NS2359, if the Phase 2 trial proves to be successful. In addition to the NS2359 program, we expect to initiate Phase 2 studies for Tesomet. Tesomet represents an innovative treatment approach for type 2 diabetes. Finally, we are still investigating whether our preclinical candidate, AN363, can be cleared for Phase 1 clinical studies for neuropathic pain. It is our intention to build further value into these programs through early clinical development before out licensing to 3rdparties.
  • Joint ventures or spin-outs – our successful spin-out company Ataxion continues to develop well in collaboration with Biogen and Atlas Ventures who are the other shareholders. We retain an ownership interest of 14 per cent of Ataxion after Biogen and Atlas Ventures have committed to invest up to USD 17 million in the program. This should enable Ataxion to take the lead program through Phase 1 clinical trials at which point Biogen has an option to acquire the company. During 2016, we will look on additional opportunities for establishing spin-outs and joint ventures which may be financed through venture capital or through independent listings.

In summary, Saniona is in an increasingly strong position for the future. Our achievements in 2015 show that our strategy of combining low cost with high ambitions has delivered. At the turn of the year, we have a strong balance sheet with SEK 47 million in cash. The NS2359 Phase 2 program will be financed through public grants and we expect to have enough capital to finalize the Phase 2 study for Tesomet. We have partnering opportunities which may provide additional financing and support the internal developed programs.

I want to take this opportunity to thank all our dedicated employees at Saniona for their substantial achievements during the year. This proves that hard work pays off. Also, I want to thank our longstanding loyal shareholders for their support and welcome the many new shareholders who decided to invest in Saniona during the 4th quarter of 2015. The number of shareholders increased during the last quarter of 2015 by 50%, a sign of trust, which we will do everything we can to live up to."

Jørgen Drejer

CEO, Saniona AB

About Saniona

Saniona is a research and development company focused on drugs for diseases of the central nervous system, autoimmune diseases, metabolic diseases and treatment of pain. The company has a significant portfolio of drug candidates at pre-clinical and clinical stage. The research is focused on ion channels. Saniona has ongoing collaboration agreements with Upsher-Smith Laboratories, Inc., Productos Medix, S.A de S.V and Saniona’s Boston based spinout Ataxion Inc., which is financed by Atlas Venture Inc. and Biogen Idec Inc. Saniona is based in Copenhagen, Denmark, where it has a research center of high international standard and 19 employees.

Vision and objective

Saniona will be a leading biotech company within the field of ion channel-dependent diseases.

Saniona will discover and develop better medical treatments in areas with significant unmet medical needs through modulation of ion channels.

Business model

The company commercializes its research efforts through the following 3 business models:

  • By internal development of selected programs through the early phases of drug development before out-licensing to pharmaceutical companies who will take over the further development of Saniona’s programs and typical pay upfront, milestone and royalty payments on product sales to Saniona;
  • Through early stage research and development collaboration with pharmaceutical companies who will fund the research and development activities and pay upfront, milestones and royalty payments on product sales to Saniona; and
  • Through joint ventures or spin-outs, where Saniona’s financial partner will obtain a share of the upside by financing the development of one of Saniona’s programs.

Project portfolio

Saniona has a significant portfolio of potential drug candidates at pre-clinical and clinical stage. The clinical stage programs include tesofensine and Tesomet, where the active ingredient tesofensine has demonstrated strong weight reducing effects in Phase 2 clinical studies in obese patients, and NS2359, which is a promising drug candidate for the treatment of cocaine dependence. The company is currently preparing a Phase 2a trial for Tesomet in type 2 diabetes and a Phase 2a trial for NS2359 in cocaine addiction in collaboration with the University of Pennsylvania’s Treatment Research Center (TRC). In addition, the company is collaborating with Productos Medix, S.A de S.V, which is planning to develop tesofensine and Tesomet for obesity in Mexico and Argentina. Saniona currently has five active research programs. The company is developing three internal research programs and two research program in collaboration with Upsher-Smith Laboratories, Inc. and Saniona’s spin-out Ataxion Inc. Ataxion is financed by Atlas Venture Inc. and Biogen Inc. The company’s project portfolio is set-out below.

(se tabel in enclosed pdf)

In addition to the active pipeline shown above, Saniona has a range of validated drug discovery assets as well as clinical stage assets (e.g. AN788 and AN761) positioned for partnering or spin-out.

Market

Saniona’s research is focused in the field of ion channels, which is an established concept in pharmaceutical development. According to a recent global strategic business report, the global market for ion channel-modulators is expected to exceed $21 billion in 2018[1].

Saniona’s ongoing programs address significant market segments:

Product Indication Market estimate
Tesomet Type 2 diabetes > USD 23 billion[2]
NS2359 Cocaine addiction > USD 1.8 billion[3]
AN363 Neuropathic pain > USD 6 billion[4]
AN470 Schizophrenia > USD4.8 billion[5]
AN346 Inflammatory bowel disease > USD 5.9 billion[6]

For a significant time to come, Saniona will be dependent on major pharmaceutical companies’ interest in purchasing, developing and commercializing projects from Saniona’s pipeline of preclinical and clinical drug candidates. According to the Board's assessment, there is a well-developed market for licensing, sale, and establishment of research and development collaboration between smaller, research-intensive businesses and large pharmaceutical companies.

Many of the large pharmaceutical companies have in recent years undergone considerable restructuring, which has resulted in fewer research projects and a close down of research sites. Furthermore, the number of dedicated biotech firms that can provide new innovative products to the pharmaceutical industry has decreased as a result of the global financial crisis. However, there is still a significant need for new and innovative products for the pharmaceutical companies, which often have a limited number of products in their pipelines. Therefore, the market for out-licensing of new, innovative pharmaceutical projects and product programs are considered attractive. Importantly, within the field of ion channels, there are relatively few biotech companies supplying major pharmaceutical companies with research and development projects. Combined this is creating interesting opportunities for Saniona.



[1]     http://www.prweb.com/releases/ion_channel_modulators/electrophysiology/prweb10579822.htm. Further details may be found in the annual report for 2014 page 6.

[2]     The market for type 2 diabetes is estimated to be USD 23.3 billion in the 7 major markets in 2014. Diabetes Type 2 Forecast, 7 major Markets, Datamonitor 2015

[3]     Estimates by TRC, University of Penn

[4]     Major markets 2012, Decision Resources

[5]     Schizophrenia Forecast 7 major market, Datamonitor, 2014

[6]     Major markets 2014, Datamonitor

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