In 2020 Saniona laid a solid foundation in transforming the company, from discovery phase focusing on out-licensing its molecules, to a fully-integrated pharmaceutical company with the funding and expertise needed to bring its proprietary products to market. Already in 2021, the progress of Saniona’s primary drug candidate Tesomet in two rare diseases stands out, coupled with positive feedback from the FDA on the regulatory path forward. BioStock spoke with CEO Rami Levin about the company’s Q4 and year-end report and what the strategy to advance the company to the next stage forward looks like.
Biotechnology company Saniona is developing the drug candidate Tesomet for the treatment of patients with the rare diseases Prader-Willi syndrome (PWS) and hypothalamic obesity (HO). Saniona also has a broad pipeline based on its own drug discovery platform in ion channels, where the lead candidate SAN711 for rare neuropathic diseases will start its Phase 1 study (first in human) in the first half of 2021.
»With a clear path forward for Tesomet in HO and PWS, we look forward to initiating our phase IIb trials in the first half of this year, as planned. We also plan to initiate a phase I trial of SAN711 in the first half. Further, our partner Medix has stated that they are confident that the Mexican health authority’s review of tesofensine for weight management is moving forward, and they expect a decision in early 2021« – Rami Levin, vd Saniona
The CEO comments
Saniona released its year-end report for 2020 yesterday. BioStock contacted CEO Rami Levin, who paints a pictureof a company that now has strong tailwinds at its back, with the aim of taking its products to the market on its own. Levin talks about the ongoing major transformation, with the long-term goal of becoming a profitable, prosperousbiotech company with several market-approved drugs in different therapeutic areas, addressing patients’ unmet needs.
Rami Levin, after several years where Saniona has focused on drug discovery and early clinical phase development, you are now approaching phase IIb studies in two rare diseases. Can you give our readers the bigger picture of Saniona’s strategies and long-term goals?
– The year 2020 was transformational for Saniona in terms of business strategy. Historically, the company was focused exclusively on early-stage drug discovery and development, with a strategy of out-licensing its novel molecules to other companies. Today, Saniona is focused on becoming a fully integrated pharmaceutical company with the ability to discover, develop and eventually commercialise our own innovative treatments for rare diseases.
– We achieved several important steps in this transformation during 2020. In particular, we raised the funding we needed and brought in the expertise needed to advance our programs into later-stage clinical trials. Having this funding and expertise in place has allowed us to achieve milestones we could never have achieved otherwise. We were able to work collaboratively with the FDA to file an Investigational New Drug (IND) application and obtain orphan drug designation (ODD) for Tesomet in PWS and align on the regulatory path forward in HO. Additionally, we have been working with a clinical research organisation (CRO) to begin selecting sites for our phase IIb clinical trials in both PWS and HO, selected a contract manufacturer for the phase IIb and III trials in PWS and HO, and are collaborating with the PWS and HO patient advocacy organisations.
– Ultimately, we hope to advance Tesomet through phase IIb and then phase III clinical trials, while simultaneously continuing to advance our preclinical assets SAN711 and SAN903 into clinical development. Our goal is to continue to identify new lead optimization programs and preclinical candidates from our ion channel drug discovery engine. This will provide Saniona with a robust pipeline and a steady flow of value-creating milestones over the short and the long term.
You are now focused on developing and commercialising your products in rare diseases internally. What arethe main benefits of this strategy?
– We made the strategic decision to recruit the expertise and build the capabilities to develop and eventually commercialise our proprietary molecules ourselves, rather than through partnerships, because we believe this strategy can provide the most long-term value to patients and shareholders.
– To illustrate this from a shareholder perspective, consider that when we out-license one of our products to another company, that company assumes the cost of development and the risk upon themselves, and they also take the majority of future revenue. On the other hand, when we develop and commercialise a product ourselves, we must invest in conducting the clinical trials as well as take on the risk ourselves, but we retain all future revenue.
– It usually creates far more value for shareholders to retain that future revenue potential. The exception is when the development cost is higher than Saniona can reasonably afford, such as it would be in very common diseases which would require large clinical trials – like general obesity or schizophrenia. In these cases, we may choose to out-license our innovative products to a larger company that can conduct the very large and expensive studies.
The year-end report was delayed. Can you comment on the restatements of earnings?
– As we previously announced, as part of Saniona’s evaluation of a potential US listing, we completed a company-initiated restatement of prior period financial statements and a subsequent audit of these financial statements under US Public Company Accounting Oversight Board (PCAOB) audit standards. The restatements are included in the 2020 year-end report. Importantly, the restatements relate to accounting adjustments and do not impact Saniona’s cash position, forecast, operating plan or the conduct of our clinical trials. The accounting effect of these adjustments for 2019 was as follows: Net revenue increased from SEK 2.7 million to SEK 7.2 million, operating loss decreased from SEK 75.8 million to SEK 68.8 million, total assets decreased from SEK 96.0 million to SEK 94.8 million, and equity decreased from SEK 58.4 million to SEK 53.9 million.
»Developing a drug requires significant investment, but will create significant longer term shareholder value as we bring Tesomet to the market around the world«
Overall, there were no financial surprises in the full year report. Can you comment on the increase in expenses in 2020 over 2019?
– As I mentioned, 2020 was an active year for Saniona, both in terms of recruiting the expertise we needed into the company and preparing for our phase IIb clinical trials. The executive management team I recruited are each leaders in their fields and each bring two to three decades of experience to Saniona. This is a team with a proven track record of getting drugs approved and bringing them to the market – and they are based in the US, where salary costs in general are higher than in Scandinavia, and competition for their talent amongst other biopharma companies is fierce. In addition to increasing the size of our team, we have been very active in clinical trial preparations such as hiring clinical research organisations and contract manufacturers. All of this requires investment – which is necessary in order for Saniona to succeed in advancing Tesomet. As I mentioned before, developing a drug requires significant investment, but will create significant longer term shareholder value as we bring Tesomet to the market around the world.
Saniona reached several important milestones during Q4 and early 2021, partly based on the transformationthat the company has undergone in 2020. Can you outline the regulatory path forward for Tesomet in PWS and HO considering the positive feedback you recently received from the FDA?
– During the fourth quarter and throughout 2020, we took several important strides in transforming Saniona into a fully-integrated biopharmaceutical company with the ability to discover, develop and ultimately commercialise our own innovative treatments for rare disease patients around the world. As I mentioned, we raised the funding we needed and brought in the expertise needed to advance our programs into later-stage clinical trials.
– Specifically, in the fourth quarter, we achieved positive top-line phase II results from the open-label extension study of Tesomet in patients with HO, we received feedback from the FDA on the regulatory path for Tesomet in PWS and HO, and we completed the hiring of our current executive management team. In early 2021 we have achieved several additional important milestones, including further clarifying the regulatory path for Tesomet in HO, obtaining orphan drug designation to Tesomet for the treatment of PWS, and receiving USD 2.9 million (SEK 24.2 million) relating to Novartis’s acquisition of Cadent Therapeutics, in which we held an ownership stake.
– Looking forward, I see the opportunity to continue this positive momentum. With a clear path forward for Tesomet in HO and PWS, we look forward to initiating our phase IIb trials in the first half of this year, as planned. We also plan to initiate a phase I trial of SAN711 in the first half. Further, our partner Medix has stated that they are confident that the Mexican health authority’s review of tesofensine for weight management is moving forward, and they expect a decision in early 2021. We are also in the process of planning an R&D Day to provide more visibility into our world-leading ion channel expertise. We look forward to keeping the market updated on all of these exciting events.
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