Saniona achieved several milestones last year, initiating a transformation of the company, which is the central conclusion of the company’s annual report for 2020. Most notably, a new business strategy was established under the leadership of President and CEO Rami Levin, who took up his position at the beginning of the year. Saniona also achieved significant progress in its ongoing clinical studies with drug candidate Tesomet, raised 65 million USD in a directed share issue and recruited a complete and experienced US-based management team. BioStock reached out to CEO Levin for a comment.
Saniona’s most advanced treatment in clinical development is Tesomet. The company aims to start a phase IIb study in the rare diseases Hypothalamic Obesity (HO) and Prader-Willi syndrome (PWS) during the second half of 2021. Assuming a positive outcome in those trials, a phase III trial will then be conducted before an application for approval of a new drug can be submitted in the US and in Europe within two to three years.
In addition, Saniona also plans to start a first clinical study in humans with candidate SAN711 during the first half of 2021 and with candidate SAN903 during the first half of 2022.
The CEO comments
BioStock got in touch with CEO Rami Levin to learn more about the progress achieved in 2020 and how the company has transformed under his leadership, as well as what we can expect from the company during the rest of 2021.
Rami, your 2020 annual report just came out – what would you say is the take home message from the report?
– If you look at the 2020 annual report compared to previous years, I think it is clear that Saniona is in a very different place than just a year ago – a very exciting place.
– I told you when we spoke in January that Saniona is currently in the strongest position the company has ever been in, and that is thanks to the incredible transformation we underwent in 2020. We have a strong cash runway to last us into the second half of 2022 at a time we are about to initiate three clinical trials, and we have the financial and operational support as well as the necessary expertise to advance our strategic activities. Our ion channel drug discovery engine continues to generate proprietary compounds to fill our pipeline. We also continue to assess our opportunity to access the U.S. capital market through a U.S. Nasdaq listing, and the interest from potential institutional investors on this front is encouraging.
– In summary, I think this is an incredibly exciting time to be a part of Saniona’s journey, and I hope our annual report conveys that.
The report talks about 2020 being a transformative year for the company – how so?
– When I joined Saniona at the beginning of 2020, I knew that in order to maximize value, Saniona needed to transform, and we did this on several fronts during the year:
- First, we transformed our business strategy from one focused on out-licensing to a strategy of retaining our innovation and developing it ourselves, which we believe will create the highest value.
- Second, to enable this, we transformed from a discovery focus to a focus on discovery, development and delivery – bringing medicines all the way to patients.
- Third, in order to move from discovery into development, we had to transform from a company that historically had raised very small amounts of capital to a company with sufficient funding to conduct larger clinical trials – hence the 65 million USD financing.
- And fourth, of course, we also needed to expand beyond our expertise in drug discovery and hire a team who could support development as well.
– I’m very proud of Saniona’s transformation in 2020 – we now have the funding and expertise that we need to execute and take us to our next milestones.
When you look at the share price last year, it went up significantly in the summer, then came down quite a bit towards the end of the year. But so far this year we have seen it move up a bit. What do you make of these trends?
– As you know, I cannot comment specifically on the share price. What I can say is this: our philosophy on investor relations is to present accurate, transparent information to the investing community, which enables each investor to make appropriate decisions for themself. Our mandate is not to attempt to manage the short-term share price; it is to advance our rare disease pipeline and build and grow the company to reach its full potential over the long term.
– Drug development is a long-term endeavor, not a short-term one, and progress is not always reflected in the share price in the short term. In fact, when you look at the progress we have made and are making, we believe the intrinsic value of the Company is much greater than the share price reflects, which is often the case at various stages of a biotechnology company’s development and growth. So if we remain focused and continue to execute on our long-term objectives, we believe we will deliver value to patients and shareholders in the future.
It looks like one of your larger shareholders Pontifax have reduced their holding in Saniona. This means that Pontifax and AP2 have sold shares since they bought shares in the directed share issue in August 2020 with a large discount. What is your comment on that?
– When it comes to the AP2 funds selling of shares, I have stated before that this came as a disappointment for us. As state owned pension funds, their stated mission is to be long-term shareholders. Regarding Pontifax, we did see that Pontifax was flagged regarding a lowering of their shares in Saniona. We were unaware of this until it was reported publicly and cannot speak to their decision. We buy shareholder data from a third-party vendor, Modular Finance, which is a well-known and trusted provider on the Swedish financial market, and we saw no evidence of Pontifax’s sale in any of their reports to-date.
– We have a good dialog with all our larger shareholders, including Pontifax, however they had not informed us of their intent to sell some of their shares, and they had no obligation to do so, since we are a listed company and any shareholder may decide at any time to buy or sell shares. Investors, including long-term investors, make buying and selling decisions based on a variety of factors, some of which have nothing to do with the Company or its prospects. As of today, Pontifax still remains a large shareholder.
– We will continue to present at investor conferences and meet with institutional investors, as we have been doing frequently, to raise awareness and increase understanding of Saniona’s strategy and value proposition. We remain confident in our strategy of discovering, developing and delivering innovative medicines to rare disease patients.
In the online message boards, we see some investors questioning the AGM proposal to issue up to 250M new shares. Why would Saniona need so many shares?
– The share authorization proposed for the AGM sets the high end at four times the existing number of shares: this is consistent both with market practice in Sweden when changing the permitted number of shares in the articles and with Saniona’s own approach over the past several years. In 2018 we amended the articles with a range of 20M to 80M shares, in 2020 we amended the articles with a range of 29M to 117M shares, and now we are proposing to amend the articles with a range of 62M to 249M shares. In each case, we have always set the range at four times the existing number of shares.
– As you know, Saniona’s stage of development and growth plans will require additional capital. This is the path to build a successful rare disease company, and there are plenty of examples of other rare diseases companies who have taken this path before, including Genzyme, Sobi, Alexion and countless others. However, it is important to note that Saniona has no fixed plans for fundraisings at this time. Additionally, in the past we have never utilized the entire share allotment, and even if we were to do a financing, we have no expectations that we would ever end up close to this figure during the coming 12 months when the authorization for new issues expire.
– However, even though we do not anticipate that we would use anywhere near the maximum amount, the Board suggests we maintain our standard practice of using the four-time multiple because it provides maximum flexibility, and because calculating and requesting a smaller specific amount could lead to speculation regarding Saniona’s future possible financing plans and the size of any such transactions, and such speculations could negatively impact the stock.
– Needless to say, the Board will always carefully consider available options and act in the best interest of all shareholders.
– I know some investors have stated that they do not want to be diluted. Unfortunately, it costs a lot of money to conduct clinical trials and bring products to the market, which means we must continue to attract additional institutional investors to provide us access to the type of capital required. Yes, that could result in dilution, but would ultimately allow us to build a larger and more valuable company. On the point of dilution, I will note that we are also examining a number of non-dilutive alternatives to access capital.
– Finally, I know there has been criticism towards the discount we gave to some of the institutional investors last summer. As we mentioned many times now, we brought in the best investors on the best terms possible at that time. I would remind investors that, as of now, we are still only evaluating a potential listing in the U.S. If such a listing were to be pursued, and if it involved a financing, it would be a public offering – and a public offering in the US is structured very differently from a private placement, which we did last year. A public offering is marketed to a broad range of public investors in the open market, and therefore the discount is usually far less than that of a private placement.
– Ultimately each investor needs to make their own decision as to whether or not Saniona is a good investment choice for them. The biopharmaceutical business model requires significant upfront investment to deliver long-term growth and value.
What are you most excited about for Saniona in 2021?
– I am excited to execute on the strategies and plans we have laid. Last year, 2020, was all about laying the foundation. We needed to bring in the money and the expertise to advance Tesomet into larger clinical trials, liaise with the FDA, prepare our financials and operations to be prepared to potentially access the U.S. market, and continue to advance our ion channel pipeline.
– Now that we have the foundation in place, 2021 is all about execution. We already received Orphan Drug Designation from the FDA for Tesomet in Prader-Willi syndrome, and we are working to obtain this in hypothalamic obesity as well. We have completed significant preparations for our Phase 2b trials of Tesomet in both PWS and HO, and we look forward to starting these trials this year. We also look forward to initiating a Phase 1 trial of SAN711 for rare neuropathic disorders, which will mark the first candidate from our ion channel drug discovery engine to advance into the clinic. In summary, I believe 2021 will be a year of progress and achievement for Saniona.
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