September 4, 2018 / 1:05 PM / 8 months ago

UPDATE 1-Santhera counts on good news to buoy shares, help raise cash

* Regulatory setbacks hit shares, postponed capital hike

* Company hopes good news will buoy financing efforts

* Drugmaker lifts 2018 sales target on higher Raxone sales (Adds details from news conference, comment from CEO)

By John Miller

ZURICH, Sept 4 (Reuters) - Santhera is counting on positive regulatory news on its drug Raxone in coming months to lift the Swiss drugmaker's shares to levels where it can tap investors to bolster shrinking cash reserves, Chief Executive Thomas Meier said on Tuesday.

In the first six months of 2018, Meier's cash pile slipped to 34.8 Swiss million francs ($35 million) from 58.2 million francs on Dec. 31, as Santhera's first-half loss widened to 27.4 million francs from 22 million in the year-ago period.

Its shares have also retreated nearly 60 percent this year as Raxone failed to win European Medicines Agency (EMA) backing to treat patients with Duchenne muscular dystrophy (DMD).

The stock decline, aggravated by another 6 percent drop on Tuesday to 16 francs, has meant seeking new money for trials and to expand Santhera's portfolio had to be delayed, Meier said.

"We could have tried in the last months, come hell or high water, to do a financing round but we wouldn't have made ourselves beloved among our shareholders," he told a news conference.

"The news flow is important, and the value of the DMD asset must be priced into our shares. After that, we can start with financing efforts."

After collecting more data about Raxone's long-term efficacy in improving respiratory function in DMD patients, Meier plans to submit a new application with European and U.S. authorities in 2019. He is optimistic about Santhera's chances this time.

"The DMD indication is not forgotten or dead -- just the opposite," he said. "We've done our homework, we heard what European officials wanted, and we were able to close the holes."

Chief Financial Officer Christoph Rentsch declined to give dimensions of a potential financing round, but said the company does not plan to boost debt, ruling out a vehicle like the 60 million franc convertible bond Santhera issued in 2017.

Raxone is already approved to treat Leber's hereditary optic neuropathy (LHON). Sales for the rare, blindness-causing mitochondrial disease in the first half of 2018 topped the company's expectations.

Consequently, Santhera now forecasts 30-32 million francs in 2018 revenue, up from its previous 28-30 million target.

Within 2-3 years, annual European sales of Raxone for LHON will peak at some 50 million francs, Meier said. That is a key reason for Santhera to get Raxone expanded to potentially lucrative DMD treatment, with four times as many patients.

"We are hoping to set a more attractive price so we can reach good sales," Meier said. ($1 = 0.9694 Swiss francs) (Reporting by John Miller; Editing by Michael Shields)

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