Swiss Biotech Report 2006

12AN EXPONENTIAL INCREASE IN STRENGTHSANTHERA The company which was formed in 2004as the result of the merger between Graffinity Pharmaceuticalsand MyoContract is living proof that amerger between two smaller companies that complementone another in terms of products and personnelcan uncover previously hidden reserves ofstrength.In mid-2003, both the management and the investorsof Graffinity Pharmaceuticals AG, a German companybased in Heidelberg, agreed that – in order to competesuccessfully in the market in the future – thecompany would have to change its business model.At that time, Graffinity Pharmaceuticals had a technologyready to be launched on the market, as wellas a preclinical programme for type 2 diabetes, butexpanding these two projects into a profitable businesswithin a short time frame was not feasible. “Wetherefore took the view that an M&A transaction wasthe best route to provide us with the late-stage productswhich we needed,” explains Santhera’s CEOKlaus Schollmeier, who was at that time CEO of Graffinity.At the same time as Graffinity was reassessing its future,the management of MyoContract AG in Baselwas also involved in intensive discussions about howthe company should progress. In order to get its firstproduct into phase III clinical development, it wasclear that MyoContract needed both additional investmentas well a more rounded and experiencedmanagement team. Management decided to pursue adouble strategy: either to complete another round ofventure capital financing or to take the opportunity ofa merger with a complementary biotechnology firmas a way to create a more robust platform for its futuregrowth.OUTSTANDING COMBINATIONFrom left:PD Dr Thomas Meier, CSOBarbara A. Heller, CFODr Helmut Kessmann, CBODr Klaus Schollmeier, CEOGraffinity and MyoContract eventually made contactwith one another, partly due to to the Graffinity team’sexperience in M&A. “It quickly became clear thatthere was an excellent fit between the two businessesand that together we could create a company with areally exciting future,” says Schollmeier. Nothingstood in the way of a merger, and so in July 2004 thetwo companies came together to establish SantheraPharmaceuticals AG, which is headquartered in Liestal,Switzerland. “Being located near to Basel, thestrongest major pharmaceutical and biotech clusterin Europe, provides us with a major competitive advantage,”says Schollmeier who assumes the positionof CEO at Santhera.Today Santhera is one of Europe’s leading late-stageprivate companies and is focused on the identification,development and marketing of new therapies forneuromuscular diseases. The pipeline currently includesone product in clinical phase III for the treatmentof Friedreich’s Ataxia, one product in phase IIfor the treatment of Duchenne Muscular Dystrophy,and three late-stage preclinical development projectsfor the treatment of Duchenne Muscular Dystrophy,Cancer Cachexia as well as type 2 diabetes. In orderto maintain a tight business focus, Santhera lookedfor a partner for its type 2 diabetes programme basedon its expertise with DPP-IV inhibitors. In mid-2005Santhera succeeded in signing a potentially very lucrativelicensing deal for the development and commercialisationof these novel compounds with theSwedish company Biovitrum, which specialises inthis therapeutic area. The final step in creating thenew Santhera took place in late 2005 when it spun offits screening technology service division,@which wasstill based in Germany, through a management buyout.For further information please visitwww.santhera.com