Saniona AB (publ) (SANION) Q4 FY2025 Earnings Call Transcript & Summary

Okay. Hello, and welcome to this live queue with Saniona regarding the Q4 report. First off, we will have a presentation by the company and CFO, Johnny Stilou, and CEO, Thomas Feldthus. And after that, we will have a Q&A. So please, Soniona, start with your presentation.

So good morning, everyone, and thank you for joining our Q4 and full-year 2025 investor update. So 2025 has been an important and transformational year for Saniona. We strengthened our financial position, advanced three differentiated CNS programs towards the clinic, and secured a significant pharmaceutical partnership. Today, we will walk through our strategic progress, financial performance, and what investors can expect over the coming years. Before we begin, I would like to remind everyone that today's presentation includes forward-looking statements. These are based on current expectations and involve risks and uncertainties that could cause actual results to differ materially. With that said, let's move to the agenda. We will start with a review of 2025 highlights and our strategic positioning. Then I will outline our development plan for 2026 and the coming years. After that, Johnny will walk you through the financial performance. We will conclude with Q&A. 2025 has been a transformational year for Saniona across partnerships, financing, pipeline progression, and organizational buildup. Starting with partnerships. In August 2025, we entered into an exclusive license agreement with Jazz Pharmaceuticals for AN2355 in epilepsy. This was a major validation of our ion channel platform and brought significant upfront capital. With Acadia, following the deal we did with them in November 2024, we have completed the extended Phase I work program in 2025. All activities were financed by Acadia in preparation for their upcoming Phase II studies. Within Cephagenix, our joint venture in migraine, we secured up to EUR 9 million in seed financing from AdBio and AdVentures, demonstrating external validation of that asset as well. Our research collaboration with Oslo, the Nordics, and Boehringer Ingelheim progressed well under extended lease agreements in 2025. Medix resubmitted the fen application in Mexico in February 2025, and dialogue with regulators continues; we are still awaiting the final outcome. On financing, we successfully completed the TF04 financing, raising DKK 150 million with 97.6% exercise rate, a strong signal of shareholder support. Thank you for that. On the internal pipeline, we initiated three preclinical development programs: SAN2219 in epilepsy, SAN2465 in major depressive disorders, and SANT2668, which we selected in August as our clinical candidate for pediatric epilepsy. We also acquired a headquarters in June to secure long-term operational stability with the intention to execute a sale and leaseback at a later stage. Finally, we strengthened our leadership team and operational capacity. Headquarters headcount increased from 22 to 34 employees. We welcome Pierandrea Muglia as Chief Medical Officer in February and Johnny Stilou as CFO in May. And the expanded capabilities in clinical development, translational medicines, toxicology, and CMC. Taken together, 2025 was about building the foundation for clinical execution. Next slide, please. So Saniona is a clinical-stage CNS innovator built on decades of drug discovery expertise. We focus on neurological and psychiatric disorders where current treatments are insufficient. Our strategy is balanced. We selectively partner with programs to generate validation and nondilutive funding while advancing high-value internal assets to capture long-term upside. Financially, we ended the year with approximately DKK 581 million in cash. In addition, we expect approximately DKK 167 million in near-term milestones under existing agreements. This provides financial flexibility to advance our three prioritized programs into Phase I. Our internal pipeline consists of three prioritized assets in clinical development, all built around subselective GABA modulation. Importantly, all three programs incorporate translational biomarker strategies, including PET and QEED, to support dose selection and increase the probability of success in Phase II. So our internal pipeline focuses on two major CNS indications, epilepsy and depression. Starting with epilepsy. Epilepsy remains one of the most debilitating neurological disorders. Approximately 30% of patients are drug resistant, yet they account for roughly 80% of the total treatment cost. Due to hospitalizations, emergency intervention, and long-term complications. In the European Union alone, the annual cost exceeds EUR 20 billion. Despite numerous approved drugs, these remain a clear need for therapies that combine strong seizure control with improved tolerability. This creates a compelling opportunity for differentiated GABA A modulators such as SAN2668 and SAN2219. Turning to treatment-resistant depression. Depression is the largest contributor to mental health-related costs. It accounts for more than half of mental health care spending, with socioeconomic burden exceeding EUR 100 billion annually in Europe. Approximately 30% of patients do not respond adequately to standard therapies. These patients face significant disability and elevated suicide risk. The need for rapid-acting, well-tolerated, mechanistically differentiated treatments is clear, and that is the rationale behind SAN2465. Together, epilepsy and depression represent high unmet need, substantial disease burden, and meaningful commercial potential. So we now have a robust differentiated CNS pipeline entering clinical development. We have two partner programs. Acadia is advancing ACP-711 toward Phase II in essential tremor. Jazz licensed SAN2355 for epilepsy and is progressing with development. They are at a similar stage as our internal programs. Based on proceeds from these deals, we are advancing three internal assets within epilepsy and depression. Our current plan is to initiate 2 Phase I studies in late 2026, and then a third in early 2027, with Phase II studies expected to start in 2028. These are early-stage programs, but importantly, we have already demonstrated that this type of asset can attract significant pharmaceutical interest. The track record gives us confidence to advance these programs internally. Next slide. So over the past 16 months, we have received $70.5 million in upfront payments. We remain eligible for development and regulatory milestones, bringing total potential payments to approximately $410 million. Of this amount, $17.5 million is expected in the near term as partners have progressed into the next clinical phase. In addition, we are legal for more than $1.2 billion in commercial milestones, bringing total potential payments up to $1.6 billion for these two deals, plus royalties on future sales. While milestones are not guaranteed, these partnerships provide meaningful nondilutive upside and potential future income streams while we are advancing our internal portfolio. This slide highlights recent CNS companies that create substantial value after advancing validated assets into mid- and late-stage development. Our ambition is to build programs with comparable scientific, legal, and clinical differentiations. For example, Lundbeck acquired Longboard for $2.6 billion following a relatively small Phase II study across several DEE indications that supported regulatory engagement of a broad pediatric label. Our SAN2668 program is designed with a similar basket study strategy in pediatric DEE indication. So it's exactly what we intend to do here. Looking 5 years ahead, our objective is to have 1 or 2 assets in late-stage development and additional early-stage programs progressing. Including near-term milestones, we estimate approximately $90 million available to execute our near-term strategy. Our modeling suggests that bringing two assets to Phase III by 2030 will require approximately an additional $60 million, potentially $100 million. We expect to fund that gap through a combination of midterm milestones, potential new partnerships, and, if appropriate, capital market activity over the coming years. Importantly, we have financing in place for several years and flexibility in how we fund future growth. With that overview, let me now turn to our three internal programs and what you can expect in 2026 and beyond. We are preparing all three programs for Phase I initiation around year-end 2026. Each Phase I study will include single ascending dose and multiple ascending dose components. Following the SAN study, we plan to conduct PET studies using radiolabel ligands to measure receptor occupancy in the brain. This will allow us to establish dose target engagement relationships and support rational dose selection for Phase II. In parallel, we collect quantitative EEG data as functional biomarkers. These readouts will help confirm pharmacological differentiations and provide objective measures related to sedation, vigilance, and cognitive effects. For SAN2668, we are also evaluating a sensitive epilepsy study in 2027. This model has historically shown a strong correlation with effective seizure control in the broader epilepsy population. It requires only a single dose and could run in parallel with the MAD study. Importantly, conducting such a study in adults before moving into the pediatric population supports both the regulatory alignment and future recruitment rate. If execution proceeds as planned, we expect substantial clinical and biomarker data flow in the second half of 2027. So this slide summarizes key enabling activities across CMC, preclinical, regulatory, and clinical work streams. All three programs are progressing on similar timelines. During the first half of 2026, we expect to complete GLP toxicology studies and finalize clinical trial material manufacturing. In the third quarter, we expect final toxicology reports and drug product manufacturing completion. Following that, we plan to submit CTAs and EINDs with the objective of opening two studies before year-end and the third in early 2027. Executing two parallel programs in operation is operationally demanding, but we have built the organization and selected experienced CROs to support this effort. Our collaboration with partners may also generate additional value in the coming year. Acadia expects to initiate Phase II in essential trauma, which would trigger a $10 million milestone to Saniona. Jazz has not provided formal guidance, but could potentially initiate Phase I this year, triggering a $7.5 million milestone payment. AstronauTx may exercise its option in Alzheimer's disease, leading to an option payment to Saniona. Boehringer Ingelheim may also reach a research milestone. Cephagenix could trigger the next tranche of venture financing upon milestone achievements. And then, Medix tesofensine in Mexico, regulatory dialogue continues. It has taken several years. And while approval cannot be ruled out, the strategic importance to Saniona today is limited compared to our CNS pipeline. Overall, these collaborations provide optionality and potential nondilutive capital to Saniona. I will now turn you over to Johnny Stilou to give an update on our financial performance during the fourth quarter.

Thank you, Thomas. As you can see on this slide, our financial result for the year was a positive result of SEK 284 million and reflects the upfront payment of $42.5 million from Jazz received in the third quarter of '25. Q4 shows a loss of SEK 41 million, which is in line with our expectations, as there is no milestone payment in the quarter, which is fully as expected. We expect to receive an additional $17.5 million, equal to SEK 167 million, in near-term milestone payments from the Acadia and Jazz agreements when Acadia starts Phase II trial, and Jazz starts the Phase I trial. These milestones are expected to occur during '26. As a biotech company, any income from partner agreements will be triggered by achieved milestones, and therefore, reported revenue will fluctuate significantly between quarters. This is fully normal and expected, and also included in our financial planning and forecasts. On the next slide here, you find an overview of our operating expenses for the past 8 quarters. Operating expenses or OpEx were realized at SEK 51 million in Q4. This was at a similar level as Q3.  However, we do see, as expected, an increase in OpEx throughout '25, driven by both higher personnel costs and program costs. Our organization grew from 22 people at the beginning of the year to 34 people by the end of '25.  We plan to further expand our organization in '26 as we finalize our build of the clinical organization to move our 3 internal programs into clinical Phase I trials. Driven by the planned higher personnel cost and also program cost in '26, we expect quarterly OpEx to increase further in '26 compared to '25. On average, we expect approximately a 50% increase in OpEx in '26 compared to '25.  At the end of the year, we had SEK 581 million in cash. As previously mentioned, our strong cash position is largely driven by the 2 large partner deals with the upfront payments from Jazz in August '25 of the $42.5 million and the $28 million upfront from Acadia in November '24. We expect, as mentioned, to receive an additional $17.5 million in near-term milestone payments from these 2 agreements later in '26.  This will further bolster our cash position and provide us with a strong cash runway to progress our 3 internal programs into clinical trials. We expect that with the cash position, including the near-term milestone payments, we are fully funded to complete the 3 Phase I programs and are funded into 2028. With that, I will give the word back to Thomas for final remarks. Thank you.

So before we open for questions, let me briefly summarize where we stand. 2025 positions Saniona for the next phase of development. We strengthened our balance sheet and secured multiyear finance visibility. We established high-quality pharmaceutical partnerships that provide meaningful nondilutive upside and external validation of our platform.  We prioritized 3 different CNS programs and aligned them toward first-in-human studies starting in 2026. Importantly, all 3 programs follow a biomarker-driven development strategy designed to support rational dose selection and increase the probability of Phase II success. In short, Saniona is entering a focused clinical execution phase with financial flexibility and strategic validation. With that, we are happy to take your questions.

Thank you very much for that presentation. And you answered some of the questions that I had already received. But one was about, you mentioned a bit about costs are expected to increase in '26, and also mentioned a level there. But can you elaborate a bit on how you expect to balance between retaining a solid cash position and also kind of accelerate your programs? What's your strategy?

So as I mentioned, we expect that our average cost base operating cost will increase by approximately 50% in '26 compared to '25. This is driven by the completion, you can say, of our organizational build clinical capabilities to execute our 3 internal programs into clinical trials, the Phase I trials. We are very, very prudent about when we execute those costs, both the external cost and also when we hire needed resources and competencies. So we maintain full flexibility on our cash position.  As mentioned, we expect near-term milestones payment of $17.5 million, so despite the increase in expected cost, we have a very solid cash position. And as I mentioned, this cash position, while we execute on our current plans to move the 3 programs into clinical Phase I trials, we do have sufficient funding to do that and to finalize the 3 Phase I trials, and further to have funding into 2028.  As we have mentioned in the past, we have further acquired the headquarters, and we do have an additional option if we so choose to do a sale and leaseback of our headquarters, which will further strengthen our cash position. So we believe that we still have a very, very strong and solid cash position to execute our strategy. No need to worry about.

I can maybe add on this that, based on the current cash position, as John said, we have runways into the second half of '28. And this assumes that we actually initiate the Phase II studies. However, that runway will not be sufficient to fully complete the Phase II programs independently.  In practical terms, this means that we have the flexibility to generate Phase I data, postpone some activities, and perhaps initiate Phase II and create value before running additional capital. As we approach the Phase II execution, we expect to evaluate funding opportunities, including milestones, potential partnerships, and capital market activities. So we are funded through key inflection points, but not through full Phase II completion in all 3 programs.

And one question was about how to balance between, for example, the 3 prioritized internal programs. How do you prioritize between early out-licensing and retaining the programs longer in-house to have a higher value? I mean, how willing would you be to out-license them early if you got a great offer?

We internally advance a portfolio rather than betting on one single asset. And each program addresses a different indication with distinct risk-reward profiles. 668 has strong rare disease positioning and could suit us very well in the long term. SAN2219 targets a large refractory epilepsy population, and SAN2465 addresses a major unmet need in depression.  These studies will, in Phase III, be quite substantial. So you can say from a prioritization point of view, we have a very high interest in 2668 ourselves because we can take it all the way. The timing for the partnering, the longer we take it, the more valuable they will become. But we are already in partnering discussions with several companies, including companies we have met at JPMorgan. And this you need to do if you want to time-out-license it at a given point in time.

You mentioned JPMorgan there. Can you elaborate a bit more on your impressions from the meetings you had?

Yes. I say in general, I think that the overall sentiment towards TNS has clearly improved compared to previous years, and also illustrated by the 3 companies I referred to in my presentation. So there is a new strategic interest in differentiated neuroscience assets and particularly those with strong translational strategies and biomarker support. I think we had a very interesting JPMorgan meeting. We had more than 40 meetings during the period, and this was partly because we had basically a 2.5-day full book with investors, bankers, and sell-side and buy-side analysts. Then, parallel to this, we have many meetings with pharmaceutical companies and biotech companies interested in our assets. So it was really interesting, and several of them, the pharmaceutical companies, said we are interested in this and that, and we want to continue discussing on the CDA and eventually go into the data room. So this is where we are.

And if you look at Swedish listed companies, 2025 was a great year for licensing deals compared to previous years. It seems that, yes, there has been a bottleneck issue here that, in the end, companies need new drug candidates to fill up their pipeline. What are your impressions when it comes to the future? Do you see that interest will continue to increase in the coming years from pharma companies in general?

Absolutely. And we have several products in epilepsy, and there are many very successful companies in epilepsy, which do not necessarily have so much internal innovation power. It means that they need to go out and in-license programs in order to bring them forward commercially. And this is among the companies we are speaking with. Having said that, I also think that we have interest from large pharmaceutical companies with significant innovation power internally because they would like to see the assets. It goes by itself that the Jazz deal and the deal have validated our science and people, we have important questions coming from large companies as well, who want to see what we have.

Yes. Sounds good. And one question was also about, there's been a lot of discussion about the FDA, and there was one proposal here that you might only need to do one Phase III trial, for example, some indications that it could be easier to take a drug candidate all the way to the market. Do you have any general thoughts about the development in the FDA and how it could impact your drug candidates?

Assuming the U.S. market is pivotal for nearly all pharmaceuticals. And also the financial market in biotech is very much dependent on interest from U.S. investors at the end, at least when you're going in large scale. So, American investors are very focused on what the FDA is saying about your programs. We have selected, in this case, for our 3 programs, we have selected our CROs. 2 of the programs, the epilepsy programs, will be conducted by the CROs here in Europe, whereas the program with depression will be conducted in the United States. So here, we will file an IND, and then we get information from the FDA about what they think about the program. And given the importance of the U.S. market, we are also considering, while we are doing the Phase I study, also filing to get an open IND in the U.S. just to have the information on what the FDA is saying. This is what investors care about, not necessarily that it is actually conducted in Europe.

Interesting. And you mentioned there that you have a U.S. CRO when it comes to depression. What was the thinking there about depression in the U.S.? Is it that they are more capable of conducting a study or that access to KOLs and so on is more important? Or yes. Any general thoughts there?

I'm not sure you understood that question, could you?

You mentioned that you will have a 0 in the U.S. when it comes to your depression program. Can you explain why?

I think it's not necessarily related to the disease, but this is also a program that we think will be quite suitable for partnering relatively early. The reason is that the Phase III program for such an asset is quite extensive, quite significant. And even a Phase II study could be quite large. Therefore, this is a program that we would like to partner with and find a partner. And therefore, that's part of the reason. So this is one of the reasons. But it's not. I mean, you could also do these in Europe. And at the end of the day, I think you probably will if you're going into large studies, then you will maybe have both centers in the U.S. and Europe.

And what are the pros of doing a study in Europe? Is it better access? Or is it cheaper, or any other pros compared to the U.S. for the other programs?

No, it's not necessarily cost. It's not a cost. I mean, it is interesting because one of the centers we are working with for one of the program 2668 will be conducted in Holland at a center that has basically done most of the studies in the GABA space for both the European and U.S. companies over the years. And they have a huge database and a lot of additional endpoints, which you can get, and it's all integrated in-house. You get EEG readouts and all sorts of additional measurements, which are very beneficial when you are going to position the product going forward and for differentiation strategies. So this is a local expertise in GDR, which we are going to.

So yes, obviously, important to gather as much data as possible as early as possible. Some other question was about AI, which is, of course, always topical. And the question was, do you use internally in some way when you evaluate the search for new candidates in the ion channel library? And is it something that you hope to increase --

We have always used computer tools and a data-driven approach in compound optimization and target evaluation. Ion channels are structurally complex, and structure-based modeling already plays a role in our, and AI will have significant potential in predicting modeling and challenge interaction, screening prioritization, and so forth. But we are not investing heavily in it. What we're doing is that we have all employees go through training to do and stuff, so we can use it in our daily work. But we see that this still requires significant investments if you are an early adopter in this field. So we are following it, and then I'm introducing it where we find it makes sense for us right now.

Yes. And you can produce a lot of candidates also without AI, of course. So yes, maybe not needed to be in the forefront there. So another question was about Tesofensine in Mexico. And have there been any sub-approvals in the process, like manufacturing or labeling? Or is there any progress in that respect?

The process for C has been ongoing for several years, and Med has resubmitted the application in early 2025, and they continue the dialogue with the authorities. We are not aware of any final approvals, such as labeling, manufacturing association states.

And when it comes more broadly to obesity and obesity-related indications, there are, of course, a lot of new competitors, also pills for Wegovy Ozempic, for example. How could that affect the interest in Tesofensine, which is still differentiated enough with a low cost, for example? Or is it more?

When we started this program with tesofensine in Mexico was back in 2016. And then we conducted 2 Phase II studies and a Phase III study, and filed at the end of 2019. And then the time has been going by. And in this period, the obesity market has changed dramatically. At that time, only Saxenda was out there among the GLP-1 analogs, and that was not very effective. But a good entry for Novo, of course. Since then, Wegovy has come in, and then we have Eli Lilly and a lot of other companies coming in with GLP-1 analogs. And Wegovy is going off patent in many places in the world now.  So, prices are coming down. We also saw yesterday or 2 days ago that they are reducing the U.S. listing price of 50%. So, it's a very different market, and these new GLP-1s are more effective and have similar efficacy to tesofensine. Tesofensine , still a tablet, is a different mode of action and could have benefits, but it is a different model. We have to remind ourselves that the patent expired. So, the commercial opportunity out-lic somewhere big countries in the U.S. is very, very small for this reason.  But we see some opportunities in Mexico and other South American countries if it gets approved in Mexico. And this is what we are working on. So, what we see as the commercial opportunity here is that these are already cash markets. A lot of the market will be that in the future, anywhere. But it will be competitive price-wise and the efficacy is there, but the commercial opportunity, I mean, when we did that, we saw it as a possibility to get the regulatory income maybe of from Mexico, if they had $100 million in sales, then we could get $15 million annually and we thought we could do a lot of damage with that money.  The company is a different place now. We are building our CNS platform and CNS assets. And here, you have completely new patents  . All 3 programs have patent protection into the 40s, filed within the last 3 or 4 years. This is where the value in this company is, and this is what we are pursuing. It may spare us from a financing round somewhere down the line if it gets approved. That's more how I look at it.

And a question for Johnny about the currency effect in Q4, if there were any? And then also, what's your view of the kind of cash management going forward, given the volatility in the dollar, for example?

So, in general, it's a good question as we do have a substantial cash position. We, in general, make operational hedges, meaning that our cash position is held in the currency in which we can see, according to our budgeting forecasting, that costs will incur, meaning that the majority of our cost is euro-based. Hence, we have most of our currency in euros/Danish krona, which is linked to the euro. And then we do have a little in Swedish krona to hedge the Swedish krona-driven cost.  Then we do have some in U.S. dollars to reflect the cost that we will incur in U.S. dollars, meaning that due to this, any fluctuations in the dollar will only have a very limited effect on our cash position, as we have already hedged it operationally.

And another investor question was, what is the reason that you believe SAN2668 to be superior to Longboard's compounds?

It's a very different mechanism of action. That's the first place, I would say. So we really expect the program and the data that they generated. Our differentiation thesis lies in subtype selective and pharmacodynamic profile of our compound. So, we have seen the preclinical data suggest very strong seizure efficacy in our compound and a differentiated tolerability profile similar to compared to benzodiazepines. And this can only be fully established in a clinical study. At this stage, we will focus on the differentiation.  I think I would say about 2668 that our initial data suggests that this compound will be more effective than benzodiazepine for convulsive seizures, and benzodiazepines are considered the most effective drugs. They are limited in use because of the side effects and tolerance induction. And our clinical data suggests that initial data suggests that we do not have these benzodiazepine adverse effects, and also very limited tolerability induction.  So, we have a potential drug that is better than the benzodiazepines, which are reserved for rescue medication right now. That is the potential.   On top of that, we have very high modulation of so-called GABA alpha 3 channels. And we know for SN711 that this is the key for controlling spike wave discharges in the brain, which is related to absence seizures, but also a certain type of seizure. This type of seizures are also involved in cognitive development problems for these patients. So, it could normalize it and help the cognition of these patients on top of this.  The type of pediatric epilepsy syndromes we are looking for initially are those with hike weight discharges because we have an added benefit here. And this includes ES, which is the first indication to go for, but also other indications such as Lennox-Gastaut syndrome, which is one of the major pediatric epileptic syndromes. Based on this, you can broaden the label and then have the same approach as longborn. But it comes with different benefits, including the potential for cognitive improvement and very strong seizure control.

That's all the time we had. So, thank you both very much for this presentation and Q&A.