30 April 2020
Relief Therapeutics Holding AG (SIX: RLF, “Relief”, the “Company”, the “Group”) a Swiss-based publicly-traded drug development company, focusing primarily on the clinical development of peptides and proteins of natural or engineered origin to address unmet medical needs today, reports its audited results for the full year ended 31 December 2019 and provides corporate updates.
For its strategic repositioning aimed at refocusing its activities on the development of Aviptadil, Relief has terminated two collaborations and licensing agreements signed in 2018 with Genclis SA and Health and Happiness Hong Kong Limited. These were concerned with the co-development and commercialization of human applications of artificial colostrum and cow milk for the prevention of allergies. While product development and commercial prospects were promising, securing future stream of income and reshuffling the limited internal resources were a priority.
In order to strengthen its focus on Aviptadil, Relief has also entered in August 2019 into a binding Share Exchange Agreement with Sonnet BioTherapeutics, Inc. to acquire all outstanding shares of Relief Therapeutics SA. Conditions precedent were met in 2020 and the Share Exchange was closed on April 2, 2020. The transaction resulted in the transfer of the Relief Therapeutics SA entity containing the Atexakin alfa asset to Sonnet Group, who will pursue the clinical development of Atexakin alfa in chemotherapy-induced peripheral neuropathies and related indications.
Following the resignation of the CEO and CFO, the Company chose to operate with the support of its CSO, Mr. Yves Sagot and an external CFO. The team was reinforced by the election of a new Board Member, Mr. Thomaz Burckhardt.
The return of the commercial and manufacturing rights for cow milk for the prevention of allergies and artificial colostrum, as well as the termination of the corresponding licensing agreements, resulted in an absence of revenue in 2019. It also released the company from its deferred payment debt originally due in March 2020 of TCHF 4’354 toward Genclis. In 2018, Relief had recognized a non-refundable signing fee income of TCHF 565.
General and administrative expenses decreased to TCHF 946 in 2019 compared to TCHF 1’050 in 2018, primarily since the number of employees and their compensation were reduced during 2019.
The Swiss corporate tax reform voted on May 19, 2019, had a positive outcome on the net result. The reduction of corporate income tax rate led to a downward adjustment of the deferred tax liability of TCHF 3’142 and a corresponding tax income.
The EBITDA in 2019 was TCHF 861 compared to TCHF 483 in the previous year, primarily due to the change of revenue.
The net loss for 2019 was TCHF 7’460 compared to TCHF 436 in 2018, mainly driven by an impairment expense of TCHF 11’200 recorded on the carrying value of our intangible asset Aviptadil.
Throughout the year, the Company received debt financing from its main shareholder GEM Global Yield Fund LLC (GGYF) for TCHF 600 to finance operating activities. Cash and cash equivalents amounted to TCHF 137 at December 31, 2019, compared to TCHF 265 at year-end 2018.
Accounting rules prescribe that the recent COVID-19 event is considered as a non-adjusting event and shall not be considered when setting assumptions for the valuation of intangible assets as of December 31, 2019. The book value of Aviptadil was therefore estimated on its commercial perspectives for pulmonary sarcoidosis without integrating its potential value in COVID-19 and has been impaired from TCHF 30’800 to TCHF 19’600. Impairment is mostly linked to a delay in the foreseen market launch, due to the need to adapt trial design to new regulatory requirements.
At the Holding stand-alone level, and as a result of the divestment transaction with Sonnet BioTherapeutics, the value of the shares of Relief Therapeutics SA was impaired from TCHF 38’817 to TCHF 3’670. The carrying value of TCHF 3’670 reflects the market value of the exchanged shares of Sonnet BioTherapeutics Holdings based on market prices observed at closing date less transaction costs.
Based on current expectations and ongoing clinical trials for the treatment of Acute-Respiratory Distress Syndrome associated with COVID-19 (COVID-19-ARDS) with Aviptadil, the Group’s cash burn guidance for 2020 is CHF 15 million. In order to successfully complete the COVID-19-ARDS trials, three sources of cash could be exerted in parallel: the sale of SONNET BioTherapeutics’ shares, the exercise of the Share Subscription Facility with an open credit line up to CHF 43.8 million and equity transactions with investors, including our main investor Global Emerging Market (GEM), which reaffirmed its commitment to pursue the route initiated and support ongoing projects for the benefit of patients and shareholders.
The Share Exchange Agreement for the acquisition by Sonnet BioTherapeutics of Relief Therapeutics SA was closed on April 2, 2020. Based on the agreement terms, Sonnet paid to Relief Holding shares of its common stock that converted into 757’933 shares of listed Sonnet Holdings common stock. This number differs from the 7’111’947 shares originally announced as Sonnet shares were converted into Sonnet Holdings shares in its recent merger that closed on April 1, 2020, at a ratio of approximately 0.106572 Sonnet Holdings shares per Sonnet share. The value negotiated on August 2019 therefore remained unchanged. This divestment allows Relief Holding to finance the development of its main asset Aviptadil.
In early 2020, the pandemic caused by the SARS-CoV-2 coronavirus (COVID-19) spread all over the world. To date, more than 3.2 million people have officially been infected globally across 210 countries and roughly 230’000 have died. COVID-19 death is primarily caused by Acute Respiratory Distress Syndrome (ARDS), in which severe inflammation due to a cytokine storm causes the lungs to fill with fluid. Aviptadil is well-known to have potent anti-cytokine and anti-edematous effects in numerous animal models and in phase 1 and phase 2 human studies.
In February 2020, Relief Therapeutics Holding took the strategic decision to focus its activities on this humanity-threatening deadly virus. In order to further increase its chances of success, Relief asked Dr. Jonathan Javitt, the CEO of a privately-held firm called NeuroRx, to assist in conducting trials in the USA.
Due to its therapeutics potential, the Aviptadil benefit might extend beyond COVID-19 ARDS and may become a standard of care for Acute lung injury and ARDS due to septic shock and polytrauma. This view is supported by previous open-labeled trial of Aviptadil for ARDS caused by sepsis, in which 7 of 8 patients on mechanical ventilation showed substantial improvement and 6 ultimately left the hospital alive.
GEM Global Yield Fund LLC SCS has exercised, on April 29, 2020, 50’000’000 of its warrants for a total of CHF 500’000. The exercised warrants were issued in connection with the financing round completed in March 2017. Relief will use the proceeds to fund the ongoing clinical trials.
The full Annual Report of Relief Therapeutics Holding SA is available here https://relieftherapeutics.com
Relief Holding is a company developing drugs via participation in active entities that have obtained intellectual properties through their own research activities or via in-licensing. Development activities of the Relief Holding group of companies focus primarily on clinical-stage projects based on molecules of natural origin (peptides and proteins) with a history of clinical testing and use in human patients or a strong scientific rationale. Currently, Relief Holding is concentrating its efforts on developing new treatment solutions for indications related to respiratory diseases in particular COVID-19-induced ARDS.
RELIEF THERAPEUTICS Holding SA is listed on the SIX Swiss Exchange under the symbol RLF and is headquartered in Geneva, Switzerland.
For further information, please visit the Relief website at www.relieftherapeutics.com or contact investor relations at:
RELIEF THERAPEUTICS Holding SA
This communication expressly or implicitly contains certain forward-looking statements concerning Relief Therapeutics Holding AG and its business. Such statements involve certain known and unknown risks, uncertainties and other factors, which could cause the actual results, financial condition, performance or achievements of Relief Therapeutics Holding AG to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Relief Therapeutics Holding SA is providing this communication as of this date and does not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise.