January 24, 2018 / 2:23 PM / a year ago

UPDATE 1-Santhera stock dives after regulatory setback

(rewrites, adds stock price, comment and detail)

By John Revill

ZURICH, Jan 24 (Reuters) - Shares in Santhera plunged by nearly a third on Wednesday after it warned that it expected European regulators to reject wider marketing approval for its Raxone drug.

More than 82 million Swiss francs ($86 million) was wiped from the value of the Swiss orphan drug maker, which before the crash had a market capitalisation of 252 million francs.

The company contacted the SIX Swiss Exchange after its stock started to fall steeply on Wednesday, with trading halted after a 9.2 percent drop and before its statement on Raxone.

Later it said it had met with a panel of the European Medicines Agency on Tuesday to discuss getting approval for Raxone to treat Duchenne muscular dystrophy, a genetic disorder characterised by progressive muscular degeneration and weakness.

The company said it now expects the panel to maintain its original position to issue a negative opinion on Santhera’s market authorisation application.

It had filed the application on top of its existing authorisation to treat Leber’s hereditary optic neuropathy.

When trading resumed, the shares lost further ground to be 32 percent lower on the day.

“There is no indication that information leaked out,” a company spokeswoman said of the pre-suspension share move.

A Zurich-based trader said the likely rejection was a big setback for Santhera.

“It’s a mega disappointment. How can the company earn money now?” the trader asked. “The one indication they currently have for Raxone is certainly not enough to justify the price level.”

Widening potential indications for Raxone is a big hope for Santhera. The drug generated all the group’s revenues of 19 million francs in 2016, a 340 percent increase from the prior year.

Santhera said it plans to give a further update on Friday.

$1 = 0.9497 Swiss francs Reporting by John Revill and Rupert Pretterklieber, editing by Louise Heavens and Michael Shields

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