SANTHERA PHARM : Announces Interim Financial Results for the First Half Year of 2011 and Restructuring Plans to Concentrate on Catena® Franchise

Liestal, Switzerland, August 29, 2011 - Santhera Pharmaceuticals (SIX: SANN) announced today the financial results for the first half of 2011 and plans for a restructuring. In the first six months of 2011, Catena® reached net sales of CHF 1.6 million, net cash burn was reduced to CHF 12.3 million and the net result amounted to CHF -15.0 million. As of June 30, 2011, the Company had cash reserves of CHF 31.4 million. Due to the pressure of the continuously volatile markets, Santhera intends to concentrate its operations on its key asset Catena® and its multiple opportunities in late-stage development to secure more financial flexibility independent from fund raising or licensing income. As a consequence the operational resources are planned to be reduced to secure cash reach into 2013, well beyond the expected decision by the European Medicines Agency (EMA) on the Marketing Authorization Application (MAA) in Leber's Hereditary Optic Neuropathy (LHON).

Key financial figures (unaudited)

1 as of December 31, 2010

2011 Interim Report: Cash reserves of CHF 31.4 million and debt-free balance sheet
As of June 30, 2011, Santhera had cash and cash equivalents of CHF 31.4 million (end of 2010: CHF 43.7 million) and no debts. Net change in cash in the first half year of 2011 was reduced to CHF -12.3 million compared to CHF -13.8 million in the same period in 2010, despite negative currency impacts. Total equity at mid-year 2011 amounted to CHF 54.5 million (2010: CHF 67.1 million).

In the first six months of 2011, Catena® generated net sales of CHF 1.6 million (first half of 2010: CHF 1.7 million). Operating expenses amounted to CHF 15.6 million (first half of 2010: CHF 15.7 million) in line with management expectation. As a consequence, the operating result (CHF -13.9 million) was on the same level as in the same period in the previous year (first half of 2010: CHF
-13.7 million). The expenses for research and development were CHF 9.1 million, while expenses for marketing and sales and general and administration amounted to CHF 1.3 million and CHF 5.1 million, respectively . For the first half of 2011, Santhera reports a net result of CHF -15.0 million (first half of 2010: CHF -14.2 million).

Santhera intends to align its organization to focus on the development and commercialization of its Catena® franchise while continuing to evaluate strategic alternatives. Under current financial planning assumptions and absent further income from partnerships and/or funds from financing, the planned restructuring and focus on Catena® allows Santhera to remain financed into 2013.

Strategic focus on Catena® offers multiple opportunities in orphan diseases
Catena® is marketed in Canada for the treatment of Friedreich's Ataxia and available on named-patient basis in Europe and in other territories. In the first half of 2011, Santhera generated revenues of CHF 1.6 million.

In Europe, the MAA for Catena®, potentially the first therapy for the treatment of LHON, is currently under review. A decision from the EMA is anticipated in late summer 2012.

Catena® is also being investigated in a Phase III trial in Duchenne Muscular Dystrophy (the DELOS study). Following a review of the study assumptions, it has been decided to increase the number of corticosteroid non-using patients beyond 40 as originally planned. As a consequence the planned interim analysis will be delayed.

In addition, Catena® is being developed in MELAS syndrome (the MELTIMI study) and Primary Progressive Multiple Sclerosis (the IPPOMS study), conducted as investigator-initiated trials by the Columbia University of New York City and the US National Institutes of Health, respectively. Enrollment of the last patients into the MELTIMI study is expected in the second half of 2011.

Other pipeline programs
Following the analysis of additional data generated with fipamezole by Santhera and its partners and the recent scientific debate on optimal clinical endpoints for the measurement of dyskinesia in Parkinson's' disease as well as feedback from the ongoing partnering process for North America, the Company decided to seek advice from the US Food and Drug Administration (FDA) regarding further clinical development of fipamezole, causing a delay in the partnering process for North America.

Santhera foresees no further financial commitments for fipamezole or for omigapil, its third clinical-stage compound, for which development will be advanced only upon availability of external funds such as grant money.

Restructuring in Switzerland and in the U.S.
Santhera intends to concentrate its financial and human resources on Catena® and to adjust the Company's organization to reduce costs and secure a cash runway into 2013.
The operations in North America will be reduced to focus exclusively on the commercialization of Catena® in Canada. In Switzerland, the Company intends to concentrate on clinical development and regulatory affairs while nonclinical research and administration are planned to be reduced. As a consequence, Santhera intends to cut its workforce from currently 47 to 26. The legally required consultation process with the Swiss employees has been initiated.

"Securing the financial flexibility in the ongoing volatile market environment has become Santhera's highest priority. The Board of Directors unanimously decided to restructure the Company and to strengthen the focus on Catena®. We consider this the best option to maximize the value of the Catena® franchise for the Company and its shareholders", said Michael Lytton, Chairman of the Board.

Management and Board changes
Thomas Meier, currently Chief Scientific Officer, will become Chief Executive Officer, following Klaus Schollmeier who will become Chairman of the Board, starting October 1, 2011. Helmut Kessmann, Chief Business Officer, and Barbara Heller, Chief Financial Officer, have resigned and decided to leave the Company within the next months to pursue other interests.

Considering the operational changes and the needs of the Company going forward, the Board has decided to reduce the number of its members. As a consequence, Michael Lytton, Chairman, Hans-Peter Hasler, Vice Chairman, and Bernd Seizinger have tendered their resignation with effect from October 1, 2011, after which the Board will consist of four members: Jürg Ambühl, Martin Gertsch, Timothy Rink and Klaus Schollmeier. Mr Schollmeier will become Chairman of the Board and Mr Gertsch will remain Chairman of the Audit Committee.

Klaus Schollmeier, designated Chairman of the Board, commented: "I sincerely thank the leaving employees, executives and Board members for their long-term and valuable contributions to Santhera. They all have been instrumental in defining and implementing Santhera's strategy in orphan neuromuscular diseases."

Outlook
The EMA is currently reviewing the MAA for Catena® as first treatment of LHON and a decision is expected in late summer 2012. Under current planning assumptions, the measures announced today will secure cash reach beyond this decision point and into 2013 giving Santhera enough financial flexibility to develop the Catena® franchise and preserve other important assets in the company's pipeline.

2011 Half-year Financial Information

The 2011 Interim Report of Santhera Pharmaceuticals including the unaudited consolidated financial statements is available on the Company's Web site under www.santhera.com/reports.

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About Santhera
Santhera Pharmaceuticals (SIX: SANN) is a Swiss specialty pharmaceutical company focused on the development and commercialization of innovative pharmaceutical products for the treatment of severe neuromuscular diseases, an area of high unmet medical need which includes many orphan indications with no current therapy. Santhera's first product, Catena®, to treat Friedreich's Ataxia is marketed in Canada. Catena® is currently under review for marketing authorization by the European Medicine Agency as the first therapy for patients suffering from Leber's Hereditary Optic Neuropathy. For further information, please visit www.santhera.com.

Catena® is a trademark of Santhera Pharmaceuticals

For further information, contact
Klaus Schollmeier, Chief Executive Officer
Phone +41 (0)61 906 89 52
klaus.schollmeier@santhera.com

Barbara Heller, Chief Financial Officer
Phone +41 (0)61 906 89 54
barbara.heller@santhera.com

Thomas Staffelbach, VP, Head of Public & Investor Relations
Phone +41 (0)61 906 89 47
thomas.staffelbach@santhera.com

Disclaimer / Forward-looking statements
This communication does not constitute an offer or invitation to subscribe for or purchase any securities of Santhera Pharmaceuticals Holding AG. This publication may contain certain forward-looking statements concerning the Company and its business. Such statements involve certain risks, uncertainties and other factors which could cause the actual results, financial condition, performance or achievements of the Company to be materially different from those expressed or implied by such statements. Readers should therefore not place undue reliance on these statements, particularly not in connection with any contract or investment decision. The Company disclaims any obligation to update these forward-looking statements.