SymBio Pharmaceuticals

Commercial outlook

At the turning point

Pharma & biotech

SymBio is approaching a major transition as it prepares to begin internalmarketing of its lead product Treakisym (bendamustine), launch new liquid
formulations of the drug and expand the market with new indications. At
the same time, the company is moving past the recent clinical results fromthe Phase III study where rigosertib did not meet its primary endpoint andis determining the future direction of its pipeline product brincidofovir. We
are taking this time to provide our clinical and commercial outlook.

Year end
12/18
12/19
12/20e12/21eRevenue
(¥m)
3,836
2,838
2,608
9,228

PBT*
(¥m)
(2,626)(4,250)(4,729)
1,526

EPS*
(¥)
(158)
(184)
(145)
30

DPS
(¥)
0
0
0
0

P/E
(x)
N/A
N/A
N/A
15

Yield
(%)
N/A
N/A
N/A
N/A

10 September 2020

Price

¥406

Market cap¥14,291m¥110/US$Net cash (¥m) at 30 June 2020

5,409

Shares in issue

35.2mFree float

94%

Code

4582

Primary exchange

TYO

Secondary exchange

OTC US

Share price performance

Note: *PBT and EPS are normalized, excluding amortization of acquired intangibles,
exceptional items and share-based payments.

Tackling Treakisym marketing on all fronts
Treakisym is currently marketed in Japan by Eisai, but there is a planned transfer ofthe rights back to SymBio at the end of 2020. SymBio is preparing for this by both
readying its internal salesforce as well as multiple pipeline management strategies.
It has submitted a marketing application for the liquid ready to dilute (RTD)
formulation and is advancing its rapid infusion (RI) formulation in the clinic.
Additionally, the company has submitted a label expansion to the Pharmaceuticaland Medical Device Agency (PMDA) for diffuse large B-cell lymphoma (DLBCL)
based on robust data, which would double the addressable market.

%

1m

3m

12m

Abs

(1.0)

(21.0)(28.0)

Rel (local)(4.6)(19.9)(30.5)¥791¥264

52-week high/low

Rigosertib misses the markBusiness description

The company’s partner Onconova announced on 24 August 2020 that rigosertib
had failed to meet its primary endpoints in its Phase III clinical study. The drug
failed to show a survival benefit in the population of high-risk myelodysplastic
syndrome patients. The drug continues to be dosed in an ongoing investigatorsponsored Phase I/IIa study in lung cancer, but we do not expect any further clinicalinvestment in the program from Onconova.

SymBio Pharmaceuticals is a Japanese specialty
pharma company with a focus on oncology andhematology. The Treakisym powder formulation
was in-licensed from Astellas in 2005; liquid
Treakisym was in-licensed from Eagle
Pharmaceuticals in 2017; and brincidofovir was
licensed from Chimerix in 2019.

Brincidofovir: Plan announced to target adenovirus

Next events

The company announced in August 2020 that it will develop brincidofovir for thetreatment of adenovirus (AdV) secondary to hematopoietic stem cell transplant(HSCT) in pediatrics and adults. This is a shift from provisional plans to target
hemorrhagic cystitis (vHC) and HHV-6 encephalitis (HHV-6). The company licensed
worldwide rights to the drug in 2019 and is preparing for global Phase II studies.

Treakisym RTD approval decision

Valuation: Decreased to ¥37.6bn or ¥1,068/share

healthcare@edisongroup.com

We have lowered our valuation to ¥37.6bn or ¥1,068 per share from ¥39.0bn or¥1,144 per share. This was driven by removing rigosertib from our models.
Additionally, we have adjusted brincidofovir for the new AdV indication, which
increased this program’s valuation to ¥1,062m from ¥882m.

September
2020

Analysts
Nathaniel Calloway+1 646 653 7036

Wiktoria O’Hare+1 646 653 7028

Edison profile page

SymBio Pharmaceuticals is a
research client of Edison
Investment Research Limited

Investment summary
Company description: A Japanese drug licensor
SymBio Pharmaceuticals is a Japanese specialty pharma company that has in licensed a series ofassets for marketing in Japan, greater East Asia and worldwide markets. It owns the rights tobendamustine (under the brand Treakisym) and markets it (through partners) in China/Hong Kong,
Korea, Taiwan, Singapore and Japan (its major market). The company additionally licensed two
liquid formulations of the drug from Eagle Pharmaceuticals and is seeking approval to expand thelabel indication to include DLBCL. Additionally, the company has worldwide rights to brincidofovir(from Chimerix), which is preparing to re-enter the clinic.

Valuation: Decreased to ¥37.6bn or ¥1,068 per share
We have lowered our valuation to ¥37.6bn or ¥1,068 per share from ¥39.0bn or ¥1,144 per share.
This valuation is based on a risk-adjusted NPV analysis. The reason for the adjustment is largely
due to the removal of rigosertib from our model. The most valuable programs are the currently
approved indications (low-grade NHL/MCL, r/r and first-line; CLL) for Treakisym at ¥19.0bn. Thisvaluation is bolstered by the lifecycle management of introducing improved formulations of the drug
to retain market share after generics enter the market in 2022. The next highest-value program is
the DLBCL label expansion (¥12.2bn), which we expect approximately to double the addressable
market for Treakisym.

Financials: Profitability forecasted for 2021
The company reported net cash of ¥5,409m at the end of H120. We do not expect the company torequire additional capital as we model initial profitability in 2021 following the relaunch of Treakisym
with the company’s internal salesforce. We forecast revenue being down slightly in 2020 (¥2.6bn)compared to 2019 (¥2.8bn) because of ongoing supply issues with the lyophilized Treakisym
product and a planned inventory rundown at Eisai before transferring rights back to SymBio.

Sensitivities: Transitions are not without risk
SymBio is undergoing a major transition as it prepares to market products internally for the firsttime, and this process carries a series of risks. The company will market Treakisym after Eisai
returns the rights, and it will have to defend its market share. We expect generics to enter themarket in 2022, and although the company has a pipeline management strategy to retain market
share using the liquid formulations, these formulations have yet to be approved and the company
will have to successfully market the differentiated features of these products. These products
gained significant market share in the US, but success in SymBio’s targeted markets cannot beensured. The company has pending marketing applications for the ready to dilute formulation as
well as the label expansion to DLBCL, and although we consider these low-risk applications, someuncertainty must be assumed with all regulatory hurdles. Brincidofovir is based on a wellunderstood antiviral that has previously shown some indications of activity in AdV, but failed toreach statistical significance for the oral formulation, and has been associated with complications in
the literature.

SymBio Pharmaceuticals | 10 September 20202

Licensing drugs for the Japanese market and beyond
SymBio’s overarching strategy is to in-license approved or development-stage products approvedin other territories for marketing in Japan and other parts of East Asia. The company’s lead andcurrently its only marketed product is Treakisym (bendamustine), which is licensed from Astellas.
The product is marketed across East Asia by the company’s sublicensing partners, the biggest ofwhich is Eisai in Japan. The product is approved for the treatment of chronic lymphocytic leukemia(CLL) and low-grade non-Hodgkin lymphoma (NHL) or mantle cell lymphoma (MCL).
The marketing agreement with Eisai expires in December 2020, and the company will be shifting
marketing internally. Additionally, it has engaged in a series of lifecycle management activities toextend the life of the product. First, the company has in-licensed two improved formulations of the
product from Eagle Pharmaceuticals: an RTD formulation that drastically reduces prep time for the
drug; and a RI formulation that allows the drug to be infused in a much smaller volume. Additionally,
the company is seeking approval to expand the label for the product to diffuse large B-cell
lymphoma. The company completed registrational trials for the product in November 2019 andsubmitted a label expansion for approval in May 2020.
In addition to its Treakisym business, the company has a pipeline of in-licensed development-stage
assets. It has licensed the Japanese rights to rigosertib (as both iv and oral formulations as SyB L1101 and SyB C-1101 respectively) from Onconova. However, Onconova recently reported that the
drug failed to meet its endpoints in a Phase III trial in high-risk myelodysplastic syndrome (MDS), so
this program is unlikely to move forward. Additionally, the company licensed the worldwide rights tobrincidofovir from Chimerix in 2019 (SyB V-1901 internally). The company has stated that it intends
to develop the drug for AdV, a viral disease that typically only cause severe symptoms in
immunocompromised individuals after hematopoietic stem cell transplant (HSCT) or solid organtransplant. The company is to start a multinational clinical program for the drug, which we assume
will start with a Phase II study (although few details have been released).
Exhibit 1: SymBio pipeline
Drug
Treakisym

Rigosertib

Program
SyB L-601

SyB L-1701 (RTD)
SyB L-1702 (RI)
SyB L-1101 (IV)SyB C-1101 (oral)

Brincidofovir SyB V-1901 (IV)SyB V-1901 (oral)

Indication
r/r low-grade NHL/MCL
CLL
1st line low-grade NHL/MCL
r/r DLBCLAll
All
r/r high-risk MDS, monotherapy
r/r high-risk MDS
1st line high-risk MDS, combination with azacytidine
AdV after HSCT (Global)
Formulation development

Stage
Approved October 2010
Approved August 2016
Approved December 2016
NDA partial change application submitted May 2020
NDA filed September 2019
Phase I/II, completed patient enrolment
Phase III recently failed, future uncertain
Phase I Japan study complete, future uncertain
Future uncertain
Multinational study in preparation
Beginning in 2020

Source: SymBio

The Treakisym franchise
SymBio acquired the rights to develop and commercialise Treakisym from Astellas in Japan (2005)
and subsequently in China/Hong Kong, Korea, Taiwan and Singapore (April 2007). Bendamustineis a nitrogen mustard chemotherapy agent used in the treatment of hematologic cancers. It iscurrently approved in Japan for the treatment of CLL, and low-grade NHL or MCL (first line andrelapsed/refractory). The company has estimated that these indications represent a market of
approximately 12,500 patients per year combined. It is currently seeking to expand the market forthe drug by expanding the label to include DLBCL (submitted May 2020), which is currently being
reviewed by the Pharmaceuticals and Medical Devices Agency (PMDA) (more below).

SymBio Pharmaceuticals | 10 September 20203

Moving towards internal marketing in Japan
In 2008, SymBio out-licensed the marketing of Treakisym to various commercial partners (anoverview of the main agreements is shown in Exhibit 4). Although precise deal terms have not been
disclosed, we estimate that SymBio earns an average net margin of around 10–12% on top-line
reported Treakisym sales in Asia-Pacific. SymBio intends to establish its own sales organisation tomarket Treakisym in Japan after the current marketing arrangement with Eisai expires in December
2020. SymBio books revenue equal to about 50% of net in-market Treakisym sales under theagreement. Sales of the product are expected to slow down prior to the expiration of the agreementwith Eisai as the latter runs down its inventory. However, this expected slowdown has been
exacerbated by supply issues, where product obtained from Astellas (which manufactures the drug
for SymBio) have repeatedly not met quality standards. We expect this issue to resolve as thecompany transitions out of its existing supply agreements at the end of 2020. SymBio recognised
revenue of ¥2.8bn in 2019 compared to ¥3.8bn in 2018 from the drug.
Exhibit 2: Summary of SymBio’s Treakisym commercial out-licensing deals
RegionTaiwanJapan

Partner
InnoPharmax
Eisai

Date
March 2008
August 2008

South Korea, Singapore
China (including Hong Kong)

Eisai
Cephalon (Teva)

May 2009
April 2009

Terms
Development and launch; SymBio receives upfront, milestones and double-digit royalty.
Co-development and commercialisation rights; Eisai and SymBio share development costs
equally, with Eisai funding 100% of sales and marketing.
Development and marketing rights (financials not disclosed).
Development and commercialisation rights (financials not disclosed).

Source: Edison Investment Research, SymBio Pharmaceuticals

Liquid formulations in development to extend product lifecycle
SymBio moved to extend the lifecycle of Treakisym when it in-licensed rights to patent-protectedliquid formulations of Treakisym from Eagle in September 2017. The new liquid formulations ofTreakisym that SymBio in-licensed from Eagle are more convenient for healthcare workers and forpatients. The first in-licensed product is an RTD liquid formulation that will significantly reduce dose
preparation time, making it easier and safer for health professionals. This compares to the freeze
dried Treakisym, which has to be reconstituted before administration, a time-consuming processthat carries the risk of exposing healthcare workers to cytotoxic powders and vapours. The second
in-licensed product is an RI formulation that will cut drug infusion time to 10 minutes from 60 for thecurrent Treakisym product (and the RTD formulation).
The RTD and RI formulations of bendamustine are marketed as Belrapzo and Bekenda
respectively in the US. Belrapzo is marketed by directly by Eagle, which reported sales of $29.7m
for the product in 2019. The more popular product is the RI formulation Bekenda, which is licensed
to Teva Pharmaceuticals. Teva reported 2019 sales of its bendamustine products (which includes
Bekenda and freeze-dried generics, but Teva notes that Bekenda is dominant) of $496m, downfrom $642m in 2018.
The liquid formulations are protected by patents that extend to 2031. Treakisym is likely to facecompetition from generic versions of the marketed freeze dried powder formulation from June 2022,
but the company expects to switch the majority of patients to the more convenient liquid
formulations following the intended launch of the RTD formulation in early 2021. The RTD producthas been submitted for approval and a decision is expected by the autumn of 2020.
The RI product represents a greater change to the current treatment protocols, so approval of thisproduct is expected to take longer. SymBio announced on 9 September 2020 that the final patient
had been examined in the company’s clinical study of the RI formulation. The trial was primarily
aimed at confirming the safety of the RI formulation. The company states that, based on the current
timeline, it expects the product to be approved in H222 and we expect the first significant sales in
2023.

SymBio Pharmaceuticals | 10 September 2020

4

SymBio aims to transition at least 90% of patients from currently marketed FD powder to liquid
formulations by the end of 2021, and 100% by the end of 2022. We take a slightly moreconservative view and model 95% of patients being switched to these products. We believe that
this is achievable given the similar transition that Teva executed with Bekenda in the US.

Expanding the market to DLBCLIn addition to seeking approval for the new formulations, SymBio also hopes to expand the market
for Treakisym to include the more severe blood cancer DLBCL. The company has completed
clinical studies for this indication and applications for marketing approval have been submitted to
the PMDA. The first application in May 2020 was for use in combination with rituximab and thesecond in July 2020 was for use with rituximab and polatuzumab vedotin.
DLBCL is an intermediate or high-risk form of NHL, but accounts for the largest fraction of NHL
cases in Japan and elsewhere. Approximately 45% of NHL cases in Japan are DLBCL,
corresponding to approximately 16,000 patients. 1 Assuming that 70% of DLBCL patients progress
to receive second-line therapy, we forecast a target market of 11,200 second-line (r/r) DLBCL
patients per year, which would approximately double the addressable market for the drug.
SymBio previously completed a Phase III study in Japan to support a label expansion of Treakisym(in combination with rituximab) to relapsed and refractory DLBCL in November 2019 and reported
that it received positive results. The company presented the detailed results from this study at theEuropean Hematology Association (EHA) virtual meeting in June 2020. The study enrolled 40
patients of whom 38 were evaluated for safety and efficacy.
The abstract for the presentation reported an objective response rate (ORR) in 29 of 38 (76%)
patients, of which 18 of 38 (47%) showed a complete response (CR), with a median progressionfree survival (PFS) of 11.9 months. These results are superior on a numerical basis to otherreported studies of this combination. For instance, an Italian retrospective study reported 50%
ORR, 28% CR, and a PFS of 8.8 months. 2 Other studies have reported lower response rates. 3 The
safely profile presented in the abstract was also consistent with other results and predominantly
showed hematologic adverse events ( AEs). A majority of patients saw grade 3 or higher drops inlymphocyte counts (90%), neutropenia (74%) or reduction in CD4 lymphocytes (66%). This is to be
expected for most drugs targeting hematologic malignancies and is indicative of the drug’s activity.
This combination has been previously studied in a number of different trials across the globe and isamong the arsenal of treatment regimens available to doctors despite not being formally approved.
The BR treatment regimen (as it is typically called) has historically been used as a salvage
treatment in patients following failure of first-line chemotherapy as an alternative to moreaggressive chemotherapy salvage or autologous stem cell transplant. The BR regimen has agenerally more tolerable profile than these other treatments. Because of this there have also been
attempts to investigate it as an alternative treatment in the first line in frail patients. 4 However, alimitation to evaluating the data on the BR combination is that there is a lack of placebo controlled
studies, although this has not limited other similar approvals. Bendamustine was approved in the1

Chihara D, et al. (2013) Differences in incidence and trends of haematological malignancies in Japan andthe United States. Brit J Haem 164, 536-545.

2

Arcari A. et al. (2016) Safety and efficacy of rituximab plus bendamustine in relapsed or refractory diffuse
large B-cell lymphoma patients: an Italian retrospective multicenter study. Leuk Lymph 57, 1823-1830.

3

Vacirca JL, et al. (2014) Bendamustine combined with rituximab for patients with relapsed or refractory
diffuse large B cell lymphoma Ann Hematol 93, 403-409.

4

Storti S, et al. (2018) Rituximab Plus Bendamustine As Front-Line Treatment In Frail Elderly (>70 Years)
Patients With Diffuse Large B-Cell Non-Hodgkin Lymphoma: A Phase II Multicenter Study Of The
Fondazione Italiana Linfomi. Haematologica 103, 1345-1350.

SymBio Pharmaceuticals | 10 September 20205

US for the treatment of indolent NHL in patients who have failed rituximab treatment, based on asingle-arm study.
The company also provided a breakdown of response rates based on patient subgroups. Patientswere segmented into those who had germinal center B-cell type (GCB) DLBCL or the generally
more aggressive non-GCB subtype of the disease, as well response rates by age (Exhibit 3). These
results showed strong activity across subgroups, including the more difficult to treat non-GCB
patients and those over 75. These results are relevant because they continue to support the use of
Treakisym in harder to treat populations.
Exhibit 3: Patient subgroup analysis
Cancer subtype
Patient age

GCB
Non-GCB
Under 65
65 to 74
75 or older

ORR
83%
78%
86%
75%
73%

CR
67%
39%
71%
45%
36%

Source: SymBio Pharmaceuticals

Rigosertib
SymBio in-licensed rigosertib (iv and oral formulations, Japan and Korean rights) from Onconova in2011 for MDS, a rare blood cancer. The licensing agreement included a $7.5m upfront payment toOnconova and $22m in development and regulatory milestones, $30m in commercial milestones,
and tiered royalties in the teens and up to 20%.
The drug was being studied in the Phase III INSPIRE trial of iv rigosertib for the treatment of
second-line, higher-risk MDS (HR-MDS) following failure of hypomethylating agents (HMAs). On 24
August 2020, Onconova announced that the drug failed to meet its primary endpoint of
improvement in overall survival: 6.4 months vs 6.3 months for placebo (p=0.33). Little otherinformation was provided. The drug is still being tested in an investigator-sponsored trial for lungcancer (a Phase I/IIa study), but after the recent failure we do not expect the drug to be approved,
and are removing it from our models and forecasts.
Onconova also developed an oral formulation of the drug and completed a Phase I/II dose
escalation/expansion study in 2018. The oral formulation is being developed for the treatment ofhigh-risk MDS in combination with azacitidine as a first-line treatment. The expansion trial for thisstudy remains ongoing, and the company is also running a trial of the oral formulation in refractory
MDS patients. SymBio has the Japanese rights to the oral formulation of the drug as well, and there
is a possibility that some positive signs will be seen in the trials of the oral formulation. However,barring major surprises, we do not expect the data will be sufficient for these programmes toprogress further.

Brincidofovir
At the end of September 2019 the company announced that it has licensed worldwide rights to theantiviral brincidofovir from Chimerix, excluding the prevention and treatment of smallpox. The deal
includes a $5m upfront payment, double-digit royalties and $180m in downstream milestones
payable to Chimerix. Chimerix will retain the rights to develop the drug for smallpox, but SymBio will
be able to develop the drug worldwide for all other indications. On 5 August 2020 the company
announced its plans to develop the drug for the treatment of AdV disease in pediatric patients
following HSCT in a global clinical study. The drug has previous clinical experience in thisindication, which will allow the company to progress immediately to later-stage trials (although the

SymBio Pharmaceuticals | 10 September 20206

precise clinical development plan has not been announced). This marks a shift from the previously
announced intent to target viral hemorrhagic cystitis (vHC) and human herpesvirus 6 (HHV-6), twoother diseases associated with HSCT.

Clinical history of brincidofovir
Brincidofovir is a derivative of the antiviral cidofovir, formed by conjugating a lipid tail to the drug.
This improves the drug’s properties by increasing cell permeability and, importantly, it reduces thedose-limiting renal toxicity that is characteristic of cidofovir. Both molecules are broad-spectrum
inhibitors of DNA viruses that work by inhibiting DNA synthesis. The lipid tail also improves oral
bioavailability and the oral formulation of the drug was the major development focus for Chimerix.
However, the oral form of the drug has been implicated in some of the severe gastrointestinal (GI)side effects that have been reported in clinical studies. The iv formulation has been explored andChimerix previously published data from a Phase I study showing improved tolerability of this formof the drug. Some GI toxicity was seen with 20mg given once a week, but the 10mg twice a weekdose only had one patient with nausea (out of nine). Exposure at this dose was similar to the
100mg twice a week oral dosing used in the Phase III clinical study (more details below), which had
61% diarrhea, 34% abdominal plain, 31% nausea and 24% vomiting. Future studies will focus on
the iv formulation.
Although there is little doubt that brincidofovir is an active molecule, its clinical development history
has been complex. The lead indication of the drug for a long time under Chimerix was for thetreatment of cytomegalovirus (CMV) following stem cell transplant, which it investigated in the oral
formulation in a Phase III study that reported in 2015. 5 The study failed to reach its primary
endpoint: no improvement in clinically significant CMV infection rates was seen at 24 weeks (51.2%
for brincidofovir vs 52.3% for placebo), although the reasons behind this are complex. The drug
showed antiviral activity during the 14 weeks that patients were on the drug, but this benefit
deteriorated during the follow-up period. Moreover, patients on the drug arm had higher reported
rates of graft-versus-host disease (GVHD) and other infections following the treatment period.
There was a numerically higher rate of all-cause mortality on the brincidofovir arm (HR=1.6),
although it failed to reach statistical significance (p=0.11). When investigating the cause of thesesurprising results, the study coordinators found that patients on the drug arm had over eight times
the level of exposure to corticosteroids than the placebo arm. Moreover, the excess diagnoses of
GVHD were attributable to acute GI GVHD. The rate of GI toxicity was very high in the drug arm(60.7% vs 36.2% for placebo), and one plausible explanation advanced by the study authors is that
this toxicity was misdiagnosed as GVHD, leading to higher rates of steroid use in the drug arm andsubsequently higher rates of infection. However, the authors were unable to differentiate GI GVHD
from toxicity via histopathology.
The drug was also investigated for activity in against AdV by both Chimerix and independent
investigators. One retrospective study (n=27) compared oral brincidofovir to cidofovir in pediatric
HSCT patients with AdV viremia and found that 83% of patients who received brincidofovir had a 1log or greater reduction in viral load (compared to 9% with cidofovir). 6 Chimerix performed arandomized, placebo controlled Phase II study (n=48) in HSCT patients with asymptomatic AdV,
and although numerical improvement was seen in rates of treatment failure (as defined as

5Marty FM, et al. (2019) A Randomized, Double-Blind, Placebo-Controlled Phase 3 Trial of Oral Brincidofovir
for Cytomegalovirus Prophylaxis in Allogeneic Hematopoietic Cell Transplantation. Biol Blood Marrow
Transpl 25, 369-381.

6

Hiwarkar P, et al. (2017) Brincidofovir is highly efficacious in controlling adenoviremia in pediatric recipientsof hematopoietic cell transplant. Blood 129, 2033–2037.

SymBio Pharmaceuticals | 10 September 20207

increasing viral load) and all-cause mortality, these data failed to reach statistical significance. 7 A
post hoc analysis found that in patients with baseline viral loads over 1,000 copies/mL, 86% on the
BIW (twice a week) oral brincidofovir arm had a 2-log response compared to 25% on the placeboarm (p=0.04, although post hoc results should be interpreted with caution). This study similar to the
CMV study reported increased rates of GVHD in the BIW brincidofovir arm (50% acute GVHD, 36%
gut GVHD, compared to 17% and 11% in placebo) as well as increased rates of diarrhea (57% vs
28%, although other GI effects were lower).
Despite some indications of activity, Chimerix announced in May 2019 that it would be discontinuing
all of its clinical programs for the drug due to enrolment difficulties across all of its trials. We suspectthat fears over the risks of the drug negatively affected enrolment in these studies. Chimerix
continues to develop the drug for smallpox under the animal rule. The company also transitioned toa new management team during this period, signaling a major shift in its strategy.

SymBio’s plan
We view SymBio’s decision to license brincidofovir as highly strategic. The limitations of the drugthat have overshadowed its development appear to be in part due to the GI toxicity related with theoral formulation. SymBio hopes that the iv formulation can substantially reduce these risks, whichappears to be the case with the 10mg dose (although some toxicity was seen at higher doses). This
leaves the company with the worldwide rights to a molecule with well-understood antiviral activity
across a range of indications. Moreover, the original drug cidofovir has never been approved inJapan, so brincidofovir approval could be the first of its kind in that country. The current plan for the
drug is seek approval for the IV formulation of the drug following a large multinational development
program (focused on the US, EU and Japan), which currently includes a Phase I clinicalpharmacology study with healthy volunteers (to study drug-drug interactions) and a global Phase IIa
study in pediatric AdV patients (to be run concurrently). The company has also communicated an
intent to study the drug in adult AdV patients and to explore the use of the drug to other viral
complications of HSCT and other transplant types (such as solid organ transplants) in the future.
The rates of AdV infection vary significantly between studies, but are generally lower for autologoustransplants (2.5–14%) compared to allogeneic transplants (5–47%). 8 Patients with younger age are
known to be at higher risk for the complication, although mortality is lower in this population. Ratesof transplantation were 22,863 (9,237 allogeneic) in the US in 2017, 9 41,100 (17,155 allogenic) in
Europe in 2017, 10 and approximately 5,700 (3,700 allogeneic) in Japan in 2018. 11 Assuming thatthe company initially targets pediatric (approximately 13%) allogeneic transplant patients initially,
this corresponds to an addressable global (US/Europe/Japan) population of approximately 1,000transplant recipients per year (based on the mid-range, 26%, of reported infection rates above).
We agree with the company’s rationale to pursue approval for AdV as opposed to the previously
proposed indications of vHC and HHV-6. AdV is a more common complication for HSCT and thepredicate drug cidofovir is already an established treatment. Although the market for the assumed
initial indication of pediatric allogeneic transplants is small, there are expansion opportunities to thebroader HSCT population and other varieties of transplant.

7

Grimley MS, et al. (2017) Brincidofovir for Asymptomatic Adenovirus Viremia in Pediatric and Adult
Allogeneic Hematopoietic Cell Transplant Recipients: A Randomized Placebo-Controlled Phase II Trial. Biol
Blood Marrow Transpl 23, 512-521.

8

Sandkovsky U, et al. (2014) Adenovirus: Current Epidemiology and Emerging Approaches to Prevention
and Treatment. Curr Inf Dis Rep 16, 416.

9

US Health Resources & Service Administration, Transplant activity Report.

10

Passweg JR, et al. (2019) The EBMT activity survey report 2017: a focus on allogeneic HCT for
nonmalignant indications and on the use of non-HCT cell therapies. Bone Mar Transpl 54, 1575-1585.

11The Japanese Data Center for Hematopoietic Cell Transplantation.

SymBio Pharmaceuticals | 10 September 20208

Sensitivities
SymBio faces a unique set of risks associated with its ongoing clinical and commercial plans. It is ata crossroads with Treakisym as it both prepares to internally market the product as well as launch
new formulations and new indications. The company has not previously marketed any products andthere is a risk it will not be able to retain market share once the reins have been passed from Eisai.
Additionally, the commercial strategy for the product is contingent on its expanded approvals for theliquid formulations and/or DLBCL. Although we have little reason to expect that there will be issues
with these marketing applications, there is unavoidable clinical and regulatory risk. Although there isevidence to support expansion of the market into DLBCL, the drug has not been approved for thisindication elsewhere and it may face regulatory scrutiny. Moreover, even if the liquid formulations
are approved, it is not certain that the company can convert existing patients on to theseformulations to avoid generic competition, although these formulations have captured significant
market share in the US.
The company’s other development programs also face clinical and regulatory risk. Brincidofovir has
not been previously approved and has faced previous clinical trial missteps. Brincidofovir although
based on a drug commonly used for the treatment of AdV previously failed to show a statisticalimprovement in prior Phase II studies (albeit with the oral formulation).

Valuation
We have lowered our valuation to ¥37.6bn or ¥1,068 per share from ¥39.0bn or ¥1,144 per share.
This reduction is driven by the removal of rigosertib from our model, which we previously valued at¥1.8bn. Additionally, cash is lower as reported at the end of H120 (¥5.41bn compared to previous
estimates of ¥5.58bn). These factors are offset by rolling forward our NPVs and an increase in thevaluation of brincidofovir (see below).
Our valuation is based on a risk-adjusted NPV analysis of each of the company’s products anddevelopment programs. We assume a 95% probability for success for the RTD and RI formulationsof Treakisym as these products are already approved in other geographies. For the DLBCL label
expansion, we assume a 90% probability of success on the basis of the positive results from thecompany’s Phase III study and other strong support of efficacy in this indication in the literature. We
assume the product will retail at approximately ¥80,000 per dose and expect a price cut of 5%following generic entrants in 2022. We expect to update these models when feedback is received
from the PMDA on the company’s outstanding applications for DLBCL and the RTD formulation.
We have changed some of our assumptions for brincidofovir to reflect the company’s direction withthe drug and intent to target pediatric AdV patients, which has increased this program’s valuation to¥1.06bn from ¥0.88bn. We assume that the company will seek initial approval for pediatric HSCT
patients with AdV on a worldwide basis. The total number of addressable patients is slightly larger(approximately 1000 per year as outlined above, compared to 650 previously) to reflect the numberof AdV patients in the US, EU, and Japan following allogeneic HSCT. We have also adjusted our
pricing assumptions because of greater price durability in the US and Europe and assume 2% pricegrowth annually (from ¥10m per patient at base). We assume that the company will run a 60 patient
Phase II and a 150 patient Phase III study, similar to previous expectations. However, we have
reduced the probability of success to 20% from 30%. This change is primarily to reflect that the
drug will have a higher bar for acceptance in this indication because cidofovir is an establishedtreatment already. There are also other risks, which include the increased burden of doing multinational trials and the fact that the drug has already been unsuccessfully tested in this indication(albeit with a different and oral formulation), which may have an impact on enrolment.

SymBio Pharmaceuticals | 10 September 2020

9

Exhibit 4: Valuation of SymBio
Program

Indication

Treakisym
Low-grade NHL/MCL (r/r and 1st line); CLLTreakisym (DLCBL)
r/r DLBCLBrincidofovir
AdV following HSCT
Total
Net cash and equivalents (¥m, June 2020)
Total firm value (¥m)
Total basic shares (m)Value per basic share (¥)

Prob. of Launch
successyear
100–95%
90%
20%

2010
2021
2025

Peak
revenue
(¥m)
8,600
9,600
9,100

Valuation(¥m)
18,965.16
12,166.04
1,062.05
32,193.25
5,409.70
37,602.94
35.18
1,068.83

Source: SymBio Pharmaceuticals reports, Edison Investment Research

Financials
The company reported sales of ¥1.36bn for H120, down from ¥2.00bn for H119. The company
reported a ¥1.8bn operating loss in H120. Sales continue to be depressed by issues with the supply
of lyophilized Treakisym product. Given that the supply issues have persisted without abatement fora year now, we do not expect a resolution before rights are returned to SymBio at the end of 2020.
In addition, there is a planned rundown in sales expected in 2020 as Eisai reduces its existing
inventory in preparation for the transfer. We have removed the contribution from rigosertib in our
forecasts, the main impact of which was an R&D investment of approximately ¥10bn over the next
four years. We are not making any other major changes to our forecasts at this time.
We expect the company to become profitable in 2021 following the transfer of Treakisym rights
back to the company from Eisai. Because of this we do not expect the company to require
additional capital to advance its current operations, but it may need cash for additional in-licensing
opportunities. We forecast ¥9.2bn in sales in 2021, driven purely by recognizing a larger portion of
the Treakisym margin.

SymBio Pharmaceuticals | 10 September 2020

10

Exhibit 5: Financial summary
2018
JPN GAAP

2019
JPN GAAP

2020e
JPN GAAP

2021e
JPN GAAP

2022e
JPN GAAP

3,835.5(2,662.7)
1,172.9(1,832.7)(1,996.2)(2,621.4)(34.7)(2,533.1)(2,656.1)(92.7)
0.0(0.0)(2,625.8)(2,748.7)(3.8)(2,625.8)(2,752.5)
0.0
0.0(2,629.6)(2,752.5)

2,837.8(1,973.0)864.8(2,441.6)(2,724.8)(4,263.5)(38.1)(4,174.5)(4,301.6)(75.0)
0.0
4.2(4,249.5)(4,372.5)(3.8)(4,249.5)(4,376.3)
0.0
0.0(4,253.3)(4,376.3)

2,608.1(1,956.0)652.0(2,203.0)(3,324.8)(4,754.8)(121.0)(4,748.7)(4,875.8)
19.6
0.0
0.0
(4,729.1)(4,856.2)(3.8)(4,729.1)(4,860.0)
0.0
0.0(4,732.9)(4,860.0)

9,227.8(1,618.7)
7,609.1(465.0)(5,772.5)
1,465.0(93.4)
1,498.7
1,371.6
27.3
0.0
0.0
1,526.1
1,398.9(467.7)
1,526.1
931.2
0.0
0.0
1,058.4
931.2

11,483.8(2,261.2)
9,222.6(820.0)(6,396.9)
2,103.4(97.7)
2,132.9
2,005.7
47.0
0.0
0.0
2,179.8
2,052.7(591.2)
2,179.8
1,461.4
0.0
0.0
1,588.6
1,461.4

Basic average number of shares outstanding (m)EPS - basic normalised (¥)
EPS - diluted normalised (¥)
EPS - basic reported (¥)
Dividend (¥)

17(158.14)(104.91)(165.54)0.00

23(183.72)(180.46)(189.03)0.00

33(144.83)(143.00)(148.72)
0.00

35
30.09
31.06
26.48
0.00

36
44.64
46.62
41.07
0.00

BALANCE SHEETFixed Assets
Intangible Assets
Tangible Assets
Investments & other
Current Assets
Stocks
Debtors
Cash & cash equivalents
Other
Current Liabilities
Creditors
Tax and social security
Short term borrowings
Other
Long Term Liabilities
Long term borrowings
Other long term liabilities
Net Assets
Minority interests
Shareholders' equity

200.9
71.4
57.0
72.6
6,038.5
533.8
411.7
4,821.4
271.6(1,336.3)(654.9)(71.2)
0.0(610.2)
(1.3)
0.0
(1.3)
4,901.8
0.0
4,901.8

386.5
240.5
75.5
70.4
4,887.5
0.0
549.3
3,910.8
427.4(872.2)(33.2)(87.8)
0.0(751.3)
(1.6)
0.0
(1.6)
4,400.1
0.0
4,400.1

395.1
228.8
95.9
70.4
3,657.8219.7
285.8
2,724.9427.4(1,236.6)(424.0)0.0
0.0(812.6)
(1.6)
0.0
(1.6)
2,814.7
0.0
2,814.7

394.5
202.3
121.8
70.4
4,743.0
181.8
1,011.3
3,122.6
427.4(1,390.0)(486.9)0.0
0.0(903.1)
(1.6)
0.0
(1.6)
3,745.9
0.0
3,745.9

409.7
184.6
154.6
70.4
6,360.2
254.0
1,258.5
4,420.4
427.4(1,561.0)(566.7)0.0
0.0(994.3)
(1.6)
0.0
(1.6)
5,207.3
0.0
5,207.3

CASH FLOWOp Cash Flow before WC and tax
Working capital
Exceptional & otherTax
Net operating cash flow
Capex
Acquisitions/disposals
Equity financing
Dividends
Other
Net Cash Flow
Opening net debt/(cash)
FX
Other non-cash movements
Closing net debt/(cash)(2,714.0)
184.5
208.8
(3.8)
(2,324.5)(26.2)
0.0
4,272.1
0.0
0.0
1,921.3(2,947.1)(47.0)
0.0(4,821.4)(4,334.4)(242.1)229.5(3.8)(4,350.7)(216.5)0.0
3,740.00.0
0.0(827.2)(4,821.4)(83.4)
0.0(3,910.8)(4,735.2)
346.8
127.1
(3.8)
(4,265.0)(102.3)0.0
3,201.7
0.0
0.0(1,165.7)(3,910.8)(20.3)
0.0(2,724.9)

1,492.3(624.7)127.1(467.7)527.1(129.4)
0.0
0.0
0.0
0.0
397.7
(2,724.9)
0.0
0.0(3,122.6)

2,150.4(239.6)127.1(591.2)
1,446.7(148.8)
0.0
0.0
0.0
0.0
1,297.8(3,122.6)
0.0
0.0(4,420.4)

Year end 31 December
INCOME STATEMENT
Revenue
Cost of Sales
Gross Profit
R&D
SG&A
EBITDA
Depreciation & amortisation
Normalised operating profit
Reported operating profit
Net interest
Joint ventures & associates (post tax)
Exceptionals
Profit Before Tax (norm)
Profit Before Tax (reported)
Reported tax
Profit After Tax (norm)
Profit After Tax (reported)
Minority interests
Discontinued operations
Net income (normalised)
Net income (reported)¥m

Source: SymBio Pharmaceuticals reports, Edison Investment Research

SymBio Pharmaceuticals | 10 September 202011

Contact details

Revenue by geography

Toranomon 30 Mori Bldg
3-2-2 Toranomon
Minato-ku
Tokyo 105-0001
Japan+81 3 5472-1125
www.symbiopharma.com

N/A

Management teamPresident and CEO: Fuminori Yoshida

Corporate officer and CFO: Takaaki Fukushima

Mr Yoshida founded SymBio in March 2005. He has held senior management
positions in the healthcare industry in both the US and Japan, including founding
director of both Nippon BioRad Laboratories (1980) and Amgen Japan (1993) inaddition to Amgen Inc as corporate VP. Mr Yoshida has a BS in organic
chemistry (Gakushin University), an MS in molecular biology (MIT) and an MS in
health policy and management (Harvard Grad School).
Corporate officer, Head of Japan business unit, and COO: Shigeo Kimura

Mr Fukushima was appointed to the role of CFO in January 2020. He has
previously held CFO positions at Nidec Sankyo Corporation (2019) and wasofficer and deputy general manager of corporate management for Hitachi Metals.

Mr Kimura was appointed as managing executive officer, CCO, and generalmanager of Japan Business Division, and since March 2020, has been director,
senior managing executive officer and general manager of the Japan Business
Division. Prior to this he was the former Oncology Business Unit head at BristolMyers Squibb.

Mr Ishida is a SymBio corporate officer and chief development officer, as well as
being head of R&D and director of R&D Support and Data Science. He wasformerly oncology project head, Japan development, at AbbVie GK; also formerly
global project leader, Oncology, R&D, at Bayer Healthcare.

Corporate officer and CDO: Nobuo IshidaPrincipal shareholders(%)

Yoshida Fuminori
Cephalon Inc
Matsui Securities Co Ltd
Whiz Partners Inc
Eisai Co Ltd

2.45
1.84
0.88
0.64
0.59

Companies named in this report
Chimerix (CMRX), Eagle Pharmaceuticals (EGRX), Eisai (TYO.4523), Onconova (ONTX), Teva (TEVA)

SymBio Pharmaceuticals | 10 September 202012

General disclaimer and copyrightThis report has been commissioned by SymBio Pharmaceuticals and prepared and issued by Edison, in consideration of a fee payable by SymBio Pharmaceuticals. Edison Investment Research standard fees are £49,500
pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for theprovision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.
Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of
this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information
or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and otherfactors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.
Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or inconnection with the access to, use of or reliance on any information contained on this note.
No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber orprospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories ofinvestors.
Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any
positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject toEdison's policies on personal dealing and conflicts of interest.
Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia
Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial
Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice
given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having
regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like
instrument.

New Zealand
The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the
purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the
topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in
relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, isintended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making
an investment decision.

United Kingdom
This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A
marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any
prohibition on dealing ahead of the dissemination of investment research.
This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article
19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be
distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.
This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States
Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fidepublication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does notoffer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or thatany particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.
Frankfurt +49 (0)69 78 8076 960
London +44 (0)20 3077 5700
Schumannstrasse 34b
280 High Holborn
60325 Frankfurt
London, WC1V 7EE
SymBio Pharmaceuticals | 10 United
September
2020
Germany
Kingdom

New York +1 646 653 7026
1185 Avenue of the Americas
3rd Floor, New York, NY 10036
United States of America

Sydney +61 (0)2 8249 8342
Level 4, Office 1205
95 Pitt Street, Sydney
NSW 2000, Australia

13