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Coverage

SymBio Pharmaceuticals / 4582
Update Notes

Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp

This PDF document is an updated note on the company. A comprehensive version of the report on the company, including this latest update, isavailable on our website and various professional platforms.

On May 12, 2020, SymBio Pharmaceuticals Ltd. announced earnings results for Q1 FY12/20.
FY12/19

Cumulative(JPYmn)FY12/20

Q1

Q2

Q3

Q4

Q1

Sales

1,611

2,005

2,008

2,838

551

YoY

81.4%

4.0%

-33.8%-26.0%-65.8%

Gross profit
YoY
GPM

609

529

563

865

128

144.0%
37.8%

-7.7%
26.4%

-39.1%
28.0%-26.3%
30.5%-79.0%
23.2%

SG&A expenses

1,205

2,545

4,099

5,166

1,090

YoY
SG&A ratio

25.0%
74.8%

34.1%
126.9%

44.8%
204.1%

34.9%
182.1%-9.6%
197.6%

Operating profit-596-2,015-3,536-4,302

-962

-

-

-

-

-

-616

-2,069-3,642-4,377

-991

-

-

-

-

-

Net income-617-2,070-3,641-4,376-992

YoY
Net margin

-

-

-

-

-

Q1

Q2

Q3

Q4

Q1

1,611
81.4%
609

394
-62.2%-793-99.7%
33

830
3.3%
302

551
-65.8%
128

144.0%
37.8%--90.5%
-

21.4%
36.4%

-79.0%
23.2%

YoY
OPM

Recurring profit
YoY
RPM

Quarterly(JPYmn)Sales
YoY

Gross profit
YoY
GPM

FY12/19

SG&A expenses

1,205

1,340

1,555

1,067

1,090

YoY
SG&A ratio

25.0%
74.8%

43.4%
340.4%

66.5%
-

7.0%
128.6%-9.6%
197.6%

Operating profit-596--1,419--1,521
-

-765
-

-962
-

-616
-

-1,453--1,573
-

-735
-

-991
-

-617
-

-1,453--1,571
-

-736
-

-992
-

YoY
OPM

-

Recurring profit
YoY
RPM

-

Net income
YoY
Net margin

-

-

-

-

-

-

-

-

-

-

Q2

FY12/20
Q3

Q4% of FY
16.2%

FY Est.
3,404
20.0%

-

-5,090---5,134---

FY12/20Q2-4,803

Q3

Q4

Q3

Q4

Q3

Q4

-

-

-

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Breakdown of SG&A expenses
FY12/19

Cumulative(JPYmn)
SG&A expenses
YoY

FY12/20

Q1

Q2

Q3

Q4

Q1

1,205

2,545

4,099

5,166

1,090
-9.6%

25.0%

34.1%

44.8%

34.9%

R&D expenses

472

963

1,972

2,442

438

YoY

13.4%

14.8%

52.5%

33.2%

-7.1%

SG&A expenses excl. R&D
YoY

733

1,582

2,127

2,725

651

33.8%

49.3%

38.3%

36.5%

-11.1%

FY12/19

Quarterly(JPYmn)
SG&A expenses
YoY

FY12/20

Q1

Q2

Q3

Q4

Q1

1,205

1,340

1,555

1,067

1,090
-9.6%

25.0%

43.4%

66.5%

7.0%

R&D expenses

472

491

1,009

470

438

YoY

13.4%

16.2%

122.1%-13.0%-7.1%

SG&A expenses excl. R&D
YoY

Q2

733

849

546

597

651

33.8%

66.0%

13.8%

30.6%

-11.1%

Q2

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

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Coverage

SymBio Pharmaceuticals / 4582
Update Notes

Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp

Q1 FY12/20 results▷

Sales:▷

Recurring loss:

JPY991mn (loss of JPY616mn in Q1 FY12/19)

Net loss:

JPY992mn (loss of JPY617mn in Q1 FY12/19)▷▷

JPY551mn (-65.8% YoY)

Operating loss: JPY962mn (loss of JPY596mn in Q1 FY12/19)

Sales fell YoY. The company booked sales of Treakisym®.
SG&A expenses fell 9.6% YoY to JPY1.1bn and R&D expenses declined 7.1% YoY to JPY438mn. This included expenses for
conducting clinical trials of intravenous and oral formulations of Treakisym® and rigosertib. Excluding R&D expenses, SG&A
expenses fell by 11.1% YoY to JPY651mn. The company incurred development costs for its in-house sales organization.
As a result, operating loss, recurring loss, and net loss widened YoY. The difference between operating loss and recurring loss was
accounted for largely by JPY30mn in non-operating expenses: mainly JPY16mn in forex losses and JPY13mn in stock issuancecosts.

Domestic
Preparations for in-house sales organization begin
The business alliance agreement between SymBio and Eisai Co., Ltd. under which Eisai acts as a sales agent expires in December
2020. The company plans to transition to its in-house sales organization in January 2021. This should facilitate a move into theblack from FY12/21 and ongoing profit growth thereafter and lay the groundwork for future business development.
In Q1, the company hired and trained additional Treakisym® sales representatives and regional sales managers who will form thecore of its in-house marketing network. This set the stage to complete the nationwide sales structure in 1H FY12/20. SymBio
continued building its distribution and logistics capabilities with logistics centers in East and West Japan and in-houseinfrastructure including a new IT system with ERP.

Substandard products
SymBio imports lyophilized Treakisym® for injection from Astellas Deutschland (consolidated subsidiary of Astellas Pharma). Some
batches of Treakisym® 100mg vials imported from Astellas Deutschland for domestic sales in FY12/19 had impurities andappearance defects in a significantly higher percentage than stipulated in the supply agreement. In order to prevent a recurrenceof such product quality issues, the company objected to Astellas Deutschland, and demanded steps such as corrective andpreventive action (CAPA) processes to fulfil its responsibilities as the supplier. Nonetheless, there was no improvement in Q1,
with persistent supply issues. Several batches from Astellas Deutschland had high defect ratios and deliveries were irregular. Sales
fell YoY as Treakisym® inventory levels were low compared with Q1 FY12/19.
The problems with defective products and irregular deliveries are likely to persist through the rest of 1H, and SymBio expects
sales from shipments to its Treakisym® sales agent, Eisai, to be down YoY. The company is persisting with its efforts to restore
Treakisym® inventory levels, reduce defect rates, and stabilize supply through discussions with its supplier.

Treakisym® (SyB L-0501[lyophilized injection]/SyB L-1701 [RTD]/SyB L-1702 [RI]/SyB C-0501 [oral]; anticancer agent; generic name:bendamustine hydrochloride)
The anticancer agent Treakisym® is used for the indications of untreated low-grade non-Hodgkin’s lymphoma and mantle cell
lymphoma (marketing approval obtained in December 2016), refractory or relapsed low-grade non-Hodgkin’s lymphoma andmantle cell lymphoma (October 2010), and chronic lymphocytic leukemia (August 2016).
The combination therapy of Treakisym® and rituximab (BR therapy) was newly included in the Practical Guidelines for
Hematological Malignancies 2018 edited and published by Japanese Society of Hematology as a standard treatment option,

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Coverage

SymBio Pharmaceuticals / 4582
Update Notes

Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp

which applies to all of the approved indications. This has seen Treakisym® establish its position as a standard treatment for
lymphatic cancer.
Also, SymBio obtained approval for the partial revision to the marketing authorization of Treakisym® in July 2018. Treakisym® can
now be used in combination with new anti-CD20 antibodies and not just rituximab for the treatment of CD20-positive follicularlymphoma, the most common histological type of low-grade NHL. This allows the company to provide patients a new treatment
option: combination therapy with obinutuzumab (launched in August 2018). In March 2019, SymBio obtained approval for thepartial revision to its application to use Treakisym® as a pretreatment agent in tumor-specific T cell infusion therapy. This allows
Treakisym® to be used as a pretreatment agent for Kymriah® intravenous infusion, which was the first chimeric antigen receptor
T-cell (CAR-T) therapy approved in Japan and on the NHI drug price list from May 2019.
Following on from the above approved indications, the company conducted a phase III clinical study for the fourth indication of
relapsed or refractory diffuse large B-cell lymphoma (r/r DLBCL), with Treakisym® administered in combination with rituximab (BRtherapy). The response rate (primary endpoint) in the test results released in November 2019 was better than expected. In May
2020, the company applied for a partial revision to manufacture and marketing approval.
The company concluded an exclusive licensing agreement in Japan with Eagle Pharmaceuticals (based in New Jersey, US) in
September 2017. Following consultations with the PMDA, the company filed for approval of the RTD formulation in September
2019, and plans to launch it in Q1 FY12/21. SymBio launched clinical trials for the RI formulation in November 2018 primarily toconfirm safety and completed patient enrollment in March 2020. The company will apply for approval without delay after theend of the clinical trials of the RI formulation and aims to begin sales in 2H FY12/22. The RI formulation can be administered in just
10 minutes versus 60 minutes for the current lyophilized injection and RTD formulation. This reduces the burden on patients andhealthcare professionals, providing significant value added. Multiple patent protections in the form of a liquid product license
extended the product life of Treakisym® to 2031.

Rigosertib Sodium (SyB L-1101 [IV]/SyB C-1101 [oral]; anticancer agent; generic name: Rigosertib Sodium)
Onconova Therapeutics, Inc., the licensor, is currently conducting a global phase III trial and SymBio Pharmaceuticals started theJapan trial in December 2015 (50 patients enrolled as of April 2020). The global phase III trial addresses higher-risk
myelodysplastic syndromes (higher-risk MDS), which do not respond to the current standard treatment with hypomethylating
agents, which relapse after treatment under the current standard of care, or which are intolerant to hypomethylating agents, andis under way at clinical trial sites in more than 20 countries worldwide. Onconova announced that it had reached its target ofenrolling 360 patients worldwide as of March 2020. Onconova said the primary endpoint results would become clear in 2H 2020,
and that it planned to announce trial results at an academic conference by the end of the year. Based on these trial results, thecompany plans to apply for approval in Japan at the same time as in the US and Europe.
Regarding the oral formulation of rigosertib, Onconova completed phase I/II clinical trials for the drug used in combination withazacytidine, whose results suggested the efficacy and safety of the combination therapy.. To verify the tolerability and safety ofthe oral formulation of rigosertib among Japanese patients, SymBio began phase I clinical trials in Japan in June 2017 andcompleted patient enrollment in June 2019. After completing the phase I trials, the company will participate in global phase III
clinical trials of the drug used in combination with azacitidine as first-line treatment for higher-risk MDS currently planned by
Onconova. In December 2019, Onconova announced that it was considering the design of a Phase II/III adaptive trial withuntreated higher risk MDS patients based on the data presented at the 61st American Society of Hematology (ASH) Annual
Meeting in December 2019.

Antiviral drug for the treatment of infections SyB V-1901 (generic name: Brincidofovir）
In September 2019, SymBio concluded an exclusive global license agreement with Chimerix Inc. (hereafter Chimerix) for
brincidofovir (SyB V-1901, hereafter BCV IV and BCV Oral), an antiviral drug for the treatment of infections in intravenous and oral
forms). The company acquired exclusive global rights to develop, manufacture, and market BCV for all diseases except smallpox.

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Coverage

SymBio Pharmaceuticals / 4582
Update Notes

Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp

BCV Oral has demonstrated a strong, broad-spectrum antiviral effect in clinical trials in Europe and the US by Chimerix. The
company will design a global clinical trial based on these findings.
The company will initially develop BCV-IV for treatment of viral hemorrhagic cystitis (vHC) occurring after hematopoietic stem
cell transplantation for the domestic market, which has high unmet medical needs. It plans to conduct clinical studies and gain
approval in Japan first so it can offer it to patients there. It also plans to market BCV IV globally after conducting international joint
clinical trials in countries including the US and Europe. As well, the company plans clinical development of BCV IV as an antiviraltreatment of infections after kidney transplants, because it is likely to be effective for transplants other than hematopoietic stem
cell transplants, including organ transplants. The company looks to expand its business in Europe, the US and Asia (including
China), where organ transplant markets are larger than Japan’s. It is also looking for partnerships that take advantage of regional
characteristics of these target diseases.

SyB P-1501, a post-operative patient-controlled analgesia
Regarding SyB P-1501 licensed by The Medicines Company, the company initiated an arbitration against The Medicines
Company, under the rules of the International Chamber of Commerce, seeking damages of USD82mn (approximately JPY9.0bn)
arising from The Medicines Company’s repudiation of the license agreement. SymBio argued that The Medicine Company’s
failure to provide sufficient assurance to the company regarding the performance of obligations under on the license agreement
in light of its decision to suspend and withdraw from business activities relating to SyB P-1501in the European and US markets
was a material breach of the license agreement. On November 30, 2017, the license agreement was terminated as the breach
was not corrected within the contract period and development of the product ceased in February 2018. Arbitration proceedings
against The Medicines Company are still ongoing. In January, 2020, Swiss company Novartis AG announced that it had acquired
The Medicines Company. SymBio expects an arbitration judgment in 1H 2020.

Overseas
The company marketed SyB L-0501 in South Korea, Taiwan, and Singapore, and product sales were in line with the company’splans.

In-licensing of drug candidates
The company is currently focusing on producing and unrolling development plans for antiviral drug brincidofovir it in-licensed in
September 2019. It is constantly looking into multiple licensing deals and looking for and evaluating promising in-licensing drugcandidates.

This note is the most recent addition to the full report.

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