RCoverage

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 August 5, 2020, SymBio Pharmaceuticals Ltd. announced earnings results for 1H FY12/20
FY12/19

Cumulative(JPYmn)

FY12/20

Q1

Q2

Q3

Q4

Q1

Q2

Sales

1,611

2,005

2,008

2,838551

1,361

YoY

81.4%

4.0%

-33.8%-26.0%-65.8%-32.1%

Gross profit
YoY
GPM

609

529

563

865

128

330

144.0%
37.8%

-7.7%
26.4%

-39.1%
28.0%-26.3%
30.5%-79.0%
23.2%-37.7%
24.2%

SG&A expenses

1,205

2,545

4,099

5,166

1,090

2,170

YoY
SG&A ratio

25.0%
74.8%

34.1%
126.9%

44.8%
204.1%

34.9%
182.1%-9.6%
197.6%-14.7%
159.5%

Operating profit-596-2,015-3,536-4,302-962-1,840-------616-2,069-3,642-4,377-991-1,883------Net income-617-2,070-3,641-4,376-992-1,885

YoY
Net margin------

YoY
OPM

Recurring profit
YoY
RPM

FY12/19

Quarterly(JPYmn)
Sales
YoY

Gross profit
YoY
GPM

Q2

Q3

Q4

Q1

Q2

1,611
81.4%
609

394
-62.2%-793-99.7%
33

830
3.3%
302

551
-65.8%
128809
105.7%
202

144.0%
37.8%--90.5%-21.4%
36.4%-79.0%
23.2%

25.0%

1,205

1,340

1,555

1,067

1,090

1,080

YoY
SG&A ratio

25.0%
74.8%

43.4%
340.4%

66.5%-7.0%
128.6%-9.6%
197.6%-19.4%
133.5%

Operating profit-596--1,419--1,521
--765
--962
--878
-

Recurring profit
YoY
RPM

Net income
YoY
Net margin

Q4% of Est.
40.0%

FY Est.
3,404
20.0%

--5,090---5,134---4,803-

FY12/20

Q1

SG&A expenses

YoY
OPM

FY12/20
Q3-------616--1,453--1,573
--735
--991
--892
-

-------617--1,453--1,571
--736
--992
--893
-------Q3Q4Q3Q4Q3Q4Source: 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

Q2

1,205

2,545

4,099

5,166

1,090

2,170
-14.7%

25.0%

34.1%

44.8%

34.9%

-9.6%

R&D expenses

472963

1,972

2,442

438834

YoY

13.4%

14.8%

52.5%

33.2%

-7.1%

-13.4%

SG&A expenses excl. R&D
YoY733

1,5822,127

2,725

651

1,336

33.8%

49.3%

38.3%

36.5%

-11.1%-15.5%

FY12/19

Quarterly(JPYmn)
SG&A expenses
YoY

FY12/20

Q1

Q2

Q3

Q4

Q1

Q2

1,205

1,340

1,555

1,067

1,090

1,080
-19.4%

25.0%

43.4%

66.5%

7.0%

-9.6%

R&D expenses

472

491

1,009

470

438

396

YoY

13.4%

16.2%

122.1%-13.0%-7.1%-19.4%

SG&A expenses excl. R&D
YoY

733

849

546

597

651

685

33.8%

66.0%

13.8%

30.6%

-11.1%-19.3%

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

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RCoverage

SymBio Pharmaceuticals / 4582
Update Notes

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

1H FY12/20 results▷

Sales:▷

Operating loss: JPY1.8bn (loss of JPY2.0bn in 1H FY12/19)▷Recurring loss:

JPY1.9bn (loss of JPY2.1bn in 1H FY12/19)▷Net loss:

JPY1.9bn (loss of JPY2.1bn in 1H FY12/19)

JPY1.4bn (-32.1% YoY)

Sales fell YoY. The company booked sales of Treakisym®.
SG&A expenses fell 14.7% YoY to JPY2.2bn and R&D expenses declined 13.4% YoY to JPY834mn. This included expenses forconducting clinical trials of intravenous and oral formulations of Treakisym® and rigosertib. Excluding R&D expenses, SG&A
expenses fell by 15.5% YoY to JPY1.3bn. The company incurred development costs for its in-house sales organization.

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 for domestic sales of Treakisym® in January 2021. Thisshould facilitate a move into the black from FY12/21 and ongoing profit growth thereafter and lay the groundwork for futurebusiness development.
In Q2, the company completed setting up its nationwide internal sales organization as planned, hiring and training additional
Treakisym® sales representatives and regional sales managers who will form the core of its nationwide in-house marketing
network. In addition, SymBio continued building its distribution and logistics capabilities with logistics centers in East and WestJapan and in-house infrastructure including a new IT system with ERP, which is also now in the final stages.

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 1H,
with persistent supply issues. Several batches from Astellas Deutschland had high defect ratios and deliveries were irregular. Q2
sales fell YoY as Treakisym® inventory levels were low compared with Q2 FY12/19.
In Q3, the company is persisting with its efforts to restore Treakisym® inventory levels by continuing discussions with its supplier
to reduce defect rates, and stabilize supply .

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 celllymphoma (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,
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 follicular

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RCoverage

SymBio Pharmaceuticals / 4582
Update Notes

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

lymphoma, 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 ofrelapsed 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. After Chugai Pharmaceutical Co., Ltd.
applied for manufacture and marketing approval of polatuzumab vedotin-piiq in combination with BR therapy to treat r/r DLBCLin June 2020, the company made a partial change to its application for approval of Treakisym® in combination with polatuzumab
vedotin-piiq and rituximab therapy. If the new drug applications by Chugai and SymBio are approved and polatuzumab
vedotin-piiq is added to the NHI drug price list, Treakisym® can be used with polatuzumab vedotin-piiq in combination with BRtherapy. At present there are no effective treatments for the additional indication of r/r DLBCL, which is usually treated by a
combination of anticancer agents as salvage chemotherapy. An effective new drug with few side effects is sought, however,
because salvage chemotherapy produces severe adverse effects. Since BR therapy is already being used in the West to treat r/r
DLBCL, patient organizations and related academic societies have petitioned MHLW so that it can be used in Japan as soon as
possible.
The company concluded an exclusive licensing agreement in Japan with Eagle Pharmaceuticals (based in New Jersey, US) in
September 2017 for the RTD and RI formulations of Treakisym®. 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 to confirm safety and completed patient enrollment in March 2020. The company will apply for approval without delay
after the end of the clinical trials of the RI formulation and aims to begin sales in 2H FY12/22. The RI formulation can beadministered in just 10 minutes versus 60 minutes for the current lyophilized injection and RTD formulation. This reduces theburden on patients and healthcare professionals, providing significant value added. Multiple patent protections in the form of aliquid product license will enable the extension of 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 (INSPIRE trial), with SymBio performing
the Japan trial. The global phase III trial addresses higher-risk myelodysplastic syndromes (higher-risk MDS), which do notrespond 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, and is under way at clinical trial sites in more than 20
countries worldwide. Onconova announced that it had reached its target of enrolling 360 patients worldwide as of March 2020
and achieved the required number of survival events in July 2020. Onconova said the primary endpoint results would become
clear in Q3 2020, and that it planned to announce trial results at an academic conference by the end of the year. Based on thesetrial results, the company 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 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 with untreated higher
risk MDS patients based on the data presented at the 61st American Society of Hematology (ASH) Annual Meeting in December
2019.

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RCoverage

SymBio Pharmaceuticals / 4582
Update Notes

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

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.
After concluding the exclusive global license agreement, SymBio held discussions with Japanese and overseas infectious disease
experts to examine the scientific and medical validity of BCV and progress its feasibility study. The company concluded that it
would prioritize global development of BCV IV (mainly in Japan, the US, and Europe) to treat adenovirus (AdV) infections inpatients receiving hematopoietic stem cell transplantation to address an unmet medical need. Based on safety and efficacy dataacquired from its study, the company plans to extend its target disease area to multivirus infections in patients receiving
hematopoietic stem cell transplantation. By exploring the potential for expanding target disease areas to organ transplants(including kidney transplants) to grow the market for, and maximize the business value of BCV, the company aims to transform
itself into a global specialty pharmaceutical company with an integrated structure to supply quality pharmaceutical products.
Clinical trials by Chimerix have demonstrated superior, broad-spectrum antivirus activity of BCV Oral against dsDNA viruses,
raising expectations for its potential as a safe and effective therapy to prevent and treat a range of viral infections in patients
receiving hematopoietic stem cell transplantation.

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 (MDCO), under the rules of the International Chamber of Commerce, seeking damages of USD82mn (approximatelyJPY9.0bn) arising from MDCO’s repudiation of the license agreement. SymBio argued that MDCO’s failure to provide sufficientassurance to the company regarding the performance of obligations under on the license agreement in light of its decision tosuspend and withdraw from business activities relating to SyB P-1501in the European and US markets was a material breach of thelicense agreement. In August 2020, SymBio announced that it had received the arbitration judgment. The Court of Arbitration
did not award damages sought by the company, but ordered MDCO to pay 50% of all arbitration costs as sought by thecompany. Counterclaims and claims for costs by MDCO were rejected. The above costs are under close examination andexpected to take several weeks to finalize. The company commented that it would examine the arbitration judgment in detail toassess carefully its impact on FY12/20 earnings forecasts.

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.

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RCoverage

SymBio Pharmaceuticals / 4582
Update Notes

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

Full-year company forecasts
FY12/19

FY12/20(JPYmn)Sales
Gross profit

1H Act.
2,005
529

2H Act.
833
335

FY Act.
2,838
865

1H Act.
1,361
330

2H Est.
2,043
816

FY Est.
3,404
1,146

GPM

33.7%

26.4%

40.3%

30.5%

24.2%

39.9%

SG&A expenses

2,545

2,622

5,1662,170

4,066

6,236

SG&A ratio

126.9%

314.8%

182.1%

159.5%

199.0%

183.2%

Operating profit-2,015-2,287-4,302-1,840-3,250-5,090-------2,069-2,307-4,377-1,883-3,251-5,134OPM

Recurring profit
RPM

Net income
Net margin-------2,070-2,306-4,376-1,885-2,918-4,803------

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

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

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