SymBio Pharmaceuticals

Corporate outlook

Looking forward to Treakisym Phase III data

Pharma & biotech
17 April 2019

Treakisym continues to generate double-digit sales growth, although 2018
sales were below our expectations. A temporary dip in revenue is expected
in 2020 as inventory held by Eisai is wound down, ahead of SymBio
establishing its own sales organisation in Japan at the end of that year.

Price

The ongoing Phase III study of Treakisym in diffuse large B-cell lymphoma(DLBCL) is on track to allow a potential filing in Q220; we estimate that the
DLBCL indication could double peak sales, if approved. SymBio reaffirmed
its key goal to become profitable in 2021, the first full year of Treakisym
self-commercialisation. Our valuation is ¥26.8bn or ¥308/share.

Net cash (¥m) at end December 2018

4,821

Shares in issue

87.3m

Free float

84%

Code

4582

Primary exchange

Japan

Secondary exchange

OTC USYear end
12/17
12/18
12/19e12/20eRevenue
(¥m)
3,444
3,836
4,109
3,293

PBT*
(¥m)
(3,977)(2,749)(3,679)(5,303)EPS*(¥)(79.8)(41.4)(41.0)(54.5)

DPS
(¥)
0.0
0.0
0.0
0.0

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

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

¥224

Market cap¥19,555m¥113/$

Share price performance

Note: *PBT and EPS (diluted) are normalised, exceptional items.

Guidance adjusted for lower sales, lower costs
Treakisym sales reported by partner Eisai rose by ~12% to ~¥7.6bn in 2018.
SymBio’s revenue from Eisai and other partners rose by 11.4% to ¥3.8bn, but was
9% below guidance and our forecasts. Net loss declined by 31% to ¥2.8bn. The
company’s updated mid-range plan forecasts sales to decline by 26% in 2020 to~¥3.3bn, as it transitions the product shipment destination from Eisai towholesalers, ahead of the switch to the company’s own salesforce in 2021. Its 2021
sales target is lowered by about 17% to ¥9.1bn. However, lower anticipated costs
mean that targeted net profit in 2021, the first full year of self-commercialisation, isvirtually unchanged at ¥1.0bn.

%

1m

3m

12m

Abs

6.2

8.2

11.4

Rel (local)

4.6

2.3

19.0

52-week high/low

¥272

¥116

First Treakisym liquid formulation to file Q121

Business description

SymBio is on track to launch its ready-to-dilute (RTD) liquid Treakisym formulation

SymBio Pharmaceuticals is a Japanese specialty
pharma company with a focus on oncology andhaematology. The Treakisym powder formulation
was in-licensed from Astellas in 2005; liquid
Treakisym was in-licensed from Eagle
Pharmaceuticals in 2017. Rigosertib was inlicensed from Onconova.

in Q121 and is preparing a marketing application for filing. A trial to confirm thesafety of the rapid-infusion (RI) product enrolled the first subject in April 2019, witha market launch targeted in H122. SymBio aims to transition at least 90% of
patients from currently marketed freeze dried (FD) powder to liquid formulations by
the end of 2021, and 100% by end 2022. This strategy could prevent FD generics
from gaining significant market share (generics not expected before June 2022).

Next events
Treakisym sales update

Q219

Treakisym on track for DLBCL filing in Q220

DLBCL top-line data

H219

The Phase III study of Treakisym in DLBCL recently completed recruitment; if the

RTD liquid formulation filing2019

trial is successful, filing is planned for Q220, allowing a potential launch in Q321.

Valuation: rNPV of ¥26.8bn ($237m) or ¥308/share
Our updated SymBio risk-adjusted valuation is vs ¥26,828m ($237m) or ¥308/share(vs ¥25,469m). The increase results from the ¥4.3bn net capital raised in 2018 androlling forward the model, partly offset by lower peak sales in currently approved
Treakisym indications and the sales dip in 2020 due to inventory run-off.

Analysts
Dr Dennis Hulme+61 (0)2 9258 1161

Maxim Jacobs+1 646 653 7027

healthcare@edisongroup.com
Edison profile page

SymBio Pharmaceuticals is a
research client of Edison
Investment Research Limited

Investment summary
Company description: Japanese specialty pharma company
SymBio is a Japanese specialty pharma company that was established in 2005 and is based inTokyo. It in-licenses assets with proof-of-concept data for development and commercialisation in
Asia-Pacific, removing the need for investment in early-stage R&D. SymBio has two main assets:
Treakisym (bendamustine) for blood cancers, with Asia-Pacific marketing rights out-licensed tovarious commercial partners; and rigosertib for a rare blood cancer, which is being investigated in a
global Phase III trial in which SymBio is participating. SymBio plans to commercialise Treakisym
and rigosertib via its own salesforce after 2020 in Japan. SymBio is exploring opportunities to inlicense further assets during 2019. It is also looking to expand globally and it established a USbased subsidiary in 2016.
Exhibit 1: SymBio main product pipeline
Product
Treakisym (SyB L-0501)

Rigosertib iv (SyB L-1101)

Indication(s)r/r lg NHL/MCL
CLL; first-line lg NHL/MCL
r/r DLBCL
r/r HR-MDS

Stage
MarketedMarketedPhase III
Phase III

Rigosertib oral (SyB C1101)

First-line HR-MDS (combo) Phase I
and LR-MDS

Comments
First approved indication in Japan. Partner Eisai reported 2018 sales of ¥7.6bn.
Both indications were approved in Japan during 2016 launched by partner Eisai in 2017.
Phase III initiated Q317, fully recruited Q219; targeting filing Q220, launch Q321.
Global Phase III ongoing with SymBio participating; trial expanded after cleared interim
analysis in Q118; full recruitment expected H219; SymBio targeting filing in 2021.
New Phase I single agent study of oral high-dose rigosertib initiated Q217, to be followed by
Phase I in combination with Vidaza; SymBio intends to participate in partner Onconova’splanned Phase III combo trial in first-line HR-MDS.

Source: Edison Investment Research. Note: NHL: non-Hodgkin’s lymphoma; MCL: mantle cell lymphoma; CLL: chronic lymphocytic
leukaemia; lg: low grade; r/r: relapsed/refractory; DLBCL: diffuse large B-cell lymphoma; HR-MDS: higher-risk myelodysplastic
syndromes; LR-MDS: lower-risk myelodysplastic syndromes.

Valuation: Risk-adjusted NPV of ¥26.8bn ($237m) or ¥308/share
We value SymBio at ¥26,828m ($237m) or ¥308/share, which is based on a risk-adjusted NPV
analysis and includes ¥4.8bn ($43m) net cash at end December 2018. Our valuation includes
Treakisym, where we assume sales can continue to grow for the next two years supported byadditional indications that were approved in 2016, as well as risk-adjusted contributions for the
relapsed/refractory (r/r) DLBCL indication for Treakisym (Phase III ongoing) and for rigosertib. Ourvaluation assumes that liquid Treakisym formulations will allow SymBio to maintain a greater than
75% share of the market until at least 2031 in the face of competition from powder generics from2022 onwards.

Financials: Cash runway to H120
We estimate that end December 2018 net cash of ¥4.8bn should be sufficient to fund operations
into H120. We model ¥4.2bn of indicative debt in FY20, and note that the company may require
additional funding over and above these amounts for investment in new in-licensing or M&A
opportunities.

Sensitivities: Treakisym sales growth and pipeline progress
The main sensitivities for SymBio relate to the main assets and SymBio’s ability to in-license
additional products in the future. For Treakisym, our estimates assume that partner Eisai cancontinue to grow sales over the next two years in the indications that were approved in 2016. Wealso expect top-line data from Treakisym in r/r DLBCL during 2019, which will be critical in shaping
the future development pathway. SymBio plans to establish its own salesforce to market Treakisym
and rigosertib (if approved), which will require investment into a commercial infrastructure from2019 onwards. We estimate sales organisation costs to be ¥1.7bn per year.

SymBio Pharmaceuticals | 17 April 20192

Maximising Treakisym’s potential
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). In 2008, SymBio
out-licensed the marketing of Treakisym to various commercial partners (an overview of the main
agreements is shown in Exhibit 2). 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 to market
Treakisym in Japan after the current marketing arrangement with Eisai expires in December 2020.
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

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 liquid formulations areprotected by patents that extend to 2031.Treakisym is likely to face competition from genericversions of the marketed FD powder formulation from June 2022, but the company expects toswitch the majority of patients to the more convenient liquid formulations following the intended
launch of the RTD formulation in Q121.
Encouraged by the longer Treakisym lifecycle, SymBio is investing in a Phase III study of Treakisym
in r/r DLBCL patients, an indication where it reported promising results from a Phase II study in2012. DLBCL comprises around 45% of non-Hodgkin’s lymphoma (NHL) cases in Japan, and weestimate that approval in this indication could double the sales potential of Treakisym.
Taken together, the patented liquid formulations and the DLCBL Phase III justify SymBio investingin establishing its own sales organisation to market Treakisym and other drugs such as rigosertib (ifapproved), in our view. We estimate that SymBio could earn an operating profit margin of 50% of
net sales of Treakisym under a self-commercialisation model, compared to an estimated margin of
10–12% of in-market top-line sales under the arrangement with Eisai. We expect the higher margin
from self-commercialisation of Treakisym to make SymBio profitable in 2021.

New products could leverage own sales organisation
Having its own sales organisation should enable SymBio to better understand and respond tomarket needs, positioning it to deliver the benefits of Treakisym to healthcare providers andpatients. Treakisym is used in the haematology departments of approximately 900 institutions
across Japan, with the top 400 institutions accounting for ~90% of sales. If rigosertib is approved
for treating myelodysplastic syndromes (MDS), the top 400 institutions would similarly be expectedto account for the majority of use. Therefore, SymBio would be in a position to market rigosertib (ifapproved) through its own sales organisation for minimal additional cost. The same operation
leverage would apply were SymBio to in-licence or develop other haematological drugs.
Establishing its own sales organisation will be an important step towards achieving SymBio’s visionof establishing itself as a leading speciality pharma company.

SymBio Pharmaceuticals | 17 April 20193

Pipeline progress
Exhibit 3 summarises the status of SymBio’s product pipeline. The main areas of focus are:

Obtaining approval for the two liquid formulations of Treakisym to extend the product lifecycleout to 2031.

Completion of the Phase III study of Treakisym in DLBCL, which could potentially double thesales potential of Treakisym.

Participating in the global Phase III study of intravenous (iv) rigosertib in MDS, which could
become SymBio’s second product for haematological cancers.

Completion of ongoing Phase I studies of oral formulations of Treakisym and rigosertib, which
could lead to development of additional indications for both drugs.

Exhibit 3: Status of Treakisym development program

Source: SymBio

Exhibit 4: Rigosertib development program

Source: SymBio

Key news anticipated for SymBio in 2019 includes:Top-line data from the DLBCL Phase III study.

Filing for approval of the RTD liquid Treakisym formulation.

Update on the clinical study of the rapid infusion Treakisym formulation.



Reaching full recruitment in the rigosertib Phase III study.

SymBio Pharmaceuticals | 17 April 20194

Liquid formulations extend Treakisym lifecycle
The new liquid formulations of Treakisym that SymBio in-licensed from Eagle are more convenient
for healthcare workers and for patients.
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 FD
Treakisym, which has to be reconstituted before administration, a time-consuming process thatcarries 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 the current Treakisym product (and the RTD formulation).

Liquid formulations aim to maintain SymBio’s market share
We expect the approval pathway for the RTD Treakisym formulation to be relatively straightforward,
as the same dose of drug is administered to patients in the same way, with the only difference
being the way the dose is prepared. SymBio has consulted with regulators the approval pathway for
the RTD formulation and is preparing a filing application. It has narrowed down the timing of the
anticipated launch of the RTD product to Q121, which is towards the earlier end of its previous
target of H121. A launch at this time would allow it the RTD formulation to be well established in themarketplace before the potential entry of the first FD generics in June 2022.
The RI product represents a greater change to the current treatment protocols, so approval of thisproduct is expected to take longer. SymBio announced on 4 April 2019 that it had enrolled the firstof the planned 32 patients in a clinical trial primarily aimed at confirming the safety of the RI
formulation; market launch targeted in H122. We conservatively model a 95% chance of a launch of
the RI product by the start of 2023.
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.

DLBCL indication could double Treakisym sales
SymBio is seeking to add another indication for Treakisym, in the treatment of r/r DLBCL, anintermediate or high-risk form of NHL. It commenced a Phase III trial to confirm the safety andefficacy of Treakisym plus rituximab in r/r DLBCL in August 2017 and announced on 8 April 2019that it had completed enrolment. SymBio’s mid-range plan aims to file an NDA in Q220 and istargeting a market launch in Q321, if approved, so we expect top-line data to be reported in H219.
We model Phase III costs of ¥2bn and a potential launch in H221.
DLBCL is a rapidly growing, intermediate or high-risk form of NHL, in contrast to the slower-growing
indolent or low-risk lymphomas that are included in the current approvals for Treakisym.
DLBCL is the most common form of NHL and is estimated to represent 45% of NHL cases inJapan.1 Based on epidemiology studies1 and Globocan data, we estimate there will be 35,500 new
cases of NHL and 16,000 new cases of DLBCL in Japan in 2020. 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 in Japan by 2020.
The market of 11,200 r/r DLBCL patients in Japan is almost as large as the combined market of~12,500 patients for the currently approved indications for Treakisym in chronic lymphocytic
leukaemia (CLL) and first-line and r/r low-grade NHL and mantle cell lymphoma (MCL). Given the1

Chihara et al; British Journal of Haematology, 2014, 164, 536–545.

SymBio Pharmaceuticals | 17 April 20195

high unmet need for this patient group, we model a 50% market penetration and peak sales (netsales after discounts) of ¥9.6bn for DLBCL vs ¥9.3bn for the currently approved indications.

Treakisym sales forecasts trimmed after slower 2018
Japan accounts for about 95% of Treakisym sales. Japanese in-market sales of Treakisym
estimated from prescription numbers and expressed on a National Health Insurance price basis
grew by 11.6% to ~¥8.5bn in 2018, from ¥7.6bn in the previous year. Partner Eisai reports sales on
a net sales after discounts basis; on this basis Eisai reported Treakisym sales revenue of ¥7.3bn inJapan itself for the 2018 calendar year (up ~12%) and total net Treakisym revenue of ¥7.6bn whensales in other territories (South Korea and Singapore) were included.
SymBio books revenue equal to about 50% of net in-market Treakisym sales under the marketing
agreement with Eisai. While total sales reported by SymBio in 2018 increased by 11.4% to ¥3.8bn,
these sales were 9% below guidance and our forecasts.
Treakisym sales have grown by ~80% over the period from 2016 to 2018, supported by approvals
for two new indications for Treakisym in Japan that were received in 2016:


CLL, approved in August 2016; andfirst-line low-grade NHL and MCL (first-line lg NHL/MCL), approved in December 2016.

SymBio attributed the shortfall in 2018 sales to slower than expected market penetration in first-line
treatment of low-grade NHL. As a result, it has reduced its targeted market penetration in first-line lg
NHL to 70% by 2020, from its previous target of 75%.
We have adjusted our forecasts of net in-market sales of Treakisym in currently approved
indications, adjusted for discounts (the form reported by Eisai), to grow by ¥0.6bn in 2019 (75% of
the Treakisym sales growth reported by Eisai for the 2018 calendar year) and by ¥0.6bn in 2020.
We forecast Treakisym sales in existing indications to peak at ¥8.6bn (previously ¥9.5bn) in 2021,
as shown in Exhibit 5.
We model in-market Treakisym sales (net sales after discounts) in DLBCL in 2021 to be ¥0.5bn, if
launched in Q321 in line with the company’s targets. We estimate that sales in DLBCL could
exceed the currently marketed indications by 2025, and peak at ¥9.6bn in 2026, if approved (Exhibit
5).
Exhibit 5: Treakisym in-market net sales forecasts
18,000
Treakisym sales (¥m)

16,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

2016

2017

2018

2019e

Original indications (r/r lg NHL/MCL)

2020e

2021e

2022e

2023e

2016 approvals (CLL; first-line lg NHL/MCL)

2024e

2025e

2026e

DLBCL

Source: Eisai, SymBio, Edison Investment Research. Note: SymBio records royalties on in-market Treakisym
sales; sales estimates are net in-market sales, after discounts.

Plans for self-commercialisation starting to take shape
In February, SymBio released an updated four-year plan along with its results for the 2018 financial
year. The plan provides a clearer outline of the pathway to self-commercialisation in 2021.

SymBio Pharmaceuticals | 17 April 20196

Previously, in February 2018 the company foreshadowed that it was giving serious consideration to
moving to self-commercialisation of Treakisym, and at that time prepared its 2021 targets on theassumption that it would proceed with self-commercialisation. On 16 October 2018 it announced
that it had begun preparations to establish its own sales organisation to sell Treakisym in Japan.
The rationale for self-commercialisation is underpinned by the in-license of liquid formulations ofTreakisym from Eagle Pharmaceuticals. We expect the launch of liquid formulations (if approved) toallow SymBio to maintain a dominant share of the bendamustine hydrochloride market in the faceof FD powder generic which could be launched as early as June 2022.
Exhibit 6 compares the targets in the most recent four-year plan announced in February 2019 to thetargets announced 12 months earlier. For 2021, we compare the new targets to the median of theold high and low targets.
The most notable revision is that the sales target for 2020 has been reduced by 23% to ¥3.3bn, due
to its expectation that it will discontinue shipments to Eisai around the end of H120 as it transitions
the product shipment destination from Eisai to wholesalers.
Furthermore, targeted sales for 2021 are 17% below the median point of the old sales target range.
The twin contributors for this are, firstly, an anticipated launch date of the DLBCL indication now
three months later (Q321) and, secondly, a 5% reduction in the peak uptake of Treakisym in thefirst-line l/g NHL indications approved in 2016.
For the first time the company has provided performance targets for 2022. These provide the first
insights as to the company’s expectations of the full-year sales potential and the costs of promoting
the DLBCL indication and liquid formulations for Treakisym. We calculate targeted operating
expenses to be ¥9.3bn in 2022 vs ¥7.9bn in 2021, with lower R&D costs due to the completion of
the DLBCL Phase III trial likely partly offsetting the cost of supporting its own sales force.
Exhibit 6: Old and new forecasts and performance targets

Revenue
Operating income
Ordinary income
Net income
Implied OpEx

2019
Old
(¥m)
4,238
(3,786)(3,849)(3,853)(8,024)2019New%(¥m) Change
4,465
+5%
(3,587)-5%(3,612)-6%(3,616)-6%(8,052)
+0%

2020
Old
(¥m)
4,238
(3,786)(3,849)(3,853)(8,024)2020New%(¥m) Change
3,282
-23%
(5,180)+37%(5,224)+36%(5,228)+36%(8,462)
+5%

2021*
Old
(median, ¥m)
10,975
1,328
1,275
1,085
(9,647)2021
New%(¥m) Change
9,132
-17%
1,225
-8%
1,181
-7%
1,005
-7%
(7,907)-18%

2022**
Low(¥m)
11,282
2,084
2,040
1,736

2022
High
(¥m)
11,809
2,464
2,420
2,060

2022*
Median(¥m)
11,546
2,274
2,230
1,898
(9,272)

Source: SymBio, Edison Investment Research. Note: *Median values calculated by Edison from high and low range data; ** 2022
performance targets have been provided or the first time in the current four-year mid-range plan; OpEx= operating expenses –calculated by Edison as revenue minus operating profit.

IV rigosertib: A potential second product for SymBio
SymBio in-licensed rigosertib (iv and oral formulations, Japan and Korean rights) from Onconova in2011 for MDS, a rare blood cancer. SymBio is contributing patients from Japan to the global Phase
III INSPIRE trial of iv rigosertib for the treatment of second-line higher-risk MDS (HR-MDS).
Onconova announced on 25 March 2019 that enrolment in the Phase III study has passed 75% (ie270 patients), and that it is on track to fully enrol the target of 360 patients in H219. Onconova also
expect to report top-line results of the overall survival analysis after 288 events will be available in
H219. SymBio has previously said it aims to file for approval in Japan in 2021.
As of December 2018 SymBio had already reached its target of enrolling 40 patients in Japan, but it
has stated that enrolment is proceeding.
Onconova said that the Independent Data Monitoring Committee had observed a promising survival
signal at the interim analysis conducted in early 2018. The committee recommended that the trial

SymBio Pharmaceuticals | 17 April 20197

continue with an expansion in enrolment to 360 patients (from 225 patients) based on a preplanned sample size re-estimation.

Development of IONSYS pain patch terminated
SymBio in-licensed the exclusive rights to develop the IONSYS (SyB P-1501) pain patch in Japan
from The Medicines Company (MDCO) in October 2015 and initiated a Phase III trial in Japan inJune 2016. SymBio suspended enrolment in the trial in April 2017 due to concerns over thecontinuity of MDCO’s business regarding the product. The licence agreement between SymBio and
MDCO was terminated effective 30 November 2017 and SymBio completed the process ofterminating the development of SyB P-1501 in February 2018. SymBio is seeking damages of atleast $82m (¥9bn) arising from MDCO’s repudiation of the licence agreement. We do not include
any potential damages in our valuation or forecasts.

Continued focus on in-licensing new drugs
SymBio is actively seeking new drug candidates and in-licensing opportunities globally, targeting
drug candidates with clinically confirmed efficacy and safety. Discussions with multiple potential
licensors are ongoing. If the company proceeds with its plans to establish its own salesforce inJapan then there will be increased incentive to in-license additional products that could bemarketed by the salesforce.
The company has established a US-based subsidiary, SymBio Pharma USA, as a strategic base foroverseas business development. It may look to in-license or develop drugs it can commercialise on
a global basis as part of a continued transformation to a global specialty pharma company.

Reverse stock split to take effect on 1 July
On 28 March, shareholders voted to approve a one-for-four consolidation of the company’scommon stock, which will take effect on 1 July 2019. We will not incorporate the reverse stock split
into our forecasts until after it takes effect on 1 July.

Sensitivities
SymBio is subject to the usual drug development risks, including clinical development delays or
failures, regulatory risks, competitor successes, partnering setbacks, financing and commercial
risks. The main sensitivities include rigosertib and DLBCL clinical trial success or failure, the ability
to execute future in-licensing deals and successfully establishing its own salesforce to selfcommercialise Treakisym after 2020.
For Treakisym, key risks relate to the outcome of the DLBCL Phase III trial, obtaining regulatory
approval for the liquid Treakisym formulations and success in migrating patients to the liquid
formulation to stave off competition from generic copies of Treakisym powder after 2021. It will haveto bear the cost of establishing a salesforce before the marketing arrangement with Eisai expires.
SymBio is seeking damages from The Medicines Company arising from its repudiation of the
IONSYS licence agreement. We do not model any compensation payments for IONSYS, so if
SymBio was to receive any compensation, this would represent the potential to recover some of thevalue we have now written off.

SymBio Pharmaceuticals | 17 April 20198

The main sensitivity for rigosertib is the outcome of the Phase III INSPIRE trial of iv rigosertib insecond-line HR-MDS. Onconova may need additional cash to complete the trial and report top-line
data. If it is unable to secure any additional funds that may be required, this could delay trial
completion and therefore timelines. If the outcome of the trial is negative, then not only would this
impact the development of iv rigosertib, but there could also be read-across to oral rigosertib.
SymBio is reliant on in-licensing further assets to fill its pipeline. We believe the CEO’s network is
crucial to securing future deals, although we have limited visibility on the potential terms and timingof any such agreements.

Valuation
Our valuation of SymBio is increased to ¥26,828m ($237m), or ¥308/share, based on a riskadjusted NPV analysis, which includes ¥4.8bn net cash at end December 2018 vs ¥2.9bn at theend of the previous year. We use a 10% discount rate for approved products and 12.5% elsewhere.
Our valuation includes Treakisym approved indications and the new r/r DLBCL indication, plus
rigosertib. We have rolled our valuation model forward to the new financial year and reduced
forecast peak sales for approved Treakisym indications by 9% to ¥8.6bn, following belowexpectations growth in 2018.
The higher cash balance due to ¥4.3bn (net) raised from the issue of shares and share acquisitionrights in 2018, combined with rolling forward the model to the new financial year, has more thanoffset the negative impact of reduced peak sales forecast for the approved Treakisym indications.
Our main assumptions are summarised in Exhibit 7 below.
Exhibit 7: SymBio rNPV valuation
Product

Indication

LaunchTreakisym
LG NHL/MCL (r/r and 1st line); CLLTreakisym (DLBCL)
r/r DLBCL
Rigosertib (IV)r/r HR-MDS
Rigosertib (oral)First-line HR-MDS (combo)
Net cash at 31 December 2018
Valuation

2010*
2021
2023
2025

Peak sales(¥m)**
8,600
9,600
3,800
7,500

NPV
(¥m)
16,515
9,544
2,218
3,586
4,821
36,684

Probability(%)
95-100
60
50
15
100

rNPV
(¥m)
15,818
5,046
894
248
4,821
26,828

NPV/share(¥/share)
181.3
57.8
10.3
2.8
55.3
307.5

Source: Edison Investment Research. Note: *Treakisym was launched in 2010 in r/r low-grade NHL/MCL; it received approvals inJapan in CLL in August 2016 and in first-line, low-grade NHL/MCL in December 2016; **we present Treakisym peak sales estimatesnet of discounts, to align with sales reporting by Eisai.

We model a 95% likelihood that the RI Treakisym formulation will be launched before the end of2022, thereby minimising the penetration of generic copies of the FD Treakisym formulation. We
model branded Treakisym market share gradually declining from 96% in 2022 to 75% in 2031,
followed by a more rapid decline from 2032 after the liquid formulation patents expire.
Our Treakisym valuation assumes that SymBio earns an average net margin of 10–12% on top-line
reported Treakisym sales until 2020. We assume that after 2020 the net operating margin gradually
increases to reach 50% in 2024 and subsequent years as SymBio switches to selfcommercialisation of Treakisym via its own salesforce and the liquid formulations in-licensed from
Eagle gain market share vs powder formulations.
We model ¥1.5bn of development costs to achieve approval for the RTD and RI liquid formulations.
We estimate that a salesforce of 60 would be needed to market Treakisym in Japan. At a fullyloaded cost of $250,000 per person, this would cost US$15m or approximately ¥1.7bn per year.

SymBio Pharmaceuticals | 17 April 20199

Scenario analysis
In a scenario where the Treakisym market share declines to 50% by 2031 (vs 75% for the basecase), our valuation would fall by around ¥2.0bn (¥23/share) to around ¥24.8bn (¥284/share). We
currently assume stable Treakisym pricing apart from a 5% price cut in 2022 when FD powder
generics are expected to enter the market. However, an additional price cut to Treakisym in the
future could represent downside to our forecasts; a 10% price cut in 2020 would remove around¥2.5bn from our Treakisym rNPV, or ¥30/share.

Financials
Our financial forecasts have been updated to reflect FY18 reported financials and SymBio’s
updated financial guidance for 2019 and targets for 2020–2022. The main changes to our forecasts
are summarised in Exhibit 8.
We have reduced forecast revenue in 2019 because 2018 sales were 9% below our expectations,and our decision to reduce our peak sales forecast for Treakisym in the approved indications to¥8.6bn from ¥9.5bn (expressed as net in-market sales after discounts). We have reduced forecast
revenue in 2020 by 27%, reflecting the anticipated winding down of Eisai inventory in H220 in thelead up the end of the marketing arrangement in December 2020.
We have increased R&D expenditure and reduced SG&A forecasts in 2019, broadly in line with
SymBio’s guidance (Exhibit 9). We have increased forecast R&D expenditure in 2020 in line withthe three-month delay in anticipated completion of the DLBCL Phase III, and have further increased
forecast SG&A spend as SymBio begins to build its own salesforce in Japan.
SymBio raised ¥4.3bn (net) from the issue of shares and share acquisition rights in 2018, lifting net
cash at 31 December 2018 to ¥4.8bn vs ¥2.9bn at the end of the previous year. We estimate thatthe cash of ¥4.8bn should be sufficient to fund operations into H120. We model ¥4.2bn of indicative
debt in FY20. The company may require additional funding over and above these amounts forinvestment in new in-licensing or M&A opportunities.
Exhibit 8: Main changes to our financial forecasts¥m
Revenue
Research and development
Selling, general and administration
Operating profit (reported)
Profit before tax (reported)
Profit after tax (reported)

2019
Old
4,325
(2,200)(2,720)(3,640)(3,617)(3,621)

2019
New
4,109
(2,500)(2,436)(3,703)(3,679)(3,683)% change
-5
+14
-10
+2
+2
+2

2020
Old*
4,502
(1,767)(3,180)(3,614)(3,602)(3,606)

2020
New
3,293
(2,623)(3,680)(5,315)(5,303)(5,307)% change
-27
+48
+16
+47
+47
+47

Source: Edison Investment Research. Note: *We have not previously published our 2020 forecasts.

Exhibit 9: SymBio’s 2018 outlook and 2019 targets versus our estimates

Revenue
R&D
SG&A (including R&D)
Operating loss
Ordinary loss
Net loss2019
guidance¥4,465m¥2,508m¥5,053m¥3,587m¥3,612m¥3,616m

2019
estimates¥4,109m¥2,500m¥4,936m¥3,703m¥3,679m¥3,683m

2020
targets¥3,282m
N/A
N/A¥5,180m¥5,224m¥5,228m

2020
estimates¥3,293m¥2,623m¥6,303m¥5,315m¥5,303m¥5,307m

Source: Edison Investment Research. Note: We have not previously published 2020 forecasts.

SymBio Pharmaceuticals | 17 April 201910

Exhibit 10: Financial summary
Accounts: JPN GAAP, year-end: 31 December; ¥m
Total revenues
Cost of sales
Gross profit
SG&A (expenses)
R&D costs
Other income/(expense) included in adjusted
Other income/(expense) excluded from adjusted
Reported EBIT
Finance income/ (expense)
Other income/(expense) included in adjusted
Other income/(expense) excluded from adjusted
Reported PBT
Income tax expense
Reported net income
Average number of shares - basic (m)Basic EPS
Adjusted EBITDA
Adjusted EBIT
Adjusted PBTAdjusted EPS
Adjusted diluted EPS
BALANCE SHEET
Property, plant and equipment
Goodwill
Intangible assets
Other non-current assets
Total non-current assets
Cash and equivalents
Inventories
Trade and other receivables
Other current assets
Total current assets
Non-current loans and borrowings
Trade and other payables
Other non-current liabilities
Total non-current liabilities
Trade and other payables
Current loans and borrowings
Other current liabilities
Total current liabilities
Equity attributable to company
Non-controlling interest
CASH FLOW STATEMENT
Profit before tax
Depreciation and Amortisation
Share based payments
Other adjustments
Movements in working capitalInterest paid / received
Income taxes paid
Cash from operations (CFO)
Capex
Acquisitions & disposals net
Other investing activities
Cash used in investing activities (CFIA)
Net proceeds from issue of shares
Movements in debt
Other financing activities
Cash from financing activities (CFF)
Currency translation differences and other
Increase/(decrease) in cash and equivalents
Cash and equivalents at end of period
Net (debt) cash

2016
2,368
(1,464)904(1,364)(1,667)00(2,127)5
7(195)(2,309)(4)(2,313)
39.3(58.82)(2,101)(2,127)(2,317)(59.00)(59.00)2017
3,444(2,413)
1,031(1,961)(3,018)0
0(3,947)3
3(33)(3,974)(4)(3,978)49.9(79.78)(3,917)(3,947)(3,977)(79.84)(79.84)

2018
3,836(2,663)
1,173(1,996)(1,833)00(2,656)1(0)(93)(2,749)(4)(2,753)
66.5(41.38)(2,621)(2,656)(2,749)(41.38)(41.38)

2019e
4,109
(2,876)
1,233(2,436)(2,500)00(3,703)24
00(3,679)(4)(3,683)89.9(40.97)(3,664)(3,703)(3,679)(40.97)(40.97)

2020e
3,293
(2,305)988(3,680)(2,623)00(5,315)12
00(5,303)(4)(5,307)97.4(54.49)(5,273)(5,315)(5,303)(54.49)(54.49)

2021e
9,159
(1,790)7,370(5,537)
(750)
0
0
1,083
8
0
0
1,090
(91)
999
97.4
10.26
1,130
1,083
1,090
10.26
8.60

75
0
42
77
193
5,719
273
487
205
6,685
450
0
1
451
322
0
620
942
5,485
0

47
0
69
100
216
2,947
363
490
237
4,037
0
0
1
1
604
0
407
1,011
3,239
0

57
0
71
73
201
4,821
534
412
272
6,038
0
0
1
1
726
0
610
1,336
4,902
0

71
0
59
73
203
1,172
236
473
272
2,153
0
0
1
1
402
0
610
1,013
1,342
0

74
0
50
73
197
500
189
361
272
1,322
4,235
0
1
4,236
515
0
610
1,125
(3,842)
0

117
0
44
73
234
983
147
1,004
272
2,406
4,235
0
1
4,236
513
0
610
1,123
(2,720)0(2,309)
26
137
197
(13)
6
(4)
(1,960)
(28)
0
(16)
(44)
3,226
450
(18)
3,658
(196)
1,458
5,719
5,269

(3,974)
30
121
42
(35)
3
(4)
(3,817)
(57)
0
(20)
(78)
1,164
0
0
1,164
(42)
(2,772)
2,947
2,947

(2,749)
35
123
85
184
1
(4)
(2,325)
(40)
0
14
(26)
4,272
0
0
4,272
(47)
1,874
4,821
4,821

(3,679)
40
123
(24)
(87)
24
(4)
(3,608)(42)(5,303)
41
123
(12)
271
12
(4)
(4,871)
(35)

1,090
47
123
(8)
(602)
8
(91)
567
(84)

0
(42)
0
0
0
0
0
(3,650)
1,172
1,172

0
(35)
0
4,235
0
4,235
0
(672)
500
(3,735)

0
(84)
0
0
0
0
0
483
983
(3,252)

Source: Edison Investment Research and SymBio accounts

SymBio Pharmaceuticals | 17 April 201911

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: Kenji Murata

Mr Yoshida founded SymBio in March 2005. He has held senior management
Mr Murata was the CFO for Japan at Novartis Pharma and, most recently before
positions in the healthcare industry in both the US and Japan, including founding joining SymBio, at Elanco Japan. He has also held managerial roles at Novartis
director of both Nippon BioRad Laboratories (1980) and Amgen Japan (1993) in Japan Sourcing and Sumitomo Life Insurance.
addition 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, Executive VP and COO: Kazuo Asakawa

Corporate Officer and CDO: Nobuo Ishida

Mr Asakawa is a SymBio corporate officer, executive VP and COO, as well as
GM of SymBio’s Japan business unit. He was formerly MD and head of theOncology division at Novartis Pharma KK, as well as being the company’s
corporate officer, head of the Transplantation & Immunology business division,and GM of the marketing department. He has also held managerial roles at
Nippon Roche and Sandoz Japan.

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.

Principal shareholders(%)

Yoshida Fuminori
Cephalon
Matsui Securities
Japan Securities Finance Co.
Eisai Co., Ltd.

4.2
3.1
1.5
1.5
1.0

Companies named in this report
Eisai (4523 JP), Onconova (ONTX US), The Medicines Company (MDCO US)

SymBio Pharmaceuticals | 17 April 201912

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 Edison analyst at the time of publication. Forward-looking information or statementsin 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 other factors 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies
and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in
the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia
Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial
Services Licence (Number: 427484). 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
Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any
part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of theinformation to be contained in the admission document to be published in connection therewith.
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 (nor willsuch persons be able to purchase shares in the placing).
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
The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange
Commission. 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 isa bona fide publication 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 not offer 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 that any 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
SymBio Pharmaceuticals| 17 April
2019
60325 Frankfurt
London, WC1V 7EE
Germany
United Kingdom

New York +1 646 653 7026
1,185 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