R SymBio Pharmaceuticals / 4582
CoverageUpdate 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 7, 2019, SymBio Pharmaceuticals Ltd. announced earnings results for 1H FY12/19.
FY12/18

Cumulative

FY12/19(JPYmn)

Q1

Q2

Q3

Q4

Q1

Q2

Sales888

1,928

3,032

3,836

1,611

2,005

YoY

2.1%

8.0%

25.5%11.4%

81.4%

4.0%

250

573

924

1,173

609

529

YoY

4.4%

12.4%

37.0%

13.7%

144.0%

-7.7%

GPM

28.1%

29.7%

30.5%

30.6%

37.8%

26.4%

964

1,898

2,832

3,829

1,205

2,545

YoY

26.1%

8.7%

-32.3%-23.1%

25.0%

34.1%

SG&A ratio

108.5%

98.4%

93.4%

99.8%

74.8%

126.9%-715-1,325-1,908-2,656-596-2,015

YoY------

OPM-------749-1,378-1,938-2,749-616-2,069Gross profit

SG&A expenses

Operating profitRecurring profit
YoY------

RPM-------760-1,389-1,941-2,753-617-2,070

Net income

FY12/19
Q3Q4% of FY
64.8%

FY Est.
3,092-19.4%--3,780---3,856---3,859

YoY-------Net margin-------

FY12/18

Quarterly(JPYmn)
Sales
YoY

Gross profit

FY12/19

Q1Q2Q3Q4Q1Q2888
2.1%
250

1,040
13.5%
324

1,104
75.1%
351803-21.8%
249

1,611
81.4%
609

394
-62.2%-79-124.5%YoY

4.4%

19.5%

113.0%-30.3%

144.0%

GPM

28.1%

31.1%

31.8%

31.0%

37.8%

-964

934

934

997

1,205

1,340

SG&A expenses
YoY

26.1%

-4.9%

-61.7%

25.4%

25.0%

43.4%

SG&A ratio

108.5%

89.8%

84.6%

124.2%

74.8%

340.4%

-715
--610
--583
--749
--596
-

-1,419
-

-749
-

-629
--560
--811
--616
--1,453
--760
--629
--552
--812
--617
--1,453-

Operating profit
YoY
OPM

Recurring profit
YoY
RPM

Net income
YoY

Net margin

Q3

Q4Q3

Q4Q3

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
FY12/18

Cumulative

FY12/19(JPYmn)

Q1

Q2

Q3

Q4

Q1

Q2

SG&A expenses

964

1,898

2,832

3,829

1,205

2,545

YoY

34.1%

26.1%

8.7%

-32.3%-23.1%

25.0%

R&D expenses

416

839

1,293

1,833

472

963

YoY

5.3%

-0.1%

-52.3%-39.3%

13.4%

14.8%

548

1,059

1,539

1,996

733

1,582

48.5%

16.9%

4.6%

1.8%

33.8%

49.3%

SG&A expenses excl. R&D
YoY

FY12/18

Quarterly

FY12/19(JPYmn)

Q1

Q2

Q3

Q4

Q1

Q2

SG&A expenses

964

934

934

997

1,205

1,340

YoY

43.4%

26.1%

-4.9%

-61.7%

25.4%

25.0%

R&D expenses

416

423

454

540

472

491

YoY

5.3%

-4.9%

-75.7%

76.0%

13.4%

16.2%

SG&A expenses excl. R&D
YoY

548

511

479

458

733

849

48.5%

-4.8%

-15.2%

-6.4%

33.8%

66.0%

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

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R SymBio Pharmaceuticals / 4582
Coverage

Update Notes

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

1H FY12/19 results▷

Sales:▷

Recurring loss:

JPY2.1bn (loss of JPY1.4bn in 1H FY12/18)

Net loss:

JPY2.1bn (loss of JPY1.4bn in 1H FY12/18)▷▷

JPY2.0bn (+4.0% YoY)

Operating loss: JPY2.0bn (loss of JPY1.3bn in 1H FY12/18)

Sales rose on domestic product sales of Treakisym®.
SG&A expenses rose 34.1% YoY to JPY2.5bn and R&D expenses increased 14.8% YoY to JPY963mn, which included expenses for
conducting clinical trials of intravenous and oral formulations of Treakisym® and rigosertib. Excluding R&D expenses, SG&A
expenses increased by 49.3% YoY to JPY1.6bn.
As a result, operating loss, recurring loss, and net loss widened YoY.

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. SymBio started to build an in-house sales organization for Treakisym® in the domestic market in October 2018. Keymanagement priority is to move into the black in FY12/21 and ongoing profit growth thereafter. The company is therefore laying
the groundwork for a shift to an internal sales organization to drive future business development.
Twenty Treakisym® managers are to form the core of the marketing team in the internal sales organization. The company
conducted the necessary recruitment and training activities, and prepared for deployment to each region of responsibility asplanned by the end of 1H. It also made steady progress with preparation of infrastructure such as logistics, distribution, andinformation systems.

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 company markets the anticancer agent Treakisym® in Japan through its business partner, Eisai Co., Ltd. (TSE1: 4523) for theindications of untreated low-grade non-Hodgkin’s lymphoma and mantle cell lymphoma (marketing approval obtained inDecember 2016), refractory or relapsed low-grade non-Hodgkin’s lymphoma and mantle cell lymphoma (October 2010), andchronic lymphocytic leukemia (August 2016).
As a result of additional indications, Treakisym® is steadily increasing its market share in the area of first-line treatment in medical
settings by replacing R-CHOP, the conventional standard treatment. The combination therapy of Treakisym® and rituximab (BRtherapy) was newly included in the Practical Guidelines for Hematological Malignancies 2018 edited and published by JapaneseSociety 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. According to the company, market share in the area of first-line
treatment increased to 55%.
In addition to the above three approved indications, the company is conducting Phase III clinical trials for the fourth indication ofrelapsed or refractory diffuse large B-cell lymphoma (r/r DLBCL) and these are progressing well with an aim to obtain approval. In
response to strong medical needs, the company began phase III clinical trials in August 2017, and with the enrollment of the first
patient in January 2018, is working on enrolling patients. The company has made steady progress in enrollments following thefirst patient in January 2018, completing enrollments in April 2019. Going forward, after completing the follow-up period forenrolled cases, it will prepare to file an application for regulatory approval.
SymBio is targeting a transition to Treakisym® liquid formulation (RTD and RI formulations), for which it concluded an exclusive
licensing agreement in Japan with Eagle Pharmaceuticals (based in New Jersey, US) in September 2017. The company has already

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R SymBio Pharmaceuticals / 4582
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Update Notes

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consulted with PMDA and is preparing to file for approval of the RTD formulation. SymBio launched clinical trials for the RI
formulation in November 2018 primarily to confirm safety, and has made steady progress with patient enrollments since enrollingthe first patient in April 2019. Liquid formulations of Treakisym® will offer significant value added (reduced burden) to patientsand healthcare professionals, and liquid formula patent protection makes it possible to extend the product life of Treakisym® until
2031.
In July 2018, SymBio obtained approval for the partial revision to the marketing authorization of Treakisym®. As a result,Treakisym® can now be used in combination with not only rituximab but new anti-CD20 antibodies as well. This will allow
combination therapy with obinutuzumab (launched in August 2018) for the treatment of CD 20-positive follicular lymphoma (FL),the most common histological type of low-grade NHL, enabling the company to provide patients with a new treatment therapy.
In March 2019, the company obtained approval for the partial revision to its application concerning the use of Treakisym® as apretreatment agent in tumor-specific T cell infusion therapy. This will allow Treakisym® to be used as a pretreatment agent forKymriah® intravenous infusion, which was approved as the first chimeric antigen receptor T-cell (CAR-T) therapy in Japan andlisted on the NHI drug price list in May 2019.
To reinforce the position of Treakisym® at the core of its business to strengthen its business foundation, SymBio is developing anoral formulation of the drug in addition to the injection currently under development or on sale. The company commenced aphase I clinical trial for progressive solid tumors in January 2018, with the aim of examining the recommended dosage andschedule as well as tolerability and safety of the oral formulation of Treakisym®, and narrowing down the types of potential targettumors. With the enrollment of the first patient in May 2018, the company is currently working on enrolling more patients for thetrial. To evaluate the effect of oral administration of Treakisym® on the immune system, the company concluded a joint research
agreement with Keio University in May 2018 and performed a preclinical study to verify the efficacy of the oral formulation ofTreakisym® in treating systemic lupus erythematosus (SLE), a form of autoimmune disease. The company will consider the nextstage of this research project (including clinical trials) after evaluating the results of the preclinical study.

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 (44 patients enrolled as of July 2019). The global Phase III trial addresses higher-risk myelodysplasticsyndromes (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, and is under way
at clinical trial sites in more than 20 countries worldwide. As of March 2019, the company had reached 75% of its target ofenrolling 360 patients worldwide. Based on these trial 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 has completed Phase I/II clinical trials for the drug used in combination
with azacytidine as first-line treatment for higher-risk MDS and Phase II clinical trials for transfusion-dependent lower-risk MDS inthe US. To verify the tolerability and safety of the oral formulation of rigosertib among Japanese patients, SymBio began Phase Iclinical trials in Japan in June 2017, enrolled the first patients in October 2017, and completed patient enrollment in June 2019.
After completing the Phase I trials, the company plans to start Phase I clinical trials for rigosertib used in combination withazacytidine, participate in global Phase III clinical trials of the drug used in combination with azacytidine as first-line treatment forhigher-risk MDS currently planned by Onconova, and apply for approval of the oral formulation of the drug in Japan at the sametime as in the US and Europe. In December 2018, Onconova submitted a Special Protocol Assessment (SPA) request to the US
Food and Drug Administration (FDA) to speed up the approval review for the global trials, and plans to begin Phase III clinical
trials as soon as it receives approval from the FDA. In regards to development of rigosertib for transfusion-dependent lower-risk
MDS, the company is considering participating from Japan while monitoring Onconova’s development progress.

SyB P-1501, a post-operative patient-controlled analgesia
Regarding SyB P-1501 licensed by the Medicines Company (through its wholly owned subsidiary Incline Therapeutics, Inc.) inOctober 2015, SymBio learned of an event that raised concerns about the continuity of its business, and in the interests of patient

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R SymBio Pharmaceuticals / 4582
CoverageUpdate Notes

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welfare, it suspended further patient enrollment in April 2017. The license agreement was terminated in November 2017, andthe development of the drug was terminated in February 2018.
The Company initiated an arbitration against The Medicines Company, under the rules of the International Chamber ofCommerce, seeking damages of USD82mn (approximately JPY9.0bn) arising from The Medicines Company’s repudiation of thelicense 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 frombusiness activities relating to SyB P-1501in the European and US markets was a material breach of the license agreement.
Arbitration proceedings against The Medicines Company are still ongoing.

New drug candidates
From a long-term perspective, SymBio continues to search for and evaluate promising drug candidates, in a bid to acquire global
licensing rights for these drugs and grow into a sustainable and profitable biopharmaceutical company with growth potential andprofitability. The company is considering licensing rights for several drug candidates. Further, in May 2016, the company
established SymBio Pharma USA, Inc., a wholly owned US-based subsidiary, as a strategic base for overseas business development.
The company looks to leverage this subsidiary to actively acquire licensing rights over new drug development candidates
globally, and engage in development and commercialization in major markets including the US, Japan, and Europe to transition
to a global specialty pharmaceutical company.

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

Full-year company forecasts
FY12/18

FY12/19(JPYmn)Sales
Gross profit

1H Act.
1,928573

2H Act.
1,907
600

FY Act.
3,836
1,173

FY Est.
3,092
980

GPM

31.7%

29.7%

31.4%

30.6%

SG&A expenses

1,898

1,931

3,829

4,760

SG&A ratio

98.4%

101.3%

99.8%

153.9%

Operating profit-1,325-1,331-2,656-3,780

Recurring profit-1,378-1,371-2,749-3,856

Net income-1,389-1,364-2,753-3,859

----

OPM
RPM-

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

Earnings outlook▷ Sales:

JPY3.1bn (+16.4% YoY)

▷ Recurring loss:

JPY3.9bn (loss of JPY2.7bn in FY12/18)▷ Operating loss:▷ Net loss:

JPY3.8bn (loss of JPY2.7bn in FY12/18)

JPY3.9bn (loss of JPY2.8bn in FY12/18)

In August 2019, SymBio announced a revision to its FY12/19 earnings forecast, with downward revisions of JPY1.4bn for sales,
JPY193mn for operating loss, JPY244mn for recurring loss, and JPY243mn for net loss.

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R SymBio Pharmaceuticals / 4582
Coverage

Update Notes

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Reasons for revision
SymBio imports lyophilized Treakisym® for injection from Astellas Deutschland GmBH (consolidated subsidiary of Astellas PharmaInc.), which it supplies to the market for sale in Japan through its business partner, Eisai Co., Ltd. after quality inspection andpackaging. In Q2 FY12/19, impurities and appearance defects were found in Treakisym® 100mg vials imported from Astellas
Deutschland, which led to the company returning the whole batch. Thus only a fraction of the batches scheduled for shipment in
2Q FY12/19 onward can be shipped by the end of the year, with shipments possibly being delayed until Q1 FY12/20. Thecompany therefore revised down its FY12/19 earnings forecast. Lower operating profit stems from the sales decline, but theimpact on operating profit is mitigated by SG&A expenses (including R&D expenses) being revised down by JPY294mn from
JPY5.1bn to JPY4.8bn.
The following is a discussion of the company’s previous earnings forecast. Share Research plans to update the report after
interviews with the company.

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

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