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 November 9, 2018, SymBio Pharmaceuticals Ltd. announced earnings results for Q3 FY12/18.
FY12/17

Cumulative

FY12/18

FY12/18(JPYmn)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Sales

870

1,786

2,417

3,444888

1,928

3,032

YoY350.2%

47.5%

71.7%

45.4%

2.1%

8.0%

25.5%

Gross profit

Q4% of FY
72.2%

FY Est.
4,201
22.0%

239

510

675

1,031

250573924

YoY

323.0%

26.0%

41.0%

14.1%

4.4%

12.4%

37.0%

GPM

27.5%

28.5%

27.9%

29.9%

28.1%

29.7%

30.5%

764

1,746

4,183

4,978

964

1,898

2,832

YoY

32.9%

42.5%

108.0%

64.2%

26.1%

8.7%

-32.3%

SG&A ratio

87.9%

97.7%

173.1%

144.5%

108.5%

98.4%

93.4%

Operating profit-525-1,236-3,508-3,947-715-1,325-1,908

YoY--------

OPM--------

SG&A expenses

Recurring profit--583-1,268-3,547-3,977-749-1,378-1,938

YoY--------

RPM--------Net income--2,981-583-1,266-3,546-3,978-760-1,389-1,941

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

FY12/17

Quarterly(JPYmn)

Q2

Q3

Q4

Q1

Q2

Q3

Gross profit

870
350.2%
239

916
-9.9%
271

631
220.3%
165

1,028
7.0%357

888
2.1%
250

1,040
13.5%
324

1,104
75.1%
351

YoY

323.0%-22.2%

123.8%-16.2%

4.4%

19.5%

113.0%

GPM

27.5%

29.6%

26.1%

34.7%

28.1%

31.1%

31.8%

764

982

2,437

795

964

934

934

YoY

32.9%

51.1%

210.1%-22.1%

26.1%

-4.9%

-61.7%

SG&A ratio

87.9%

107.1%

386.5%

77.4%

108.5%

89.8%

84.6%

Operating profit

-525
--711
--2,272
--439
--715
-

-610
--583
--583
--685
-

-2,279
--430
--749
--629
--560--583--684--2,280--432--760--629
--552
-

YoY

SG&A expenses

YoY
OPM

Recurring profit
YoY
RPM

Net income
YoY

Net margin-3,056

FY12/18

Q1Sales--3,044

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
FY12/17

Cumulative

FY12/18(JPYmn)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

SG&A expenses

764

1,746

4,183

4,978964

1,898

2,832

YoY

-32.3%

32.9%

42.5%108.0%

64.2%

26.1%

8.7%

R&D expenses

395

840

2,711

3,018

416

839

1,293

YoY

76.8%

62.0%

176.3%

81.0%

5.3%

-0.1%

-52.3%

SG&A expenses excl. R&D
YoY

369

906

1,472

1,961

548

1,059

1,539

5.0%

28.3%

42.9%

43.7%

48.5%

16.9%

4.6%

FY12/17

Quarterly

FY12/18(JPYmn)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

SG&A expenses

764

982

2,437

795

964

934

934

YoY

-61.7%

32.9%

51.1%

210.1%-22.1%

26.1%

-4.9%

R&D expenses

395

4451,872307

416

423

454

YoY

76.8%

50.8%

304.4%-55.3%

5.3%

-4.9%

-75.7%

SG&A expenses excl. R&D
YoY

Q4369

537

566

489

548

511

479

5.0%

51.3%

75.0%

46.1%

48.5%

-4.8%

-15.2%

Q4

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

Q3 FY12/18 results
Cumulative Q3 FY12/18 sales totaled JPY3.0bn (+25.5% YoY) mainly owing to domestic sales of Treakisym®.

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R SymBio Pharmaceuticals / 4582
Coverage

Update Notes

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

Due to sales growth, gross profit rose 37.0% YoY to JPY924mn with the gross profit margin increasing 2.6pp YoY to 30.5%. SG&A
expenses fell 32.3% YoY to JPY2.8bn due to a 52.3% YoY drop in R&D expenses to JPY1.3bn, which included expenses for
conducting clinical trials of intravenous and oral formulations of Treakisym® and rigosertib. Excluding the drop in R&D expenses,
SG&A expenses would have risen by 4.6% YoY to JPY1.5bn.
As a result, operating loss narrowed to JPY1.9bn (versus a loss of JPY3.5bn in Q3 FY12/17). Recurring loss was JPY1.9bn (versus aloss of JPY3.5bn in Q3 FY12/17) due in part to the booking of non-operating expenses of JPY34mn (mainly on share issuancecosts). Net loss was JPY1.9bn (versus a loss of JPY3.5bn in Q3 FY12/17).

Domestic
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 refractory or relapsed low-grade non-Hodgkin’s lymphoma (NHL) and mantle cell lymphoma (MCL), untreatedlow-grade NHL and MCL, and chronic lymphocytic leukemia (CLL). (The company obtained marketing approval for refractory orrelapsed low-grade NHL and MCL in October 2010, for untreated low-grade NHL and MCL in December 2016, and for CLL inAugust 2016.)
As a result of additional indications, Treakisym® is steadily increasing its market share in the area of first-line treatment byreplacing R-CHOP, the conventional standard treatment. 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 ofHematology as a standard treatment option. Sales of Treakisym® based on the National Health Insurance (NHI) drug price grewsteadily by 15.2% YoY, and product sales to Eisai also progressed in line with plan.
In addition to the above three approved indications, the company has started Phase III clinical trials for the fourth indication ofrelapsed or refractory diffuse large B-cell lymphoma (DLBCL) and is currently enrolling patients for the trial with an aim to obtainapproval. In response to strong medical needs, the company began phase III clinical trials in August 2017, and with theenrollment of the first patient in January 2018, is working on enrolling patients.
In addition to efforts for new indications, in September 2017, the company concluded an exclusive licensing agreement withEagle Pharmaceuticals (based in New Jersey, US) to develop, market, and sell liquid formulations of Treakisym® (RTD and RIformulations) in Japan for Treakisym®’s product life cycle management. The RTD and RI products offer significant value added topatients and healthcare professionals, and extend Treakisym®’s product life cycle until 2031. The company has already consulted
with PMDA on the details of the application for approval of the RTD formulation and clinical trial design for the RI formulation,and is preparing for obtaining approval and launching Treakisym® liquid formulation in 2021 or later.
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 also obinutuzumab (launched in August 2018) for thetreatment of CD 20-positive follicular lymphoma (FL), the most common histological type of low-grade NHL, enabling thecompany to provide patients with a new treatment therapy. In September 2018, the company applied for approval of a partial
revision to the marketing authorization of Treakisym® to enable its use as a pretreatment agent for regenerative medical products.
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 target
tumors. 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 began a preclinical study to verify the efficacy of the oral form of Treakisym® intreating systemic lupus erythematosus (SLE), a form of autoimmune disease.

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R SymBio Pharmaceuticals / 4582
Coverage

Update Notes

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

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 (37 patients enrolled so far). 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, and is under way
at clinical trial sites in more than 20 countries worldwide. Patient enrollments are smoothly accumulating. Based on the results ofan interim analysis performed in January 2018, SymBio decided to continue the trial in an adoptive design agreed upon inadvance with the US Food and Drug Administration (FDA), increasing the number of patient enrollment in accordance withpre-determined statistical criteria. Based on these 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 is conducting 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 I
clinical trials in Japan in June 2017 and is steadily enrolling patients. After completing the Phase I trials, the company plans topromptly start clinical trials for rigosertib used in combination with azacytidine, participate in international Phase III clinical trialsof the drug used in combination with azacytidine as first-line treatment for higher-risk MDS Onconova is planning, and apply for
approval of the oral formulation of the drug in Japan at the same time as in the US and Europe. In regards to development ofrigosertib 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 found a fact that raised concerns about the continuity of its business, and in the interests of patient
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 in October 2017, 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. 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 rights over new drug development candidates globally, andengage 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 Korea, Taiwan, and Singapore, and sales were largely in line with plans.

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

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