ANALYST NET Company Report

SymBio Pharmaceuticals Ltd.
Issue date: April 7, 2020

（4582 JASDAQ）

The Last One Mile
From drug venture to global specialty pharma

Revised Basic Report

SymBio Pharmaceuticals Ltd. does not undertake research in new drugs. Rather, it relies on aworldwide network of drug discovery companies and its own expertise to adopt and develop
promising new drugs. It occupies a niche, seeking to maximise market share and earnings byfocusing on areas of medical need in rare diseases (particularly hematopoietic tumours) unmet by
the drug majors. Most of the drug candidates it takes on already have a proven record of efficacy
and safety, which makes them a low-risk development proposition. The company’s first, andleading, drug is Treakisym®, which was approved five years after being adopted by the company
and received standard treatment status in 2018. The company seeks out new formulations and new
indications to extend product life. In addition, it is now preparing to switch the sales function to
an in-house unit. It’s ambition, now almost achieved, is to grow as a pharma specializing in blood
diseases. In September 2019 the company licensed in Brincidofovir, and in so doing acquired thesole global license, covering development, manufacture and sales, and gaining a launch pad toexpand as a licensor into Asia primarily but also globally, including the US.

Fair Research
Tsuyoshi Suzuki

Company Information

On the verge of becoming profitable
Treakisym® sales have always been handled by Eisai Co Ltd. but in 2021 SymBio itself is
supposed to take over. For this reason, precedence is being given to costs for systems development,such as an increase in sales personnel, the development of distribution networks, and the setting
up of ERP systems. In addition, R&D expenditure is rising. In 2020, the development of different
Treakisym® formulations and an expansion in indications will be more or less complete, and thedevelopment of the company’s second product, Rigosertib, is expected to begin, using oral
formulation in addition to ongoing injections The development of Brincidofovir is also expected
to start. On the other hand, in order to switch to an in-house-sales system, Eisai's inventory must
be cleared, so sales are not expected to rise much. For that reason, operating income in 2020 willrecord a bigger loss of JPY5 billion. In 2021, however, the company will overcome that, recording
a surprising turnaround in operating income to JPY1 billion, due to the switch to Treakisym® inhouse sales and the introduction of expanded indications which should boost total sales to JPY9
billion yen and increased profitability. With the announcement of a stock options issue on
February 27, 2020 the company can now see its way clear to going the last one mile.

Note: This report is the English-language version of the original Japanese-language
report issued on April 7th, 2020, to which you should refer for precise details

Tokyo

President

Fuminori Yoshida

EstablishedMarch 2005

Capital

JPY14,870 mil.

ListedOct. 2011

URL

www.
symbiopharma.com

Industry

Pharmaceuticals

Employees

107（non-con）

Key Indicators (April 6, 2020)

We estimate pipeline value at JPY89 billion (pre-tax)
We estimate total Treakisym® pipeline value at around JPY57 billion (pre-tax). The expansion of
applications to r/r DLBCL is expected to double potential market size, and it is expected that thecost ratio will be significantly improved by switching to liquid formulations. Elsewhere, it is also
expected that Rigosertib will be indicated for various cancer types as a RAS mimetic molecule,but even if it targets only high-risk myelodysplastic syndrome refractory to hypomethylating
agents, the pipeline value (before tax) will still be around JPY24.9 billion. With regard to thecompany’s third main pipeline, Brincidofovir, the indications are viral infections (viral cystitisand HHV-6 encephalitis) after hematopoietic stem cell transplantation and organ plantations. For
the Japanese, US and European markets only in the area of hematopoietic stem celltransplantations , the pipeline value is estimated at JPY29.1 billion yen (before tax). Even after
discounting company-wide administrative and basic research costs the total pipeline value isestimated at around JPY89 billion (before tax). This calculation relies on various assumptions but
potential value is significant. An increase in indications for Treakisym®, applications for, andapprovals of, formulation changes, and progress in financing will help with value creation.

Location

Share price315

52-week high896

52-week low

264

Shares outstanding

28,112,681

Trading unit

100 shares

Market cap

JPY8,855 mill

Dividend

0

EPS-181.8 yen

Forecast PER

NA

Actual BPS

143.07 yen

Actual PBR

2.20 times

No t e : E P S 、 P E R 、 B P S a n d P B R ar eba s e d o n s h ar e s o ut s t a n d in g e x c l .

treasury shares

YoY％

Op.Income
JPYmilYoY％RP
JPY milYoY％

Net Income
JPYmil

YoY
％

EPS
JPY

Share Price JPY
High
Low

Results

Revenues
JPYmil2015/12 Actual

1,933

-1.1

-2,551NA-2,630NA-2,632NA-325.01,532

708

2016/12 Actual

2,368

22.5

-2,127NA-2,316NA-2,313NA-235.3

2,036

692

2017/12 Actual

3,444

45.4

-3,947NA-3,976NA-3,977NA-319.11,244

800

2018/12 Actual

3,835

11.4

-2,656NA-2,748NA-2,752NA-165.5

1,052

464

2019/12 Actual

2,837

-26.0

-4,301NA-4,376NA-4,376

NA-189.01,088

600

2020/12 Forecast

3,404

20.0

-5,090NA-5,134NA-4,803NA-181.8

1/26
This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.
`SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

Company outline and philosophy
Business Model

SymBio Pharmaceuticals has the following characteristics:① Proof of concept (POC) strategy

The company is evolving
The company does not itself undertake drug discovery research but investigatesfrom drug venture to
candidates developed by drug discovery ventures and pharmaceuticals
specialized global pharma but
companies around the world. Usually, proof of concept has already been
operates without labs or
established. That is to say, by insisting on prior evidence of efficacy and safety
factories (“laboless-fabless”),
in human subjects the company reduces the development risks of new drug
suppressing the risk inherent
candidates.
in drug discovery and ② SymBio is a specialty pharma operating a high return, high market share niche
focusing on a high-return
strategy.
niche in the market

Thedeterminantsofcommercial
successareinteractions with a network of
drug discovery companies
and expertise
The company is a bio-venturein the rare position of having
a product which wasapproved and brought tomarket within five years of
being adopted

The company focuses its efforts on drugs for relatively rare indications in, forexample, cancer and hematology, where the need is high, but the major
pharmaceuticals companies are unrepresented. Using this niche strategy, thecompany seeks high market share and high returns. The company’s businessmodel thus far has involved entering into licensing agreements on new drugcandidates it has selected, developing them in Japan and then licensing out toother pharmaceuticals companies. However, it is now planning to set up its own
sales function by the end of 2020 and to establish itself as a specialist pharma
in the area of hematology.
③ Evolving into a global licensor
In September 2019, SymBio acquired exclusive rights (development,
production and sales) to Brincidofovir, a product with global applications.
SymBio thus evolved from a company seeking licenses in Japan to one
providing licenses around the world, firstly in Asia, particularly China, and also
the US and Europe.
The success or failure of this business model is dependent on the company’s
network of pharma-collaborators around the world and the company’s own
expertise.

Hence, the company’s track record. Normally, it takes some 10-20 years to bring adrug from basic research to the market. In terms of the probability of success, someestimates suggest that, counting from the chemical compound stage, it is less than
1/30,000, and even from the POC stage, around 7-8%. But SymBio managed to get
its first product, Treakisym®, from adoption to manufacturing and commercial
approval in only five years, and in July 2018 became recognised as a standard
therapy. In its fifteen-year history the company has ultimately adopted 6 products,
and at the moment 3 of these are under development or in the planning stage.

The network and in-house
expertise supported by a highquality work force andorganizational strength are We believe this track record has been made possible by the expertise of thekeycompany’s staff and by the way the company is organised. SymBio has a staff of107, of whom 44 are involved in R&D. The drug search function is supported by a
Scientific Advisory Board (SAB) of specialists (including Nobel Prize candidates).
The company’s founder and CEO, Fuminori Yoshida, is of great value in terms ofboth the experience he brings and his extensive personal network (see CV below).

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This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

Career of Fuminori Yoshida, CEO1949 Born in Tokyo
Graduated from the Science Faculty1971 (majored in Chemistry) of Gakushuin
University
1973

Obtained master's degree from M.I.T(specialised in Life Sciences)
Studied Management and Medical Policy
Theory at Harvard University Graduate
School1975 Joined Mitsubishi Corporation
1977 Joined AHS Japan (currenty Baxter)
1980 Founded Japan Bio-Rad Laboratories
1991 Joined Japan Syntex (now Roche)
CEO Amgen Japan, Vice-President
Amgen Inc.
Founded SymBio Pharmaceuticals
2005
Limited
1993

Source: Fair Research Inc., using company filings

In 2018, Treakisym®, the company’s leading product, became established as astandard therapy, and steady progress was seen in terms of expanded indications andformulation changes. The company’s decision to set up its own internal sales
structure demonstrated it was ready to evolve from bio-venture to specialist pharma
in the area of hematology. In September 2019, the company acquired an exclusive
license to the worldwide rights of Brincidofovir, thereby transforming itself into a
global licensor.

3/26This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）
Main product pipelines

Issued :April 7, 2020

As of March 2020, the company’s main products under development are
Treakisym®, Rigosertib and Brincidofovir, introduced in September 2019.
(Supplementary information)
In October 2015 SymBio concluded an agreement with The Medicines Company in the UnitedStates under which it would license-in the self-administration pain control drug, IONSYS. The
lump sum contract payment was JPY1 billion and Phase 3 clinical trials in Japan began in June
2016. In May 2017, however, the other party abruptly announced it was considering withdrawing
from that business. Patient registration was therefore halted and in November 2017 the agreement
was terminated. SymBio has requested the International Chamber of Commerce to arbitrate on its
claim for compensation in the amount of JPY9 billion from The Medicines Company. In January
2020 the latter was bought by Novartis AG. The arbitration case was heard in June 2019 at the
ICC Arbitration Court, and the arbitration procedures were completed in December. SymBio
expects that an arbitration finding will be issued during the first half of 2020.

(1) Treakisym® (SyB L-0501 freeze-dried injection formulation) /SyB L-1701(RTD formulation) / SyB L-1702 (RI formulation)/ SyB C-0501 (oralformulation)

Treakisym® (generic name: bendamustine) is an anticancer drug developed inGermany in 1971 and used mainly as a treatment for low-grade non-Hodgkin
lymphoma and chronic lymphocytic leukemia.
(Reference) malignant lymphoma
Lymphoma is a blood disease caused by lymphocytes (a type of white blood cellthat mainly act to provide immunity) becoming cancerous. There are two typesof lymphoma: Hodgkin lymphoma (below, HL) and non-Hodgkin lymphoma(NHL). The majority (94%) of Japanese malignant lymphomas are NHL,classified into three types according to the rate of disease progression.
Treakisym® is indicated for the NHL red areas in the chart.

Types of malignant lymphoma

Source: Therapy Handbook by Eisai and SymBio

4/26
This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

<Licensing-in and development history>

Treakisym®
received
approval in a mere 5 years
following introduction, andsince then has seen a series ofadditional indications
After receiving its first
approval in 2010 two
additional indications wereapproved in 2016, adding tomarket penetration
In July 2018 became eligible
as a standard therapy

In December 2005, SymBio acquired exclusive development and sales rights
in Japan for Treakisym® from the Astellas Pharmaceuticals European
subsidiary (now named Astellas Deutschland GmbH). Within a mere 5 years,
in October 2010, it had received approval for two indications, low grade r/r
NHL and mantle cell lymphoma (below, MCL) and, in December commenced
sales. Further approvals were received in August 2016 for chronic lymphocytic
leukemia (below, CLL), and in December for untreated NHL/MCL. Finally, in
July 2018, with respect to all approved indications, Treakisym® was newly
listed in the Guidelines for Clinical Practice in Hematopoietic Tumours for2018 (edited by the Japanese Society of Hematology) as a standard treatment
option.
Behind this was the fact that the superiority of the B-R therapy using
Treakisym® in combination with rituximab had been demonstrated over theconventional standard CHOP-R therapy (see note below on comparative tests of
CHOP-R therapy and B-R therapy.)
Tests comparing CHOP-R therapy and B-R therapy

Source: Company briefing materials: “The B-R therapy evinces better results(Note) CHOP-R therapy
Therapy combining the molecule targeting rituximab with a chemotherapeuticcombination of the anticancer drugs cyclophosphamide, doxorubicin hydrochloride,vincristine sulfate, and the steroid prednisolone.

The elevation of Treakisym® to standard treatment helped boost its market
penetration from an annual average of 35% in 2017 to 56% at the end of September
2018. It completely surpassed the erstwhile standard therapy, R-CHOP, and in 2018,its eighth year on the market, sales in Japan reached JPY8.5 billion (official drug
price basis).
(Note) Product quality problem
Sales in 2019 were only slightly up on 2018. This was because of a product quality
problem that had turned up in shipments of Treakisym® (freeze-dried preparation)
imported from the manufacturing source (Astellas Deutschland GmbH). What in fact
happened was that, in October 2018, 87% of the 25mg vials in a shipment were visibly
disfigured, so that from the first quarter of 2019 a switch was made to importing only

5/26
This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

the 100mg preparation. However, in the second quarter impurities and serious
disfiguring were found in the new preparation, forcing a temporary halt to deliveries.
The present situation is that the cause of the problem has been found and remedial
measures have been carried out. Astellas has put a CAPA program (Corrective And
Preventative Action plan) in place. SymBio has taken action to confirm theeffectiveness of this program and has initiated steps to audit quality control. The
joint actions of the two companies seems to have brought about the beginnings of aresolution to the problem.

The B-R therapy’s market penetration

Source: SymBio using M3 market survey

In the area of blood cancers <Expansion in combination therapies>
SymBioisestablishing
Treakisym® as the backbone Treakisym® is in an interesting position. In the field of hematological cancers
of its businesstargeted by Treakisym®, various new therapies have recently emerged (see below).

However, in each case, Treakisym® does not come to the fore, but is used in a
combination therapy with a new drug.
Following are examples of this:① On July 2, 2018, a combination therapy of the anti-CD20 antibody
obinutuzumab (trade name: Gazabia) and Treakisym® was approved forfollicular lymphoma, adding a new treatment option.
Following on from the B-R
therapy a variety of othercombination therapies arecoming to the fore

(Note) Follicular lymphoma accounts for about 80% of low-grade non-Hodgkin lymphoma)② CAR-T (trade name: KYMRIAH), was developed by Novartis and has
proved to be a ground-breaking treatment for hematopoietic tumours including
leukemia. In March 2019 it was approved for the treatment of relapsed or
refractory acute lymphocytic leukemia (ALL) and DLBCL. Treakisym® hasbeen approved for use in combination with CAR-T therapy rather thancompeting with it.
③ On June 10, 2019 the FDA gave rapid authorisation to a new combinationof Genentech's anti-CD79b antibody, poratuzumab, and the drug vedotin-piiq,
together with B-R therapy, for the treatment of relapsed or refractory nonHodgkin lymphoma for transplant-ineligible patients. In Europe, also, onJanuary 19, 2020, it was given rapid authorisation.
6/26

This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

④ A SymBio survey in 2018 suggested that, in the area of blood cancers,
there were almost 100 projects underway in the US and Europe trialing BR therapy in combination with new drugs.
Looking at the foregoing, in the field of hematopoietic tumours, B-R therapy has
already established itself as the mainstay, and new therapies have been developed as
add-ons, so there is little likelihood of a competitive new therapy entering thepicture.
Novel combinations now under development
By Disease

By Stage

Source: SymBio using data from SyteLine, 2018

In addition to the above, with so many trials of combination therapies using
immunity checkpoint inhibitors going on around the world it would not be surprising
if new uses arose.
<Sales structure>
Sales has been in the hands ofEisai but preparations are now
underway to take this function
in house from 2021

In January 2008, SymBio licensed out to Eisai joint development rights and sole
sales rights of Treakisym® in Japan. The arrangement involves SymBio buying
Treakisym® from Astellas Deutschland GmbH and wholesaling it to Eisai in Japan,
who then undertake sales (we assume that half the costs of developing Treakisym®
in Japan were covered by Eisai). The licensing-out agreement with Eisai terminatesin 2020. In October 2018, SymBio announced that, from 2021, it would set up its
own sales structure with a view to making a complete switch in 2021 (we detail the
in-house sales structure later).

<The current status of product development>

The company is looking to
expand indications to r/r
DLBCL. Phase 3 results were
salutary and now preparing
for an application① Additional indications ： Relapsed/ refractory moderate to high-grade nonHodgkin lymphoma
Aiming to further expand indications the company is now pursuing productdevelopment by targeting relapsed/refractory medium to high-grade NHL (below,
r/r DLBCL). In January 2018, the first cases were registered (FPI) for Phase 3
clinical tests, during the course of which, and following deliberations with thePMDA, the targeted number of cases was changed. The registration of cases wascompleted (LPI) in April 2019. Subsequently, on November 5, it was announced
that the primary endpoint (expected response rate) had been exceeded (the full
results should be announced at the ACH and other symposia during 2020).
The company is currently making preparations to submit an application to theauthorities in the April-June period of 2020, prior to receiving approval in thesecond quarter of 2021 and product launch in the third quarter.
7/26

This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

(Note) in Japan, among medium-grade NHL’s, the most frequently occurring is the diffuse
large B-cell lymphoma (DLBCL)② Formulation changes for life cycle management
Another important activity for the company’s business is the use of formulation
Steady progress being made changes for the purpose of product life cycle management. In 2020, Treakisym®
in formulaton changes to will have been authorised for 10 years, and in 2021 could be threatened bycompetition from generics. The company is using new formulations to extend
manage product life cycles
product life (to 2031). To this end, SymBio on September 21, 2017 announced theintroduction of RTD and RI liquid formulations from the US company, Eagle
Pharmaceuticals Inc., to add to Treakisym’s® existing freeze-dried formulation. The
current freeze-dried formulation does have the advantage of storage at room
temperature but has to be dissolved in liquid and diluted in saline solution before
administration, which takes time and trouble. On the other hand, while the liquid
formulation must be refrigerated, the preparation of a diluted saline liquid offers atime-saving alternative and reduces the burden on clinicians. In the US in 2014, Teva
Pharmaceutical Industries launched an FD preparation, and in January 2016
launched an RI formulation which could be administered in a shorter time (trade
name: BENDEKA®, introduced from Teva). In the short space of two years
BENDEKA accounted for 97% of the Treakisym® market.
Comparison of the freeze-dried, ready-to-dilute ready to infuse
formulations

Source: SymBio company briefing

RTD formulation approvalin second half of 2020

As for the RTD formulation, since the efficacy and method of administration is thesame as the FD formulation, it had been agreed with the PMDA that data showing
stability would be enough to fulfill application requirements with no additional
testing necessary. On this basis, an application was announced on September 26,
2019 with a view to launching at the beginning of 2021.

With respect to the RI formulation, density and method of administration are
different and therefore safety tests are necessary. However, the PMDA has agreed
that only 36 cases will be needed, and in April 2019 registration of the first patientsfor clinical tests was completed. All registrations were completed in March 2020.
Product approval could be given in the second half of 2022. These new formulations
liquid will extend product life cycle until the end of 2031.

Steady progress being madein development of RI
formulation

Introductionofformulations should extend
life cycle to end of 2031

8/26
This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

③ ③Selection and concentration
In the past, Phase 1 clinical trials of Treakisym® were progressed using oral
formulations for advanced solid tumours and preclinical studies on systemic lupus
erythematosus (SLE), a type of autoimmune disease. The results were gratifying but
due to the potential to surpass existing drugs, and the expansion of the pipeline
following the introduction of Brincidofovir, the decision was made to discontinue
both (February 2020).

(2) Rigosertib (SyB L-1101: injection formulation, SyB C-1101 oral

formulation)

Development underway of
injection
andoralformulations of Rigosertib
targetingmyelodyspatic
syndromes (below, MDS)

Rigosertib is a cancer drug mainly targeting myelodysplastic syndromes (below,
MDS) being developed in the US by Onconova Therapeutics, Inc. In July 2011, after
Onconova had completed Phase 2 tests, SymBio acquired sole development andmarketing rights regarding the injection formulation and the oral formulation in
Japan and South Korea (the one-off contract payment estimated at JPY800 million).
The current development status is as follows:(a) Injection formulation
Joint international Phase 3 trials are being conducted on high-risk MDS patients who
do not respond to the standard hypomethylating agent (HMA) treatment (HMA
refractory), or relapse after treatment. SymBio is responsible for Phase 3 in Japan.
High-risk MDS is classified into two groups (higher risk) out of those determinedas high risk by the IPSS (International Prognostic Scoring System) and those withmedium risk, with a high risk of transition to leukemia and the like. Currently, thestandard treatment is administration of azacitidine (trade name Vidaza) anddecitabine (trade name Docagen), but some high-risk MDS occurrences are resistantto the standard treatment or relapse after treatment. Rigosertib is indicated for such
relapsed or refractory high-risk MDS, and there are no competing approved drugs
yet.
Onconova completed Phase 3 (ONTIME) tests for r/r high risk MDS in February
2014. The results showed there was no statistically significant difference in overall
survival between the cohort receiving Rigosertib and the control cohort receiving
palliative care. However, looking only at HMA refractory patients or those whose
9/26

This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

condition had deteriorated during previous treatment, a statistically significant
difference was recognised: overall survival was 7.9 months for the Rigosertib cohortand 4.1 months for the control cohort. Onconova then redesigned the test design on
the basis of this partial analysis. In August, 2015 it initiated joint international Phase
3 INSPIRE tests directed at high risk MDS patients who are HMA refractory or who
have relapsed after treatment.
ONTIME results (left) and partial analysis - INSPIRE tests with same cases (right)

Source: SymBio results meetingThe
original
developer,
Onconova, changed test
design – now in joint
international Phase 3 with
SymBio participating. On thebasis of interim analysis,
cases increased in January
2018. Top-line data due forrelease in 2H 2020

SymBio initiated Phase 1 tests on r/r high risk MDS in June 2012, completing themin October 2015. Subsequently, SymBio participated in the international Phase 3
INSPIRE tests, initiated by Onconova in December 2015, as the party responsible
for Japanese clinical trials. In January 2018, on the basis of interim INSPIRE results
Onconova increased the number of cases from 225 to 360, and in Japan SymBio did
the same with a target of 50 cases. In March 2020 all 360 cases had completed
registration for joint international Phase 3 (INSPIRE). The expectation now is for
top-line data (interim report) possibly being released early in the second half of2020. At the present time an application is scheduled for 2021 and approval for 2022.
(b) Oral formulation
In Europe and the US, Phase 1 / 2 trials have already demonstrated the effectivenessand safety of the oral formulation on high-risk MDS in combination with azacitidine(2017, 14th international MDS symposium). Also, at the 2018 American Society of
Hematology (ASH) symposium the results of Rigosertib oral formulation Phase 2
trials were published, showing good tolerability and superior rates of
responsiveness for previously untreated HMA and r/r MDS patients.
Rigosertib Phase 2 clinical trial results (ASH, 2018)

Source: SymBio results meeting, 2018

10/26
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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

Onconova applied to the FDA in December 2018 for a special protocol assessment(SPA), planning Phase 3 trials in combination with azacitidine on untreated high risk
SymBio scheduled to joininternational joint Phase 2/3 MDS. As of December 2019, they have announced changes to the trial design andare considering Phase 2/3 adaptive trials.
trials planned by Onconova(Note) SPA
An SPA involves an advance agreement with the FDA on the acceptability of Phase 3 trial methods,
purpose, trial endpoints (primary and secondary) and analytical methods. Under the SPA system
the findings are accepted as they are without changes to the protocol.

SymBio plans to participate in the international joint Phase 2/3 adaptive trials
scheduled by Onconova.

KRAS-positive cancer could
become an additional
indication

Rigosertib has been shown to act as a RAS mimetic molecule. Rigosertib
competitively inhibits the activated RAS from binding to signaling molecules (RAF
in the figure below, PLK, RAL, PI3K other than RAF). By blocking the Ras-RafMapk transmission pathway by this inhibition, it is expected to suppress
carcinogenesis by activated RAS. Onconova is planning an investigator-led study(Phase 1) of advanced KRAS-positive non-small cell lung cancer with a
combination of an immune checkpoint inhibitor and Rigosertib. It is also planning
Phase 1 for KRAS-positive colorectal cancer.

Source: Onconova presentation materials, October 2018

11/26
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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

(3) Brincidofovir （SyB V-1901）
On October 1, 2019 SymBio announced it had acquired the exclusive global rights(development, manufacturing and sales) to Brincidofovir (BCV) for all indications
except smallpox from the US company Chimerix. BCV thus became SymBio’s third
strategic product after Treakisym® and Rigosertib. The company has previously
licensed in products from overseas for development mainly in Japan, but with thisacquisition it is now in an entirely new position, able to license out globally.
(Note) Why Chimerix retains all rights to the smallpox indication

Has acquired an exclusive
global license for inications
except smallpox

The US Biomedical Advanced Research and Development Authority (BARDA) has provided
Chimerix with more than USD100 million to develop BCV as one element in countering bioterror. The FDA has given BCV fast-track and Orphan status, and Chimerix expects to receive
approval for smallpox in 2020.

<Characteristics of Brincidofovir>
Compared to other anti-viral drugs such s cidofovir (CDV) and foscarnet (FOS),
CDV is highly active and effective against a multiple of infectious diseases.
BCV is active across a broad spectrum

BCV is more active across a
broader spectrum than otheranti-virals(Note) EC50 (the concentration at which a drug or antibody shows a 50% maximum response
from the lowest value) indicates that the lower the number, the higher the activity. In the upper
figure, EC50 is color-coded depending on the level. Green has high activity and red has low
activity. The left-most BCV column is green for various viruses = has a broad spectrum
Source: Chimerix(Reference) Cidofovir (CDV)
This was approved by the FDA in 1996 for the treatment of cytomegalovirus retinitis
in AIDS patients. CDV is a cytosine nucleotide analog that inhibits the replication of
DNA viruses such as adenovirus, papilloma virus, and polyoma virus as well as
herpesviridae. CDV is also effective against ganciclovir (GCV) resistance (UL97 genemutation) and is considered of utility when foscarnet (FOS) cannot be used due to theappearance of GCV resistance. It is an unapproved drug in Japan.

As can be deduced from the above chart, CDV is close to BCV in terms of activity
level and broadness of spectrum. However, CDV is difficult to use because of its
nephrotoxicity. BCV, on the other hand, has low toxicity and, despite being highly
active, is extremely safe.
12/26
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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

<BCV mode of action>

In addition, nephrotoxicity is
low and safety excellent

Brincidofovir (BCV) has a structure in which a fatty chain (hexadecyloxypropyl:
HDP) is bonded to cidofovir (CDV) and is rapidly taken into a lipid bilayer
membrane and efficiently translocated into cells. The compound whose fat chain iscleaved by metabolism by intracellular phospholipase and the generated activatedform (CDV-PP: CDV diphosphate) is retained in the cell for a long time, resulting
in a dramatic improvement in antiviral activity. In addition, because HDP binding
does not cause accumulation of renal tubular epithelial cells by the OAT-1
transporter and the low level of CDV release into the blood, nephrotoxicity, afundamental problem of CDV, is reduced. (Because CDV does not have a fatty
chain, the rate of incorporation into cells is low, and a high concentration ofadministration is required to enhance the effect, with nephrotoxicity the likely
outcome.)

Source: SymBio IR materials<Indications>Indications targeted: viral
infections
following
hematopeoietic stem celltransplantation and organtransplantation

SymBio uses the properties of BCV to target what is has described as a primary areafor development: viral infections after hematopoietic stem cell transplantation, an
area with poor prognosis, high lethality, and strong unmet medical needs. In general,in hematopoietic stem cell transplantation or organ transplantation, radiation or
immunosuppressive agents are used to suppress rejection, but in doing so are
rendering the patient easily susceptible to viral infections. Conventionally, otherantiviral agents, such as CDV and FOS have been used, but with these there is aconcern about the side-effect of nephrotoxicity. BCV is an important drug in helping
SymBio achieve specialty pharma status in the area of hematology.
The number of hematopoietic stem cell transplants worldwide is estimated at about
78,000 annually, of which some 43,000 are autologous with low rejection rates.
There are some 35,000 allogeneic transplants in which immunoreactions need to becontrolled to suppress rejection, and which are highly vulnerable to viral infection.
These are on the rise.
SymBio anticipates first undertaking drug development in Japan for viral

Phase 1 viral cystitis trials due hemorrhagic cystitis. Phase 1 clinical trials in Japan should start in the second half
to start in Japan from the of 2020, and about 50 subjects will be included in Pivotal trials. After that, it issecond half of 2020
thought that the focus will shift to the development targeting HHV-6 encephalitis
Will

draw

up

and multivirus infections. Overseas, a global development strategy will be
global formulated in the latter half of 2020, and it is assumed international joint clinical
13/26

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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）
development strategy

Issued :April 7, 2020

trials will take place. Also, in 2020, the company plans to start developing oral
formulations.
BCV life cycle management

Source: Symbio results meeting materials

In the future it will be possible to use this therapy not only for hematopoietic stem
cell transplantations, but also after organ transplantations, and it will be administered
It is anticipated that this not only via injection but orally. In other words, long-term life cycle management
product will have a prolonged will be possible.
existence due to an increase inindications and formulation Unlike Japan, organ transplants in Europe and the US are quite common. For
instance, in Japan there are 1,600 kidney transplants per year, compared with 20,000
changes

It will be necessary to find aEuropean or US pharma
partner in order to pursue
the development of drugs forpost-transplantation
viralinfections(total) in the five biggest countries of Europe, and the same number in the US. Of
these, it is estimated that about one-third are infected with the BK virus or CMV(cytomegalovirus). While the number of cases does not exceed 560 or so in Japan,
the total for the US and the five biggest countries of Europe is probably around
15,000. Since organ transplants are not part of the area SymBio specialises in, andthere are not so many cases, SymBio will probably tie up with an overseas
pharmaceuticals company to promote sales following organ transplants.
Number of organ transplants (ZOT)

Source: SymBio results meeting

14/26
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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

(Reference) Hematopoietic stem cell transplantation
Transplantation of bone marrow, which is a hematopoietic stem cell, is a treatment that aims tocompletely cure blood diseases (mainly haematological cancers such as leukemia) that are difficult
to cure only by chemotherapy or radiation therapy. Bone marrow transplantation includes
autologous bone marrow transplantation using the bone marrow of a relative, and allogeneic bonemarrow transplantation, which is increasing in frequency, using the bone marrow of another personwith the same white blood cell type.

(Reference) Viral hemorrhagic cystitis (extracted from SymBio IR data)
Among the viral infections that frequently occur after hematopoietic stem celltransplantation, adenovirus infections that causes hemorrhagic cystitis are generally
intractable, and severely irritating symptoms such as frequent urination, abdominal
pain, and dysuria, with dissemination and death when severe. Cases have beenreported in which the adenovirus is transferred to the kidney and causes renal
failure, which is fatal. It is particularly likely to occur with unrelated donors andumbilical cord blood transplants, which have a high ratio in Japan, and are often
extremely intractable due to the time required for reconstitution of the immune
system. It is said to occur at a frequency of 8.6% to 24% in allogeneic transplants.
(Reference) HHV-6 encephalitis (extract from SymBio IR data)
HHV-6 (human herpesvirus 6) is the sixth human herpesvirus to be discovered. In
allogeneic hematopoietic stem cell transplantation, reactivation of HHV-6 occurs in
30-70% of patients, causing HHV-6 encephalitis. Most HHV-6 encephalitis cases
develop at 2-6 weeks, with the most frequent occurring at 3 weeks after
transplantation. The three major symptoms are memory impairment, impaired
consciousness, and, in 30-70% of cases, convulsions. In a typical case, symptoms
gradually progress from memory impairment to impaired consciousness andconvulsions. In the case of rapid progression, the neurological symptoms worsen
every hour, and there are many cases where respiratory control is required for
repeated convulsions and respiratory depression. In HHV-encephalitis cases earlyintervention is extremely important because a rapid deterioration in the patient’s
condition early on is common. According to clinical guidelines*, the first-line drug isfoscarnet (FOS) or ganciclovir (GCV), and the second-line drug is cidofovir (CDV).
CDV is considered a second-line choice because of its strong nephrotoxicity and thepoor migration of the drug into the cerebrospinal fluid (CSF). However, no studies
have been conducted to date on the clinical effects of these drugs whose effects havebeen confirmed in vitro on HHV-6 encephalitis cases.
*Guidelines for hematopoietic cell transplantation: prevention and treatment ofviral infection HHV-6 (Japan Society for Hematopoietic Cell Transplantation,
February 2018)

15/26
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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

<Building an in-house sales function>

Plans to cover the 400 or somost significant hemalology
departments
nationwide,
divided into 6 blocs andserved by 62 sales staff
specialised in hematology

There are 1100-1200 hospitals and clinics in Japan with hematology departments,of which 800-900 are hospitals. SymBio believes it can cover the most significant
ones, or one-third of the total. As it was getting closer to starting its own sales in
2021 it began recruiting a highly professional staff in 2018. The sales structure it isconsidering consists of 62 staff divided into 2 areas nationwide and 6 blocs. As of
February 2020, it has already secured the services of 42 staff, and by April will
mobilise the remainder on secondment from CSO. The company is simultaneously
preparing two logistics centres and its distribution infrastructure should be in placeby the second quarter of 2020. The ERP, which is the company’s core systems
component, is in place and IT is being upgraded in parallel, so all should be readyfor the second quarter of 2020.

The necessary distribution
system, logistics centers andWe estimate that the cost of MR’s and promotional costs will push Treakisym® sales
core systems are in placecosts up to around JPY2 billion per year.

Teams of regional specialists in the area of hematology are to lead marketing

Source: SymBio results meeting, February 2019

16/26
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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）
Potential market size forthree major products
We posit the marke size ofTreakisym’s® three approved
indications at JPY10.6 billion,
and for Phase 3 r/r medium
and high risk NHL at JPY9.8
billionIssued :April 7, 2020

(1) Potential market size for Treakisym®
We see the market for Treakisym® rising on the back of higher market penetration
and an expansion in indications. Those indications already authorised are: ① r/r
low grade NHL/MCL ② Chronic lymphocytic leukemia（CLL）③ Untreated low
grade NHL/MCL. Sales value for ① totals JPY4.72 billion. We see total patientsat 9,336 and market penetration at 58%, with the level of sales likely to be
maintained by changes in formulation. ② and ③ have only recently beenauthorised so sales of both together are around JPY2.68 billion for FY2017. We
estimate 656 patients and 6,967 patients, respectively, with an average market
penetration in 2017 of 35%, suggesting higher penetration to come. The market
value of ② CLL would be JPY340 million at a market penetration of 55%, and for③ untreated low-grade NHL/MCL a market penetration of 75% would yield an
estimated market size of JPY5.57 billion. Further, there are an estimated 18,000
patients or so suffering from the three stages of r/r medium-high grade NHL (r/rDLBC), now at Phase 3. A maximum market penetration of 60% would yield amarket value estimated at JPY9.77 billion.
From the above we can posit a total sales value of JPY1.06 billion for the three
indications already approved. If we include r/r DLBCL, an additional indication now
at Phase 3, total estimated sales value comes to JPY20.4 billion. We do not makeany assumptions in our calculations for new combination therapies, such as CAR-T.
The market for Treakisym®

Source: SymBio company briefing, 2018(2) Potential market for Rigosertib
We posit a potential value of
JPY4.6 billion for the
Rigosertib
injection
formulation, and a potential
value of JPY11.6 billion forthe oral formulation

The Rigosertib injection formulation is indicated only for those high-grade MDS
patients who are HMA refractory. We therefore infer some 900 patients and, using
the official price of Vidaza as a reference, we calculate sales of JPY4.6 billion. For
the oral formulation, we infer 2300 patients, that being the number of high-grade
MDS patients not receiving injections. The oral formulation market is therefore
valued at JPY11.6 billion, and the total for both formulations is JPY16.0 billion.
However, if KRAS-positive cancer qualifies as an additional indication in the future,
the size of the market could fluctuate significantly.

17/26
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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

(3) Potential market size for BrincidofovirMarket size will be a functionof viral infections following
Worldwide there are some 78,000 hematopoietic stem cell transplants each year,
hematopietic transplants

43,000 of which are autologous and therefore with a low probability of rejection.
There are some 35,000 allogeneic transplants each year and for these it is necessary
to suppress the immune response to prevent rejection, which thereby increases therisk of infection.
SymBio anticipates that in Europe and the US, 50-60% of allogeneic transplants,
and in Japan, 70% will require this. As a result, the number of cases in Japan could
total around 2,600 each year, and in the US together with the five main European
countries, could total around 1,500. Elsewhere, the population-adjusted incidence ofhematopoietic stem cell transplants is still around one-twentieth that of the bigger
economies. However, we expect this to rise in the future.
Frequency of hematopoietic stem cell transplants (HCT’s)

Source: SymBio results meeting materials

The market for hematopoietic
stem cell transplants is valued
at JPY8 billion in Japan and
JPY42 billion in Europe+US.
The Asia (incl. China) market
potential is also substantial.

If we assume, given the cost of other antiviral drugs, that the drug cost per case is
JPY3 million, the market size for treating viral infections after hematopoietic stem
cell transplantations would work out at JPY8 billion in Japan and an estimated ¥ 42
billion in the US and Europe (i.e. the US and the five major European countries).
The number of hematopoietic stem cell transplantations in Asia is growing in
number and, assuming that the population-adjusted number of cases is equivalent tothat of Japan, the potential size of the Chinese market (approximately 1.4 billion
people) could be in excess of JPY 83 billion. However, almost half the potential
demand is in the coastal areas where the medical environment is well-established.

18/26
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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）
Measuring pipeline value
Our calculation is based on anumber of assumptions

Discount rate: 10%

Issued :April 7, 2020

Pipeline value simulation
In order to model the company’s value, we assume approved Treakisym®
indications include r/rDBLCL, and our calculations discount the value of
formulation changes and of the company’s in-house sales structure. We then sum theresulting value with the value of the injection and oral formulations of Rigosertib(DCF method) and deduct whole-company costs (drug search costs andadministration costs) again using the DCF method. The discount rate is set at 10%,
given that while SymBio operates at a loss it is a low risk pharmaceuticals venture
which does not use laboratories or manufacturing facilities, and does have alaunched product in the market.
< Assumptions for Treakisym®>

In line with our earlier comments, we assume that peak sales will occur four years
after market launch and will maintain that level for the next 3-4 years, before
shrinking at 5% per year and, from 2031, shrinking rapidly at 10% per year. Further,
We have amended the we set the probability of success in clinical trials directed at r/r medium-grade NHL
assumptions we made to (r/r DLBCL) at 100%, reflecting the established position of Treakisym® as a
calculatethecostof standard therapy in the area of hematopoietic tumours.
Treakisym®
formulations

liquidUntil 2020 sales will be made through Eisai, but from 2021 will be handled in-house.
We have assumed the company will in the same year be switching almost entirely tothe liquid formulations (RTD and RI). These formulations will have, we assume, acost advantage over the conventional formulations. After switching, we assume thecost rate, including the payment of royalties to Eagle, should be in the area of 20%(in our previous Basic Report we assumed 30%). Milestone payments, which will
become payable on regulatory approval of the RTD formulation, will beapproximately JPY700 million.

All development costs (excluding milestone payments) will be borne by thecompany itself. For 2020, in addition to RI formulation development, r / r DLBCL
regulatory application preparations, etc., will be assumed at about JPY900 million.
We are setting sales costs at
JPY2 billon, assuming a sales For 2021-2022 it is thought that the only cost will be the development of the RI
formulation so development outlays will fall to about JPY400-600 million. It is also
force of 62
assumed that a milestone payment to Eagle (JPY700 million) will occur in 2020,
triggered by the approval of the RTD formulation.
With a sales force of 62, as mentioned earlier, we are assuming cost of sales at anannual JPY2 billion yen.
< Assumptions for Rigosertib>We
haverevisedourcalculation of the injection
formula’s probability of As per the previous pages, we are assuming that sales will peak in the fourth year
success from 50% last time to following launch, maintaining that level for approximately 3-4 years before
contracting by 5% per year and by a sharper 10% from 2035. We are positing launch
80%of the injection formulation in around 2023, and in around 2024 for the oral
formulation. Reflecting different stages of development, we assume a probability ofsuccess of 80% for the Phase 3 injection formulation, and 50% for the Phase 3
preparatory oral formulation (the injection formulation has advanced from ourprevious calculation of 50% at an earlier point in clinical trials).

Rigosertib goes through the Further, we are assuming that payments for supplies of the drug and royalties tosame sales channels as Onconova will amount to some 25% of sales revenues. We believe that development
Treakisym®
costs (excluding milestone payments) will continue at a level of about JPY800

million annually from 2020 to 2022, and will amount to JPY300 million yen in 2023,
19/26
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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

because oral drug development will continue even after injectable drug development
peaks. We have assumed milestone payments being made at the time of approval forthe injection formulation and the oral formulation and amount to JPY 500 million
and JPY1.5 billion, respectively. Sales expenses for Rigosertib are not recorded asthey go through the same MR and the same sales channel as Treakisym® sales.
<Assumptions for Brincidofovir>
When SymBio licensed in Brincidofovir from Chimerix it was to pay a total of
USD180 million (including a one-off contract fee of USD5 million) and royalties at
a fixed proportion of sales. It was reported that the royalties rate was at a “two-digit”
percentage level, which we have assumed to be 12% for our calculation purposes.
Also for calculation purposes, we have narrowed our focus to the two viral infections
occurring after hematopoietic stem cell transplants. As for markets underconsideration, we start with Japan and China. The former has an assumed market
value of JPY8 billion, and China market is accorded a more conservative value than
was suggested in the previous pages, at JPY32 billion, or four times the Japanese
We assume a market launch in level. In terms of development schedule, we first assume the development of a viralhemorrhagic cystitis therapy in Japan, to begin in the second half of 2020 and, using
or after 2026
overseas data which includes Japanese natives, to be completed at an early date.
From mid-2021, we anticipate registering some 50 individuals for the start of Pivotal
tests. The registration should be competed in 18 months and the Pivotal tests in thefirst half of 2024. An application for approval should follow in 2025 and market
launch in 2026. It is expected that studies in patients with HHV-6 encephalitis andthose in patients with hemorrhagic cystitis will progress on a similar scale, with adelay of about one year. The overseas markets will wait on regulatory approval in
Japan, so the company is now thought to be considering a strategic direction
We have set quite challenging
involving China and other parts of Asia.
We are taking a conservative
view of market size: Japan
JPY8 billion, overseas JPY32
billionassumptions for milestones
and gross margin

As described above, assuming 50 patients for each indication in the Pivotal tests, thedevelopment cost would be about JPY500 million per year at its peak. It is also
assumed that the gross profit rate in Japan is 80%.
Given the foregoing and assuming that there are 50 patients for each indication in
the Pivotal tests, we have inferred development costs of around JPY500 million peryear at the peak. It is also assumed that the gross profit rate in Japan is 80%.
We have set whole-company Although sales in overseas markets would be possible in-house, it is assumed thatcosts
(including
basic sales rights are licensed out. In that case, the gross profit of SymBio would be 50%,
research costs) at an annual and the milestone income associated with the licensing-out we set at a total of JPY
10 billion, about one-third of peak sales. The probability of success is considered to
JPY2.2 billion
be 80% or more because POC in humans has already been established.
R&D costs to find and study new candidates for development are generated every
year, along with whole-company administration costs. After analysing thecompany’s revenues structure, we posit R&D costs generated by recurrent search
activities at JPY600 million, and whole-company administration costs at JPY1.6
billion, for a relatively high total of JPY2.2 billion.

20/26
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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

<Results of our calculation>
We calculate the discounted present value using the preconditions touched on above,
the results of which are given in the table below. Treakisym® has a pre-tax value of
JPY57.0 billion, Rigosertib JPY24.9 billion, and Brincidofovir JPY29.1 billion, fora total JPY110.9 billion. Deducting all company costs we arrive at JPY88.9 billion(pre-tax).
Even after allowing for Modelling the value of SymBio’s product pipeline (pre-tax)
whole-company costs the(JPY100 mil）
company’s pipeline value
comes to JPY88.9 billion
Prob. of success Discount rate 10%(before tax),
suggesting
Treakisym®
substantial latent value
100%
570
Rigosertib

Injection 80%
Oral 50%

249

Brincidofovir（for 2 infections after

80%

291

HSCT only ）sub-total
Company-wide costs
Total

1,109
-220
889

Source: Calculated by Fair Research Inc.
(Note) No direct comparison can be made between the company’s pipeline value andthe company’s market cap

21/26
This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

Earnings outlook

SymBio has two sources of revenue: proceeds from product sales and licensing fees.
Apart from the period ending December 2008, when the company booked a contract
fee from Eisai in exchange for sole domestic sales rights to Treakisym®, thecompany has never operated at a profit.

Revenues fell in 2019 mainly
because of a product quality
problem. In 2020, sales willagain fall, perhaps to below
2018’s level, as Eisai seeks to
draw down inventories

SymBio recorded sales of JPY2,838 million in the December 2019 period, most of
it the proceeds of sales of Treakisym® to Eisai. Because of product quality issues
with Treakisym® wholesale deliveries to Eisai had been delayed, leading to a YoY
fall in SymBio revenues of around JPY1 billion in 2019. In the December 2020
period we expect revenues to rebound on the back of a resolution to the productquality problem. However, from the beginning of 2021 SymBio is switching to its
in-house sales structure, necessitating the compression of Eisai inventories. We
expect sales to fall to around JPY3.4 billion, even lower than the level for 2018.
(The size of the market using official drug prices was around JPY8.5 billion in 2018,
and almost flat in 2019, but we expect a slight rise in 2020.)

However, in 2021 the switch
to in-house sales, an increasein qualifying indications andthelaunchofliquidformulations should provide ajump in sales to the JPY9
billon level

In 2021, however, the start of in-house sales together with a switch to the
Treakisym® RTD formulation and the inclusion of r/r DLBCL as an approved
indication should mean a significant improvement in results, such that SymBio is
forecasting sales in 2021 of JPY9 billion (as stated in the company’s medium-term
management plan of February 2020). It is quite possible that, in official drug priceterms, the size of the Treakisym® market could top the important JPY10 billion
level at this time.
(Note) It is estimated that the wholesale price at which SymBio sells Treakisym® to Eisai isaround 50% of the official drug price, and the acquisition cost which SymBio pays
Astellas Deutschland GmbH is 66% of the wholesale price. When sales move in house, thecompany will not be paying a wholesale price to Eisai but a wholesale price to medical
institutions. And with the switch to the RTD and RI formulations SymBio will be supplied not
by Astellas but by Eagle. Because of ease of drug handling, logistics costs will fall and overall,there will be a significant impact on the cost structure.

R&D costs can change
depending on incidental
contract fees and milestone
payments
forproducts
licensed in. But excluding
such variability, the pace ofdevelopment is expanding

R&D spending in 2019 was JPY2,441 million, an increase on the previous year’s
JPY1,832 million. However, for the previous year we infer JPY540 million of the
R&D was accounted for by the one-off contract payment (for BCV) to Chimerix.
Deducting that leaves JPY1.9 billion, which was used to maintain a steady programof development: around JPY1.1 billion was Treakisym® related, JPY500 million
was Rigosertib related, and the remaining JPY300 million went on other drugs
search costs. R&D spending rose JPY289 million to an anticipated JPY2,731 million
in 2020. This includes a milestone payment of around JPY700 million that was due
In the run-up to starting inbecause of the approval of the RTD formulation. R & D expenses excluding onehouse sales, sharp upturn intime milestone payments are expected to increase to around JPY2 billion as
non-R&D SG&A expecteddevelopment progresses and expands, including the start of BCV development.

Operatinglossescould
expand to JPY4.3 billion in
2020, but could perform a Uturn in 2021 recording profitsof JPY1.0 billion

SG&A expenditures excluding R&D costs came to JPY2,724 million in 2019, asizeable increase of JPY728 million on the previous year. The increase arose as full
–fledged preparations for in-house sales was getting underway. The company
expects SG&A expenditures excluding R&D costs will expand to JPY 3.5 billion in2020 and thereafter continue to increase steadily along with the sales growth.
It is expected that in 2020 the company’s operating loss will expand to JPY4.3
billion due to preparations for the in-house sales function and increased R&D costs.
However, in 2022 the start of the new sales arrangement and changes to the
Treakisym® cost structure should boost profitability and generate a JPY1 billion
operating profit. Later, the effect of increased indications for Treakisym® will sinkin, sales should grow by 20% and operating revenues could rise by almost JPY1.5
billion.
22/26

This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

SymBio Pharmaceuticals – results and medium-term outlook
JPY mil.
Dec. 2013

Dec. 2014

Dec. 2015

Dec. 2016

Dec. 2017

Dec. 2018

Dec. 2019

Dec. 2020

Dec. 2021

Dec.2022(Company） (med. term plan） (med. term plan）

Sales
Product sales
Licensing

1,532
1,432
100

1,955
1,940
15

1,933
1,933
0

2,368
2,137
231

3,444
3,444
0

3,835
3,809
25

2,838
2,811
27

3,404
3,404
0

Cost of goods sold

1,214

1,428

1,483

1,737

2,413

2,662

1,973

2,258

SG&A
of which, R&D
Excl R&D

1,999
1,053
946

1,830
774
1,056

3,135
2,035
1,100

3,031
1,667
1,364

4,978
3,017
1,961

3,828
1,832
1,996

5,166
2,442
2,724

6,236
2,731
3,505

9,008

10,816

Op. profits-1,681-1,303-2,552-2,127-3,947-2,656-4,302-5,090

1,031

1,482

Rec. Profits-1,601-1,110-2,630-2,317-3,976-2,748-4,377-5,134987

1,438

Pre-tax profits-1,601-1,112-2,628-2,309-3,974-2,748-4,372

Net profits-1,605-1,116-2,632-2,313-3,978-2,752-4,376-4,803

1,356

1,717

Liquid assetsof which, cash etc.
Fixed assets
Liquid liabs
Fixed liabs
of which, corp bonds
Net assets
Shareholders equityof which, optioms

7,634
6,163
53
251
3
0
7,433
7,336
97

7,290
5,692
164
488
2
0
6,964
6,763
200

4,827
4,261
158
551
2
0
4,432
4,132
300

6,685
5,719
193
942
451
450
5,485
5,054
431

4,037
2,947
216
1,011
1
0
3,239
2,702
537

6,038
4,821
200
1,336
1
0
4,901
4,372
530

4,887
3,910
386
872
1
0
4,400
3,779
620

247

54

0

687

1,178

4,301

3,771

1,000

500

0

3,000

0

0

0

(Reference)
Income from options
issued/exrcised
Income from CB's issued
Event

Milestone

IONSYS
expenses,etc.

In 2022 SymBio will move toa second stage

Options Nos.
50, 51Treakisym
liquidformula costs

S wi t ch t o i n-

BCV licensing in

payment

In-house sales

on RTD

RTD launch

Approval

DLBCL approved

hous e S a l es
RI formulation
received

Source: Fair Research Inc. using SymBio medium term management plan andsecurities reports

From 2022 onwards, there will be several developments including the launch of
Rigosertib and, in 2026 or thereabouts, plans for the launch of BCV. Thesedevelopments will give SymBio a more secure footing as a specialty pharma withseveral products in the market, and ready to move to the next stage.
SymBio moves to the second stage

Source: SymBio results meeting, February 2019

However, SymBio is not at present ideally placed to make this move. The financing
plan announced in 2018 with the issuance of multi-year stock options (45th, 46th,
Moving to the second stage is 47th) will be exercised ahead of schedule (scheduled completion February 12,
not without its difficulties2020), allowing the company to raise a total of about JPY7,326 million yen.
However, cash on the balance sheet stood at JPY3.91 billion at the end of 2019, andnet profits for 2020 could record a loss of JPY4,803 million, meaning that funds will
be necessary to carry the company over for one year until profitability becomes a
reality. Among the previously mentioned financings the amounts raised in JanuaryFebruary 2020 totalled JPY943 million. But to reliably carry out product23/26
This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

development and to complete the in-house sales project, the company needs greater
financial room for manoeuvre. If the company’s arbitration application filed with
the International Chamber of Commerce is successful (the amount of damages
requested by SymBio is equivalent to approximately JPY9 billion), the company’s
position will be improved. But we should not stand on a satisfactory outcome to thearbitration which cannot be taken for granted.
It was in this situation that Symbio announced stock options issues (No. 50 and No.
51) on February 27 to raise finance (JPY5.45 billion envisaged). Each has Commit
issue conditions attached, designed to expedite exercise at a relatively early date.
(Reference)

Commit issue outline

No. 50: 7 million shares, from date of issue
2.8 million shares within 56 trading days
Entire no. of shares within106 trading days
No. 51: 3 million shares
Within 46 trading days of date stipulated by SymBio

Conclusions
With its own sales structure in place and the acquisition of Brincidofovir (BCV),
SymBio has established the foundations for growth as a globally licensed blood
specialty pharma. The total pipeline value (before tax) of its three cancer products
With the announcement on(Treakisym®, Rigosertib, and Brincidofovir) is estimated at about JPY110 billion
February 27, 2020 of ayen, or about JPY89 billion yen after deducting company-wide costs.
financing using an equity
options issue the company
seems to have found its way The company’s losses have recently expanded due to the upfront costs of switching
to an in-house sales system and the increase in R & D expenses due to theover the last one miledevelopment of core products. The company is now at a particularly difficult
juncture in its development but once it overcomes this it should see a clear path toprofitability in 2021. The financing plan announced on February 27 through theissuance of stock options will help it traverse this last mile.

24/26
This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

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AI Bldg. Kayabacho 5F
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Japan
Tel. 03-6403-9217
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25/26This report is prepared by Fair Research Inc. (Fair Research) for the purpose of providing information to investors, and not for solicitation of securities trading. Although this is based on the information andmaterials that Fair Research judges reliable, there is no guarantee of accuracy, credibility, completeness, suitability and timeliness. Fair Research shall not take any responsibility whatsoever for any results
including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.

SymBio Pharmaceuticals Ltd. （4582 JASDAQ）

Issued :April 7, 2020

Disclaimer□This report is prepared by Fair Research Inc. ("Fair Research") for the purpose of providing information to investors for fees undera contract with a covered company, and not for solicitation of securities trading.
□ Although, in preparing the report, Fair Research has obtained information through interviews with the covered company,
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Research□Although the report is written based on the information and materials that Fair Research judged reliable, there is no guarantee of
accuracy, credibility, completeness, suitability and timeliness. Also, views and forecasts set forth in the report represent judgment by
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□ Fair Research shall not take any responsibility whatsoever for any results including direct or indirect damage arising from the useof, or reliance to, this report. Investors should take full responsibility for securities and other transactions.
□ The intellectual property rights of this report belong to Fair Research, and any copy, transmission or quotation of any contents
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including direct or indirect damage arising from the use of, or reliance on, this report. Investors should take their own responsibility for securities and other transactions. The intellectual property rights of thisreport belong to Fair Research, and any copy, transmission or quotation of any contents without permission is legally prohibited.