SymBio Pharmaceuticals — Top-line data from registrational DLBCL study

SymBio Pharmaceuticals (TYO: 4582)

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Research: Healthcare

SymBio Pharmaceuticals — Top-line data from registrational DLBCL study

SymBio will be presenting data at the European Society of Hematology (EHA) meeting from its pivotal study in Japan of Treakisym (bendamustine) in combination with rituximab for the treatment of diffuse large B-cell lymphoma (DLBCL). The 38-patient, single-arm study showed a 76% overall response rate (ORR), with 47% of patients achieving a complete response (CR). This gives us a high degree of confidence in the label expansion for this population submitted in May 2020.

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Healthcare

SymBio Pharmaceuticals

Top-line data from registrational DLBCL study

Clinical update

Pharma & biotech

26 May 2020

Price

¥472

Market cap

¥16.1bn

¥110/US$

Net cash (¥m) at 31 March 2020 + subsequent exercises

5,584

Shares in issue

34.1m

Free float

92.5

Code

4582

Primary exchange

TYO

Secondary exchange

OTC US

Share price performance

%

1m

3m

12m

Abs

45.2

(15.9)

(33.0)

Rel (local)

37.4

(9.4)

(31.2)

52-week high/low

¥791

¥264

Business description

SymBio Pharmaceuticals is a Japanese specialty pharma company with a focus on oncology and hematology. The Treakisym powder formulation was in-licensed from Astellas in 2005; liquid Treakisym was in-licensed from Eagle Pharmaceuticals in 2017. Rigosertib was in-licensed from Onconova. And brincidofovir was licensed from Chimerix in 2019.

Next events

Rigosertib Phase III results

H220

Treakisym RTD approval decision

October 2020

Analyst

Nathaniel Calloway

+1 646 653 7036

SymBio Pharmaceuticals is a research client of Edison Investment Research Limited

SymBio will be presenting data at the European Society of Hematology (EHA) meeting from its pivotal study in Japan of Treakisym (bendamustine) in combination with rituximab for the treatment of diffuse large B-cell lymphoma (DLBCL). The 38-patient, single-arm study showed a 76% overall response rate (ORR), with 47% of patients achieving a complete response (CR). This gives us a high degree of confidence in the label expansion for this population submitted in May 2020.

Year end

Revenue (¥m)

PBT*
(¥m)

EPS*
(¥)

DPS
(¥)

P/E
(x)

Yield
(%)

12/18

3,836

(2,749)

(166)

0

N/A

N/A

12/19

2,838

(4,377)

(189)

0

N/A

N/A

12/20e

2,608

(5,256)

(181)

0

N/A

N/A

12/21e

9,228

1,090

19

0

24.8

N/A

Note: *PBT and EPS are adjusted, excluding D&A and exceptional items.

No surprises in safety profile

The EHA abstract includes a report on the safety profile of the combination, which is in line with expectations. Grade 3 and higher events were limited to hematologic adverse events (AE), which is consistent with the profile of this treatment and other reported results. The regimen is positioned as a more tolerable treatment than other second-line therapies, so consistency in the AE profile is important. These results were to be expected but we are pleased to see that no surprises were encountered that could potentially endanger the recent submission of the combination for a label expansion of Treakisym.

Results in line with or better than similar studies

The combination of bendamustine and rituximab (BR therapy) has previously been studied in unaffiliated non-registrational studies in DLBCL patients and other aggressive lymphomas. The results in the current study replicate and/or surpass these historical benchmarks. In particular, the median progression-free survival (PFS) seen in the study of 11.9 months is superior to other reports in this patient population. Median overall survival was not reached during the study period.

Confirmed activity in difficult to treat populations

The results presented in the abstract also included a subgroup analysis based on cancer subtype and patient age. The drug combination showed activity across subgroups, including more difficult to treat non-germinal center B-cell (non-GBC) disease and patients over 75. This supports the use of the regimen in its historical role for these higher-risk groups that are often unfit for other treatments.

Valuation: Unchanged at ¥39.0bn or ¥1,144

Our valuation remains unchanged at ¥39.0bn ($354m), or ¥1,144 ($10.40) per share as we had previously upgraded our valuation for the DLBCL program upon the initial announcement of positive results in November 2019, and we remain confident in its approval (90% probability of success).

Data supports label expansion

SymBio previously completed a Phase III study in Japan to support a label expansion of Treakisym (in combination with rituximab) to relapsed and refractory DLBCL in November 2019 and reported that it received positive results. The company will be presenting the detailed results from this study at the upcoming EHA virtual meeting in June 2020. The study enrolled 40 patients of whom 38 were evaluated for safety and efficacy.

The abstract for the presentation reported an ORR in 29 out of 38 patients (76%), of whom 18 of 38 (47%) showed a CR, with a median PFS of 11.9 months. These results are superior on a numerical basis to other reported studies of this combination. For instance, an Italian retrospective study reported a 50% ORR, 28% CR and a PFS of 8.8 months.1 Other studies have reported lower response rates.2 The safely profile presented in the abstract was also consistent with other results and predominantly showed hematologic AEs. A majority of patients saw grade 3 or higher drops in lymphocyte counts (90%), neutropenia (74%) or reduction in CD4 lymphocytes (66%). This is to be expected for most drugs targeting hematologic malignancies and is indicative of the drugs’ activity.

  Arcari A. et al. (2016) Safety and efficacy of rituximab plus bendamustine in relapsed or refractory diffuse large B-cell lymphoma patients: an Italian retrospective multicenter study. Leuk Lymph 57, 1823-1830.

  Vacirca JL, et al. (2014) Bendamustine combined with rituximab for patients with relapsed or refractory diffuse large B cell lymphoma Ann Hematol 93, 403-409.

This combination has been previously studied in a number of different trials across the globe, and is among the arsenal of treatment regimens available to doctors despite not being formally approved. The BR treatment regimen (as it is typically called) has historically been used as a salvage treatment in patients following failure of first-line chemotherapy as an alternative to more aggressive chemotherapy salvage or autologous stem cell transplant. The BR regimen has a generally more tolerable profile than these other treatments. Because of this there have also been attempts to investigate it as an alternative treatment in the first-line in frail patients.3 However, a limitation to evaluating the data on the BR combination is that there is a lack of placebo controlled studies, although this has not limited other similar approvals. Bendamustine was approved in the US for the treatment of indolent non-Hodgkin lymphoma (NHL) in patients who have failed rituximab treatment, based on a single-arm study.

  Storti S, et al. (2018) Rituximab Plus Bendamustine As Front-Line Treatment In Frail Elderly (>70 Years) Patients With Diffuse Large B-Cell Non-Hodgkin Lymphoma: A Phase II Multicenter Study Of The Fondazione Italiana Linfomi. Haematologica 103, 1345-1350.

The company also provided a breakdown of response rates based on patient subgroups. Response rates were provided on the basis of whether patients had germinal center B-cell type (GCB) DLBCL or the generally more aggressive non-GCB subtype of the disease, as well response rates by age (Exhibit 1). These results showed strong activity across subgroups, including the more difficult to treat non-GCB patients and those over 75. These results are relevant because they continue to support the use of Treakisym in harder to treat populations.

Exhibit 1: Patient subgroup analysis

ORR

CR

Cancer subtype

GCB

83%

67%

non-GCB

78%

39%

Patient age

Under 65

86%

71%

65 to 74

75%

45%

75 or older

73%

36%

Source: SymBio Pharmaceuticals

The label expansion to DLBCL is an important aspect of the company’s strategy to expand its sales of Treakisym. We estimate that it will expand the target market for the drug to 11,200 second-line DLBCL patients in Japan, approximately double the current market for the drug. Moreover, this is concurrent with the company’s pipeline management efforts to seek approval for new formulations of the product: the ready to dilute (RTD) formulation, which was submitted for approval in September 2019, and the rapid infusion (RI) formulation, for which it was recently announced in March 2020 that the ongoing safety confirmation study was fully enrolled.

Valuation

Our valuation remains unchanged at ¥39.0bn ($354m) or ¥1,144 ($10.40). We previously upgraded the probability of success for the Treakisym DLBCL program to 90% from 60% following the initial announcement that the study met its endpoints in November 2019, and the current more granular data does not change our already positive expectations.

Exhibit 2: Valuation of SymBio

Product

Indication

Launch

Peak sales (¥m)

NPV
(¥m)

Probability

rNPV (¥m)

rNPV/share (¥/share)

Treakisym

Low grade NHL/MCL (r/r and 1st line); CLL

2010

8,600

19,571

100–95%

18,724

549.8

Treakisym (DLCBL)

r/r DLBCL

2021

9,600

13,383

90%

11,975

351.6

Rigosertib (IV)

r/r HR-MDS

2023

3,800

2,909

50%

1,365

40.1

Rigosertib (oral)

LR-MDS (mono) or First-line HR-MDS (combo)

2025

7,500

4,302

15%

436

12.8

Brincidofovir

vHC

2025

4,200

3,383

30%

882

25.9

Net cash (March 2020 + subsequent exercises)

5,584

100%

5,584

164.0

Valuation

 

 

 

49,132

 

38,967

1,144.2

Source: SymBio Pharmaceuticals reports, Edison Investment Research

Financials

Our financial forecasts remain unchanged at this time.

Exhibit 3: Financial summary

Accounts: JPN GAAP; year-end 31 December; ¥m

2016

2017

2018

2019

2020e

2021e

2022e

2023e

2024e

2025e

Total revenues

 

 

2,368

3,444

3,836

2,838

2,608

9,228

11,484

12,769

14,048

15,395

Cost of sales

 

 

(1,464)

(2,413)

(2,663)

(1,973)

(1,956)

(1,619)

(2,261)

(1,904)

(2,097)

(2,299)

Gross profit

 

 

904

1,031

1,173

865

652

7,609

9,223

10,864

11,951

13,096

SG&A (expenses)

 

 

(1,364)

(1,961)

(1,996)

(2,725)

(3,325)

(5,772)

(6,397)

(7,542)

(7,440)

(8,005)

R&D costs

 

 

(1,667)

(3,018)

(1,833)

(2,442)

(2,603)

(765)

(1,040)

(1,815)

(1,547)

(866)

Other income/(expense) included in adjusted

 

 

0

0

0

0

0

0

0

0

0

0

Other income/(expense) excluded from adjusted

 

 

0

0

0

0

0

0

0

0

0

0

Reported EBIT

 

 

(2,127)

(3,947)

(2,656)

(4,302)

(5,276)

1,072

1,786

1,507

2,964

4,226

Finance income/(expense)

 

 

5

3

1

0

20

19

28

57

96

177

Other income/(expense) included in adjusted

 

 

7

3

(0)

4

0

0

0

0

0

0

Other income/(expense) excluded from adjusted

 

 

(195)

(33)

(93)

(75)

0

0

0

0

0

0

Reported PBT

 

 

(2,309)

(3,974)

(2,749)

(4,372)

(5,256)

1,090

1,814

1,564

3,061

4,403

Income tax expense

 

 

(4)

(4)

(4)

(4)

(4)

(437)

(571)

(555)

(801)

(1,024)

Reported net income

 

 

(2,313)

(3,978)

(2,753)

(4,376)

(5,260)

653

1,243

1,008

2,259

3,379

Average number of shares - basic (m)

 

 

9.8

12.5

16.6

23.2

29.0

34.1

34.1

34.1

34.1

34.1

Basic EPS (¥)

 

 

(235.27)

(319.14)

(165.54)

(189.03)

(181.42)

19.17

36.47

29.59

66.30

99.16

Adjusted EBITDA

 

 

(2,101)

(3,917)

(2,621)

(4,264)

(5,179)

1,165

1,883

1,613

3,081

4,356

Adjusted EBIT

 

 

(2,127)

(3,947)

(2,656)

(4,302)

(5,276)

1,072

1,786

1,507

2,964

4,226

Adjusted PBT

 

 

(2,317)

(3,977)

(2,749)

(4,377)

(5,256)

1,090

1,814

1,564

3,061

4,403

Adjusted EPS (¥)

 

 

(236.02)

(319.35)

(165.54)

(189.22)

(181.42)

19.17

36.47

29.59

66.30

99.16

Adjusted diluted EPS (¥)

 

 

(236.02)

(319.35)

(165.54)

(189.22)

(181.42)

18.94

36.03

29.23

65.50

97.96

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

75

47

57

75

80

136

201

263

323

380

Goodwill

 

 

0

0

0

0

0

0

0

0

0

0

Intangible assets

 

 

42

69

71

241

211

191

178

169

163

159

Other non-current assets

 

 

77

100

73

70

70

70

70

70

70

70

Total non-current assets

 

 

193

216

201

386

362

398

449

503

557

609

Cash and equivalents

 

 

5,719

2,947

4,821

3,911

1,875

1,855

2,801

3,812

5,824

8,970

Inventories

 

 

273

363

534

0

220

182

254

214

236

258

Trade and other receivables

 

 

487

490

412

549

286

1,011

1,258

1,399

1,540

1,687

Other current assets

 

 

205

237

272

427

427

427

427

427

427

427

Total current assets

 

 

6,685

4,037

6,038

4,887

2,808

3,476

4,741

5,852

8,027

11,343

Non-current loans and borrowings

 

 

450

0

0

0

0

0

0

0

0

0

Trade and other payables

 

 

0

0

0

0

0

0

0

0

0

0

Other non-current liabilities

 

 

1

1

1

2

2

2

2

2

2

2

Total non-current liabilities

 

 

451

1

1

2

2

2

2

2

2

2

Trade and other payables

 

 

322

604

726

121

479

530

603

760

729

718

Current loans and borrowings

 

 

0

0

0

0

0

0

0

0

0

0

Other current liabilities

 

 

620

407

610

751

751

751

751

751

751

751

Total current liabilities

 

 

942

1,011

1,336

872

1,231

1,281

1,355

1,512

1,480

1,470

Equity attributable to company

 

 

5,485

3,239

4,902

4,400

1,937

2,591

3,833

4,842

7,101

10,481

Non-controlling interest

 

 

0

0

0

0

0

0

0

0

0

0

CASH FLOW STATEMENT

 

 

 

 

 

 

 

 

 

 

 

 

Profit before tax

 

 

(2,309)

(3,974)

(2,749)

(4,372)

(5,256)

1,090

1,814

1,564

3,061

4,403

Depreciation and Amortisation

 

 

26

30

35

38

97

93

98

106

117

130

Share based payments

 

 

137

121

148

0

0

0

0

0

0

0

Other adjustments

 

 

197

42

61

229

(20)

(19)

(28)

(57)

(96)

(177)

Movements in working capital

 

 

(13)

(35)

184

(242)

402

(637)

(246)

56

(193)

(181)

Interest paid / received

 

 

6

3

1

1

20

19

28

57

96

177

Income taxes paid

 

 

(4)

(4)

(4)

(4)

(4)

(437)

(571)

(555)

(801)

(1,024)

Cash from operations (CFO)

 

 

(1,960)

(3,817)

(2,325)

(4,351)

(4,761)

110

1,095

1,171

2,183

3,329

Capex

 

 

(28)

(57)

(40)

(217)

(72)

(129)

(149)

(160)

(171)

(183)

Acquisitions & disposals net

 

 

0

0

0

 

 

 

 

 

 

 

Other investing activities

 

 

(16)

(20)

14

0

0

0

0

0

0

0

Cash used in investing activities (CFIA)

 

 

(44)

(78)

(26)

(216)

(72)

(129)

(149)

(160)

(171)

(183)

Net proceeds from issue of shares

 

 

3,226

1,164

4,272

3,738

2,797

0

0

0

0

0

Movements in debt

 

 

450

0

0

0

0

0

0

0

0

0

Other financing activities

 

 

(18)

0

0

2

0

0

0

0

0

0

Cash from financing activities (CFF)

 

 

3,658

1,164

4,272

3,740

2,797

0

0

0

0

0

Currency translation differences and other

 

 

(196)

(42)

(47)

(83)

0

0

0

0

0

0

Increase/(decrease) in cash and equivalents

 

 

1,458

(2,772)

1,874

(911)

(2,036)

(20)

946

1,011

2,012

3,146

Opening net (debt)/cash

4,261

5,719

2,947

4,821

3,911

1,875

1,855

2,801

3,812

5,824

Cash and equivalents at end of period

 

 

5,719

2,947

4,821

3,911

1,875

1,855

2,801

3,812

5,824

8,970

Net (debt)/cash

 

 

5,269

2,947

4,821

3,911

1,875

1,855

2,801

3,812

5,824

8,970

Movement in net (debt)/cash over period

 

 

1,008

(2,322)

1,874

(911)

(2,036)

(20)

946

1,011

2,012

3,146

Source: SymBio Pharmaceuticals reports, Edison Investment Research


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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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