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Research: Healthcare
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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SymBio Pharmaceuticals |
Top-line data from registrational DLBCL study |
Clinical update |
Pharma & biotech |
26 May 2020 |
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Business description
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SymBio Pharmaceuticals is a research client of Edison Investment Research Limited |
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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* |
EPS* |
DPS |
P/E |
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 |
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
|
|
Research: Healthcare
Given that sarizotan did not meet the primary or any secondary endpoints in the pivotal Rett syndrome STARS study, Newron is focusing on its novel schizophrenia drug, Evenamide. This clinical programme, due to resume in 2020, is on hold due to COVID-19, but Phase III may start in Q321. A new marketing partner (Supernus) has taken over US Xadago sales (2019 royalties of €4.8m), which should yield higher growth. A dyskinesia trial is planned to expand the indication. Newron drew down a €7.5m EIB loan in April (a €15m loan facility remains) and had €39m cash at end December 2019. This provides cash throughout 2021. Our indicative value has been revised to CHF121m (formerly CHF340m) after removing sarizotan sales and costs.