SanBio Company Limited (4592) Earnings Call Transcript & Summary

Hello. This is Keita Mori from SanBio. We are now going to start the financial results update for the fiscal year ending January 31, 2021. First, actually, we just reached our 20th anniversary last month, February of this year. From 20 years ago, we have been trying to create new categories of medicine, and all of us at SanBio has been working hard and diligently to fulfill this goal. It feels like the time has passed very quickly as we have been working in this mission. Today is the first meeting since the 20th anniversary, and we are delighted to provide the snapshot of where we are as of today. As usual, I'd like to provide updates on the financial results. First, income statement. Our operating expense were in line with the previous year, as you can see. And operating expense are staying at around $55 million, $60 million equivalent this year as well. I'd like to just highlight that this year, we have sold our holdings of our investment securities, namely CareNet, and that -- due to this, our net loss has narrowed. Now going to the balance sheet. This is very important for biotech company in the developing stage, where we are still as of today now. Our cash and cash equivalent remain flat year-to-year, as I explained, due to the sale of the investment securities. So with the cash with about $120 million or so, we have a stable foundation to push forward our development. And lastly, looking into the future earnings forecast. Our operating expense, we expect it to remain about on par with previous year with preparations underway for SB623 Japan product approval and launch. Now I'd like to move on to the clinical data of SB623, and more specifically, I will talk about that data from TBI Phase II study. It just happened that this past January, our publication from this STEMTRA Phase II TBI trial, the first publication went out this January. And using this opportunity, I'd like to go into deeper and share the outcome of this study with everyone today. This publication included the world first demonstration of neuroregeneration by regenerative medicine under a double-blinded control study. Neuroregeneration has been considered impossible in the last 100 years. So our results most likely came with a big surprise in the community, and we have been getting a lot of response from these results and publications. In the publication, not only the successful primary end point, we also discussed the secondary end points and the safety assessment. As you can see here, we've seen improvement in many secondary end points: ERS, AraC, [ Gate Philosophy ], GRPC. These are like scales of disability or arm movement or walking. And the last one is the perception by the patients and/or doctors of the change that they see with this treatment. So on top of the secondary end point, we also have seen a very good outcome in the safety profile of this product. I forgot to mention that this publication was in the neurology, which is a world-renowned publication in this field with leading work to be submitted and accepted and shared through this publication. We are delighted to have been accepted in this publication. I'd like to sort of step back and just talk briefly about the design of this study because I think we have done something remarkable. There are 2 things that I'd like to highlight. In terms of study design, this was a chronic TBI study, not acute. Our definition of the chronic is at least 12 months after TBI. And this means that patients, after going through car accidents or injury, they go through rehabilitation. They get better somewhat over the several months. But beyond 12 months, there is very little or non-improvement expected from these patients. So we have decided to treat these critical patients who have no expectation for recovery, and we wanted to see how much improvement we can bring to these patients. The patients' severity score was GOsC score of 3 to 6, which is moderate or severe. And these patients are really, I think, suffer in many ways: motor functions, cognitive functions, and many of them have difficulty going to work or walk or move, speak. Once we can get this product approved, we believe that this will be a huge benefit for these patients. And the last thing that I'd like to emphasize of this design is that this was a double-blinded control study. Both the patients and the doctors who assess these patients are blinded, not knowing which patients got the SB623 treatment. So with this design, we'll be focusing on patients with no hope of recovery and see how much improvement we can provide to these patients. This is a highlight of the results. I touched on the primary end point in the beginning, but this is the graphical demonstration of primary end point outcome. As you can see, not only have we achieved a very clear separation of the test group, which is indicated in red and the blue, we have also seen a nice separation in month 1 and month 3. And after 6 months with 61 patients, we have been able to show a statistical significant difference between these 2 groups with a p-value of 0.04. Again, this is the first-ever demonstration of neuroregeneration by a double-blinded control study. And we are very excited about these results in this study. I'd like to share some of the responses from this publication. We got a mini media coverage, but one thing I'd like to highlight is the fact that we received editorial very soon after the publication. As you know, editorial does not happen many times, and it goes to only the work that's very important and innovative and worth going -- having a third-party deal. We received, I would say, very positive comments from Dr. Eva Feldman. She is a world-renowned neuroscientist and physician. Not only that, she is also an innovator, having done many innovative treatments, including cell therapy work for the ALS patients, which were quite -- had a lot of attention. So given the positive feedback from Dr. Eva Feldman means a lot to us, and I think it means a lot in this community. We have also -- I mean our principal investigators have been very actively presenting at the various conferences in the last 2 years. Very lately, last month, Dr. Kawamori from Hokkaido University, and actually, he is the top author of the Neurology publication among the prestigious physicians in a publication. He had a keynote speech in the 44th Annual Meeting of the Japan Society of Neuro Dermatology. And in this keynote as well as that, he also made a comment -- general comment about the study and I'll like to share this. This is the first-ever report that demonstrates the efficacy of intracranial administration of mercantile's tonal cells in a double-blinded control study for motor dysfunction caused by traumatic brain injury. So as I mentioned, this is the first example of success. With the clinical data, successful data, we are now working to bring this therapy to approval in Japan under the Japan's innovative regenerative medicine regulatory framework, which has been set up since 2014. I'd like to provide a snapshot of where we are for the filing readiness status. As of today, with all the work that we have been doing, our discussions are underway with authorities within the framework of the Sakigake Designation System. I'd like to just sort of share with you a little bit of history. The data that I mentioned, the primary end point data came in 2018 November. And then the rest of the data came in 2019. We got the Sakigake Designation in 2019. And in 2020, we worked on the stable supply, as I updated before. And with all the work that we've done, now our work focus has been shifted to the interactions with authorities as well as the preparations of the documents that we submit to the agency. So this is where we are today in terms of the product development. In addition, in parallel, we are getting -- trying to get ready for the post approval. And our team, we are working really hard to get the product ready for the launch activities. Now I'd like to pass on to Mr. Yamamoto, who is the head of the business, Japan Asia and a Corporate Officer. Please, Hiro.

Okay. Thank you, Keita. This is Hiro Yamamoto, Japan business head. I'd like to share the launch preparation status in Japan. Just halfway a year ago, I explained the launch preparation date. Financially, our preparation stage is almost final, but we need to know the global requirements, such as the global usage [ Cadran ] for the SB623 promotion and the post-marketing protocol. Once those details are determined by PMDA, we are going to prepare more detail things, such as promotion materials, SB623 injection training system and so on for the similar price to the drug reimbursement prices. And we are preparing for the materials or the price negotiation with Ministry of Health, Labor and Welfare Economic Affairs division. In addition, we will continue to tie up with the local government and the patient groups, also association, to create an environment that makes it easier for the patients to visit hospitals for SB623 administration. Next slide. This is the current state of treatment of the traumatic brain injury in the chronic phase. There are various challenges. I communicate with nearly 100 TBI patients over the phone or e-mail last year. Many TBI patients stop treatment in hospitals because there is currently no effective treatment available in the market. We assume that approximately around 40% of the TBI patients do not visit the hospital. In addition, the doctor who usually treats the patients and the doctor who perform [indiscernible] to cell transplantation are different. This is also the challenge. However, in order to overcome those challenges, we are using detailed digital tools and are communicating with the patient associations. Our next slides for the looking up to the Asia. On February 1, 2021, last month, we established our first subsidiary in Asia, named SanBio Asia Pte. Ltd. For this Singapore entity, we'd like to allocate appropriate human resources, such as supply chain, to promote SanBio global systems. Additionally, we have started a survey on how Taiwan, South Korea, China and Singapore can be deployed with Japanese product approval, also how we can treat Asian patients asking them to come to Japan for SB623 administration. This slide, looking at the both regenerative medicine and the Asia perspective. In China or Taiwan, none of them have been officially approved as degenerative medicine. However, there is a possibility that SB623 can be launched at an early stage by utilizing various regulations. And we are continuously collecting the information and conducting market research from Singapore. [ Methodologies ]. Aki is going to explain the future development from the next slide.

Thank you, Hiro. From here, I am going to talk about our future activities. I'd like to start with our pipeline. This is our pipeline. We have attractive programs such as SB623, SB618, SB308 and MSC1 and 2. We prioritized SB623 development for TBI and stroke indications. I will explain our strategy in the next slide. We are also developing SB623 for ophthalmic indications, such as dry AMD and retinal pigmentosa, partnering with Ocumension in the territory of Greater China. We are planning to start the pre clinical studies as soon as possible. We have committed to continue our investment into our pipeline to maximize SanBio [indiscernible] company. This slide shows our strategy for SB623 development. Our first priority is filing JVMA to get down approval for TBI in Japan. We are also planning to develop SB623 for ischemic stroke and hemorrhagic stroke after TBI approval in Japan. With respect to the other territories, we have been developing the more optimized development options to contribute our patient as soon as possible. Trying to be the global leader in the regenerative medicine, in addition to our investment into our pipeline, we have committed our investment into the top talents to establish the best team in the world. Last year, we made a dramatic change in our organization, which allows us to operate our global organization effectively. I was appointed as a global COO and took over responsibility for the global operations. Keita Mori, as a global CEO, is responsible for long-term strategy to materialize our vision to be a global leader in this industry. We have established global and seamless organization between R&D and manufacturing by appointing Bijan Nejadnik as our Chief Medical Officer and Chris Horan as Chief Technical Operating Officer, both in the United States. On top of the management team, we are hiring senior leaders to support our global transactions. In order to assure our JVMA filing and approval, we have hired Kazumi Sawaguchi as the Head of Japan Regulatory and the QA and QC. Kazumi has outstanding regulatory expertise and also experiences in the regenerative medicine in Japan. Since we are planning to develop SB623 for the ischemic and hemorrhagic stroke, we have enhanced our clinical capabilities by hiring Hiroyasu Narita as our Japanese Head of Clinical Development. Hiroyasu has strong expertise to develop the drugs for CNS [ TDs ]. In order to assure commercialization of SB623 in Japan, followed by the rest of the world, we have enhanced our capabilities by hiring Lisa Valentine as our Global Head of Quality in United States and Julie Cher as a Global Head of Supply Chain Management in Singapore. We are going to continue our investment into the top talent and improving our management system to motivate such talents to play an active improvement in your company. Since 20 years ago, when SanBio was founded, we have been trying very hard to contribute to the patients who have been suffering from the difficult diseases, which has no medical treatment available. We have committed to continuing our efforts for the patient all over the world. And from here, I direct to pass on to Keita for the wrapping up.

Thank you. So I'd like to just make a few words -- final words, and especially since we just reached our 20th anniversary. So as I mentioned, I think 20 years has been very rapid. Time flew in the last 20 years with the vision and mission to create new categories of new medicine. At this 20 years, the fact that we have not had a new product approved and launched is something that we care, and we like to move very quickly for the patient to seek approval and launch. And this is something, our team, we are working day-to-day to make this happen. In spite that the neuroregeneration has been considered to be impossible over the last 100 years, we -- with everything that we've done, we feel that -- we think that we can make a neuroregeneration a reality. And we have that strong sense of that. We will continue to try to make this happen, starting from Japan TBI and then globally and in many indications and create a new category of neuroregeneration and beyond. So I'd like to -- I know that this cannot be done without everybody involved, including everybody who attended this meeting. Thank you to our investors, stakeholders, partners, manufacturers, everybody. And we appreciate your continued support in the coming years. Thank you.