SanBio Company Limited (4592) Earnings Call Transcript & Summary

Good afternoon. This is Keita Mori from SanBio, and we are delighted to provide updates today. So thanks for gathering. As usual, we've got 3 topics today: financial results, SB623 in Japan and then everything else. Before I start talking about the actual topics, I would like to touch a little bit on the new executive leadership. Many of you may have heard about the resignation of [indiscernible] back in January. So this is sort of a response to where we stand as of today and show our leadership. As you can see, we have a very strong leadership. We have expanded our leadership in the last year or 2, quite tremendously. And we have professionals and leaders with tons of experience in pharma and biotech. In addition, 2 founders, myself and Toru Kawanishi have been on this SanBio since the beginning in 2001. So this is our 23rd year ongoing. So this is a new executive leadership, and we believe we have a more than hour to go through the approval process, our first product approval process and launch and much, much beyond. Financial results. So first, our income statement. In the last 12 months, we have proactively aggressively spent on expenses in R&D and overall operating expenses. Actually, specifically JPY 6 billion for R&D and JPY 7.8 billion in total. So operating expenses increased from -- one reason is a weakening yen, unfortunately. And another reason, higher expenditures related to our work towards the approval of our first product, SB623 for TBI. And lastly, due to an increase of R&D expense, which the recording has been changed for -- on the commercial production to R&D. Next is our balance sheet. At the end of the fiscal year, we have JPY 6.7 billion as a cash and cash equivalents. This is sufficient, and we have secured operating funds towards the approval of our SB623 for chronic TBI. And we did this by through the equity financing, which we initiated in the last fiscal year. Lastly, forecast. So this upcoming year, our forecast comes with a significant reduction of operating expenses by optimizing our business resource allocation as we move and proceed with the approval of the SB623 TBI program and towards the launch of our product. Specifically, R&D expense we forecast to be JPY 3.1 billion, and the overall operating expense to be JPY 4.6 billion. So now I'd like to move on to the -- talk about our main lead product candidate, SB623, specifically our activities and progress in Japan. We have been focusing much of our resource and attention and focus for Japan with a good reason. I'd like to remind everyone that we have this SB623. This is a very unique cell therapy product. This product has demonstrated recovery of functions like functions of the bone or leg resulting in movement improvements such as walking for the chronic patients in TBI and stroke. In the chronic stage, patients have a stable and fixed disability and it's considered to be almost impossible to provide an improvement. But we have worked very hard with a unique product and diligence to get development and has demonstrated success in providing benefits to these severe disease patients. So our vision is to take this innovative products and beyond and brain regeneration, it's a reality globally. And our strategy is to rapidly obtain approval in Japan because Japan provides best and most robust approval and business environment for regenerative medicine. And our strategy is to get the rapid approval and that would bring our position even yet above and beyond our competition, allowing us to accelerate the global commercialization. So in that context, approval and launch in Japan is critical for our overall vision. So this slide describes the overall process of the application through the review approval and launch, et cetera. We have completed the filing of our product for approval in Japan in March of 2022, so one year ago. We did this within the framework of the Sakigake Designation System having gone through a rigorous review by the Japanese Agency PMDA. And we did this by based upon the positive Phase II clinical trial results. We understand that we were hoping and expecting to get approval within 6 months. This did not happen, but we continue to work diligently and for the patient with everything to accelerate the approval. So now I'd like to go deeper into the -- our situation or the progress through to the approval. We have touched a number of times on the production and production-related activities. So now I'm going to talk about management of production-related items towards approval. Since I'd like to provide a good sort of context of how things have evolved, I'd like to start off looking back a year or so and explain from that. One year ago, in March of 2022, we successfully filed our application to the PMDA. And this was after we resolved the issues related to the establishment of the post-launch stable supply system. Some of you may recall that we experienced issues in 2019 and 2020, and we rigorously worked resolving these issues. And after the resolution we filed. So obviously, our production process has well been established. Since the filing completion a year ago, we have been communicating with the PMDA and responses to the production-related review made steady progress towards approval. However, recently, production issue has surfaced. So what this is, is we in the recent productions, we experienced lower than usual or lower production yield compared to their yield level at the time of the filing. So as we observed this, we -- clearly, we saw this as an issue. And rapidly, we worked very rapidly to overcome this and measures to resolve the issue have been implemented to execute production run, and we continue to aim for obtaining approval in the fiscal year. What we have done is, as we observed the issue, we worked on the analysis of the issues, and we developed the resolution measures, and these have now been completed. And now currently, we are working closely with our partner, CMO. We are including -- we are doing on-site training by our team members to implement resolution measures to improve production operations. So I actually also going to more sort of details in the next page here. And I'd like to provide more clarity to this issue and our plan for our resolution. So issues and resolution measures at host approval. So issue, again, is in recent production rents, our production yield lower compared to the level at the time of the approval filing. So this is issue. Solution we have is -- we need to do is improve the production operations and execute production run for confirmation. Criteria for success is achieve production yield at the time of the approval early. So we basically need to recover the level that we have been producing. Level of difficulty. So I would like to provide, I think, sort of the insights into this. We do have a good, past track record of achieving yield comparable to the level at the time of the approval filing, as obviously, we have repeatedly producing SB623, and this has been the case, and therefore, we filed. Timely effort is, therefore, to confirm and reproduce the past results. So we believe this is something that we have been doing and making sure that we get back to where we were before. So timing of the resolution, we believe that the main result of the resolution measures will be available in June of this year, so in 3 months. In terms of the disclosure, update will be provided in June at the time of the financial disclosure for the first quarter of the fiscal year, and that's our plan. Finally, the outlook. We believe that resolution of this issue is a milestone. And this would facilitate obtaining the approval -- product approval in this current fiscal year. So the important thing is that we solved this issue and then this would lead to, we believe, in obtaining the approval. So we hope that we are giving, I think, I think some clarity on the recent issue that we experienced and the measures that we are taking and the plan, which is around the June time, we plan to have the result and disclose to the public. So now changing the sort of the mode from the issue to more of the other areas of progress. In the last fiscal quarter or 2, what we have done successfully is to establish in-house facility, and we also acquired a license for this facility. What this facility does is manufacturing; specifically, packaging, labeling and storage over a regenerative medicine product. And we believe that this is a very important milestone and progress as our team has put the tremendous efforts in order to get the license, but we started a lot of efforts during the [Technical Difficulty] operations, et cetera, and having gone through a rigorous in actions. Now I would like to turn over to Mr. Naoki Tsukahara for the exciting preparation of our efforts into the Japanese market.

Thank you, Keita. Let me explain about the current status of SB623 post launch activities. So we have made a progress in post-launch activities since last year. And there are 2 areas that we are focusing. First one is our overall strategy and activities for sales and marketing. We will make sure that all of our activities are in compliance with expected approval criteria, which will be available when SB623 is approved. Second one is how to provide TBI patient with access to SB623 as soon as it is approved. As you know, our target patients are in chronic phase, and it is very important how to establish a system for patient referral in collaboration with the external stakeholders. So these 2 items are of the focus, and we have made a pretty progress on that. And in this chart in the table, you can see that the current status of each item other than -- and also including the above the 2 items I mentioned, the drug price, medical treatment fees, bill structure, logistics and promotional materials and system to provide appropriate use of the SB623. So these items are, again, I would say that we made a steady progress. And we are ready for launch of SB623 once it is approved.

Also this is Shinya Hirata. So I'll talk about towards optimizing corporate value. So of course, it's a great honor, so Dr. Kawabori at Hokkaido University received Hirakawa Award at 46th Annual Meeting of the Japanese Society of Neurotraumatology in February 2023. So as you know, Dr. Kawabori is [author] of the Paper presenting interim analysis results of STEMTRA trial in neuro. So the Hirakawa Award is given annually for outstanding paper related to neurotraumatology. So we believe this award represents the recognition of the academic value of STEMTRA trial in Japan. And also it represents the tremendous and growing significance of the STEMTRA trial. So as a therapeutic approach to neurotraumatology. So, next topic is [indiscernible] publication. So this is the result from our joint research with Okayama University in Japan. So article has been accepted for publication in stem cell research and therapy as regenerative. So the aim of this study is to invest is combined effects of SB623 administration and also rehabilitation to it. In this experiment model using the stroke model. So we examined the SB623 administration group, spontaneous [indiscernible] and also the combination groups, and our behavioral assessments, as I said, these were conducted before [Technical Difficulty] other results, the combination group showed higher efficacy than both of single treatment group, including reduction in [indiscernible] area, the upregulation with neurogenesis and neogenesis and also increased expression of traffic structure in brain tissue. So this will be important evidence because, that result indicates a neurological recovery by SB623 treatment and rehabilitation, we will work also [indiscernible] So we also believe the combination of SB623 and rehabilitation will be more effective therapeutic approach to TBI also in real world of clinical practice. The last part, last part is about our recent academic presentation. So result of the joint research with Okayama University is presented [indiscernible] stroke 2023, which is currently being held in Yokohama. So in addition, Dr. Yasuhara at Okayama University will make a presentation related to SB623 at the Annual Meeting of the Japanese Society for Regenerative Medicine, which will be held in Tokyo next week. And also, Dr. Weintraub will present 48-week analysis, which is a final result of the STEMTRA trial at The 14th World Congress on Brain Injury in Ireland later this month. Also we will continue to proactively disseminate the result of clinical trial and research findings in future.

As I mentioned, we and our principal investigators are very active in publishing and communicating the results not only in Japan, but globally, because our vision is to really commercialize our product globally [indiscernible]. So this is our development plan and with our priority around the brain. Clearly as I mentioned in the beginning of my presentation, our priority is the TBI in Japan and a good reason. And this will give us a rapid approval. And with this, we can accelerate the entire global and multi indication commercialization. So that's our strategy. In terms of the product pipeline, I think we need to also talk about things beyond SB623. So as you can see, we have in total 5 cell therapy product candidates, starting from SB623 to SB618, SB308, MSC1 and MSC2. In terms of indications, we are heavily focusing on brain liberation because there are no effective drugs, and there are some in-patients who are in need. Another reason is the brain area or the CNS, there is no immunorejection, and we believe our approach of the allogeneic cell therapy will be very effective in this type of indications. So as you can see, we have many, many brain, CNS-related indications; TBI, ischemic stroke, hemorrhagic stroke, dry AMD, retinitis pigmentosa, autism disease, spinal cord injury, Alzheimer's disease, [indiscernible] We have some other indications that are beyond CNS such as peripheral nerve damage or muscle dystrophy, or cancer or inflammatory disease. We will continue to initially focus on SB623 but once we make a success in initial approval and launch, we will obviously expand our activities in the rest of our pipeline. To wrap up, our aim, our vision is to become a global leader in regenerative medicine. We believe that looking at the brain regeneration field, our data and status is clearly above and beyond our competition's theory. There is no other company that are so close to the first product approval in brain regeneration. And we believe that we have a good opportunity to really become the world leader. But before that, we need to get the approval in Japan, really help patients, initially in Japan and also globally, we have so many patients that we need to help. So thank you very much for your attention.