SanBio Company Limited (4592) Earnings Call Transcript & Summary

Hello, everyone. This is Keita Mori, Founder and CEO of SanBio. I'm really excited today to bring the news as we have met the largest milestone of our company, which is the launch of our first product, new drug, AKUUGO. So in this slide, you will see cell therapy product aiming for brain regeneration, launch of AKUUGO injection for intracerebral transplantation. So this is what I mentioned at the beginning of my talk. This year, we were able to finally launch this product, AKUUGO in Japan. The indication is for chronic traumatic brain injury patients and the indication is to improve the motor impairment for these patients. There are many, many traumatic brain injury patients who are suffering with motor disability, unable to conduct daily living of life. And we are -- I think our mission is to really bring this new drug to the patients in a solid manner so that we can help our patients. We have come this far, and thanks again to everyone who's been involved, especially obviously, the patients and families who have decided to participate in our clinical trials that we have done to date. So along the line of the launch of our product, I'd like to also share with you another highlight of this 6 months. Last month in August, on the 22nd, we had a Japan National Launch Commemorative Seminar for AKUUGO. We were able to -- we are grateful to have had about 100 physicians coming from all over Japan from Kyushu to Hokkaido to everyone everywhere, and we are grateful for the time that they have taken to travel to Tokyo, be in person and get involved in this commemorative seminar. We had wonderful talks by the leading physicians from Japan. Also, we had a special lecture invited doctor from the United States, Dr. David O. Okonkwo, Professor of Neurosurgery from the University of Pittsburgh. He brought an inspirational talk at this seminar covering 2 things. I mean, for one, he was -- he congratulated the launch of AKUUGO, himself being the leading physician in the TBI clinical trial for AKUUGO. Also, in addition, he shared with the physicians in Japan, the latest news or development from the United States. That is Dr. Okonkwo's group has worked for many years to try to come up with new biomarkers for acute TBI, and his team has been successful in getting FDA's acceptance to use certain biomarkers for acute TBI. So he's very happy that to present the 2 areas of the big success and especially the launch of AKUUGO, where historically speaking, it has been a very difficult disease to develop a new product against. Dr. Okonkwo is very much looking forward to conduct a Phase III clinical trial in the United States and launch AKUUGO in the United States as soon as possible. So these are 2 highlights I'd like to sort of bring to your attention. We have done many more accomplishments this past 6 months, and I would like to go over this by myself as well as Naoki Tsukahara in later part of this presentation. I'd like to spend a couple of minutes going over the financials. So this is the consolidated statement of the income. And as you can see, in this past 6 months, we had R&D expense of about JPY 1.2 billion. This was recorded and mainly for manufacturing-related expenses for AKUUGO. Next, I'd like to go over the balance sheet of our company. We are maintaining a very good level of cash and cash equivalents, which is JPY 12 billion approximately, and this is going to meet our foreseeable short to midterm needs. We believe we are very stable finance-wise. Lastly, I'd like to go over the revision of the consolidated earnings forecast. So in this 6 months, I'd like everyone to look at the left part of this slide, comparing the gray forecast versus the green results. We have some substantial difference in this 6 months. We had a difference of about JPY 996 million in the last 6 months. And this was due to the timing shift of certain manufacturing-related R&D expenses to the second half of this year. Also, I would like everybody to look at the right-hand side of this slide. We now have for our first time in our forecast, revenue forecast. We have JPY 396 million forecast in this fiscal year. So this is the financial statement update. Now I would like to pass on to Naoki to go over the number of the progresses we had in the first half year. So Tsukahara-san, please.

Okay. Thank you, Keita. Okay. Let me introduce the progress in the first half year at my session. As Keita mentioned already, AKUUGO was listed on the NHI drug price list on May 20 and launched on May 21. This is a really great achievement in the past 25 years since SanBio was founded in 2001. This slide provides basic information on AKUUGO, including its dosage, administration and efficacy. As you may be aware, the NHI price was set at more than JPY 72 million, and this is probably the third highest drug price in Japan as far as I know. And this is our initiative this fiscal year, and we promote the adoption of AKUUGO focused on ensuring patient access to treatment and establishing a system for stable product supply. Regarding patient access, we are working to introduce AKUUGO at a total of 8 institutions consisting of the 5 original clinical trial sites plus 3 additional institutions. Preparations have now been completed at 4 institutions. Treatment of the first patient is scheduled for the first -- for the next month -- and the first patient was scheduled to treat at next month and we expect 6 patients to be treated during this fiscal year. For stable supply, we will utilize R-SAT to secure the stability of the product and establish an operational framework that enables product delivery in line with each patient's scheduled treatment. This is the AKUUGO Smart Regional Health Care Collaboration model, which we have introduced to you several times in the past biannual earnings call. It illustrates the pathway of the patients who may not generally be under the care of a neurosurgeon and who are -- then how they are referred to an administration institutions. Centered around each administrating institutions, we are working to establish these regional networks by holding regional health care collaboration seminars and informational sessions by our sales reps called Area Medical Partners. These are information materials designed to support the establishment of an AKUUGO treatment framework. The materials on the left are intended to raise disease awareness among patients and provide consultation contact and facilitate consultation and referrals. The materials in the center provide physicians and other health care professionals with information about AKUUGO itself, including information on the post-marketing clinical trial. The materials on the right explains the cell preparation procedures and surgical techniques required for AKUUGO administration. In terms of promotional activities for physicians and other health care professionals, Keita introduced already at the beginning of this presentation that we held a nationwide commemorative launch seminar. In addition to that, we have held regional seminars, cosponsored seminars at major scientific meetings such as the rehab -- Annual Meeting of rehab hospital physicians. And also, we have exhibited at conference booths and we did a survey to the doctors who visited our booth to check their awareness of AKUUGO and also provide the product information to them. As part of our interest to ensure stable supply, we have entered into a trial manufacturing agreement with JCR Pharmaceuticals in addition to Minaris Advanced Therapies to build a framework for commercial manufacturing. By establishing 2 manufacturing sites, we aim to create a supply system capable of providing the increasing demand of AKUUGO, not only in Japan, but also globally. This is the progress in SB623 development and commercialization for this fiscal year. The main highlight is its inclusion in the Japanese drug price list and market launch. And also, as we previously reported, we have reached an agreement on the trial design in the U.S. for TBI. Additionally, regarding ischemic strokes, we are currently preparing to begin discussion with the PMDA in Japan during this fiscal year. That concludes my presentation. I'll hand it back to Keita for the next session.

Thank you, Naoki. As Naoki covered, we have achieved a lot of things in the last 6 months. Now I would like to communicate our strategy to become a global leader in regenerative medicine. Our strategy is quite simple. We have a near-term focus of 3 things, 3 pillars, as we say. One of them is Japan. We now already launched our product in Japan, and we will be learning a lot of things. We will be having in-depth experiences through the activities in Japan. This is going to be our home base and provide strength to our global expansion. So number 1 strategy is Japan. Number 2 is the United States. And as everyone agrees, the United States is by far the most important end market in the biotech innovative products of the biopharmaceuticals. We have already come to an agreement with the FDA on the clinical design of the Phase III clinical trial, and we'll conduct this with much speed. This is the second strategy, U.S. Lastly, the third strategy is ischemic stroke. TBI is a very important indication for us and for the patients. When it comes to sort of the number of patients, ischemic stroke is lot of patients. There are millions of patients in Japan, United States, China, Europe, everywhere. And we will take AKUUGO and expand the indication to ischemic stroke. So this is our third strategy. So from the top to the bottom, Japan, U.S. and ischemic stroke. Let me talk about the first strategy of Japan. This one, Naoki has already gone into quite details of what we have done and what we are planning to do. As we have lots of activities in Japan, we will be really increasing our capabilities and experiences, especially we have 2 areas that we think are important. One of them is the secure patient access of AKUUGO through the regional medical collaboration. This is something that we will be doing better and better over the months, and this is going to become one of the strengths. The second area is the whole manufacturing and logistical supply chain systems. So we have already built and we will be getting more and more experiences through this system, and this is going to serve another strength when it comes to our future global expansion. So now I'd like to sort of map out our pipeline plan in terms of the indications and the territories. And as I mentioned in our strategy being Japan, U.S. and stroke, this is again the same focus. I'd like everyone to look at the left upper corner, which is the Japan/TBI. So in the short term, we will be focusing on initial dosing of the patient, adoption of the patients for AKUUGO in Japan and also post-marketing clinical study. So this is the Japan activities. The second, the U.S., I would like everyone to look at the yellow box at the top -- so what we are going to do is the next fiscal year, we plan on starting our Phase II -- Phase III clinical trial. And as I mentioned, we have already obtained the agreement from the FDA on the clinical trial design. So this is our second focus. The third area is the yellow box on the right hand. So ischemic stroke/Japan, our team has been working diligently in this area. Clinical trial design agreement with the FDA is planned in the next fiscal year, and we are also preparing for clinical trial initiation. So that's our focus in the near term. And beyond that, as we go through this, and we will become a global leader. And beyond that, we also plan on expanding indications to dementia or Alzheimer's and also territories to Europe and China, et cetera. In order to achieve our strategy, U.S. continues to be a very important area. And this is something that I have shared with everyone in the past, but I wanted to highlight again our rich and deep experiences and track record in the United States. This spans from running 3 clinical trials about 200 subjects in the United States with about 80 medical centers, including TBI and stroke. Also, we have done a huge grant obtained $20 million in the past, and we have done very good publications, et cetera, et cetera, in the United States. So with the very strong product AKUUGO and our strengths in Japan as well as in the United States, we foresee a dramatic growth of our business in the near term as well as in the midterm. We see ourselves in the middle at the present. Right now, our value drivers are threefold: Japan AKUUGO adoption for one, Japan. The second is the U.S. TBI. The third one is the ischemic stroke. And as we pursue these 3 strategies, we will be growing our business. And in the 4 years and beyond, we see ourselves getting AKUUGO adopted for TBI as well as ischemic stroke in Japan and also in the United States. And as Naoki mentioned, we have a planned first dosing of the patient next month, and this is going to be a beginning. SanBio will move and move forward. Thank you.