Q2 2019 SanBio Co Ltd Earnings Call
Chuo-Ku, Tokyo Oct 1, 2019 (Thomson StreetEvents) -- Edited Transcript of SanBio Co Ltd earnings conference call or presentation Thursday, September 19, 2019 at 6:30:00am GMT
TEXT version of Transcript
* Bijan Nejadnik
SanBio Company Limited - Corporate Officer, Chief Medical Officer & Head of Research
* Hiroshi Yamamoto
SanBio Company Limited - Corporate Officer & Business Head of Japan/Asia
* Keita Mori
SanBio Company Limited - Co-Founder, President, Executive Officer & Representative Director
Keita Mori, SanBio Company Limited - Co-Founder, President, Executive Officer & Representative Director 
Hello again. This is Keita Mori from SanBio, and thanks for this opportunity to provide the update 2x a year basis.
So today, I will go over these financial results of the second quarter of this fiscal year. Before we -- before I start talking the updates, first of all, I'd like to provide you with the latest, latest exciting updates that we just announced earlier today. This is -- we have recently obtained RMAT designation. This is Regenerative Medicine Advanced Therapy designation from the Food and Drug Administration in the United States. This is similar to a Breakthrough Therapy designation, which is -- which has all the benefits and acceleration potential for drug approval, and this RMAT is even better than Breakthrough Therapy designation.
So this year, as I look back earlier this year, we've got the Sakigake Designation from PMDA in Japan. Just lately, we got the RMAT designation from the FDA. This is a reflection of the, I think, a strong interest and endorsement from agencies of the world. So I'd like to just mention it upfront and I'd like to move on to provide updates.
So today, we'll go over -- myself, I'll go over the overall updates, and then followed by senior executives Hiroshi Yamamoto to go over the business update in Japan, and then Bijan Nejadnik to go over that global clinical update. And then lastly, I'll come back towards the end.
So this is the consolidated income statement. I think the message here is that we have been proactively spending R&D expenses over the years, and we continue to do so this fiscal half year this year. So these past 6 months, we spent about $20 million or so if you take $1 to JPY 100 ratio. And it's a little bit less than we planned, but it's mainly due to the timing, and we plan on landing about the same at the end of our fiscal year, and also the R&D project themselves are going very smoothly on track.
Next is the balance sheet. Here, the great news of these past 6 months is that we have raised additional funding about, I'd say about close to $70 million equivalent through our equity finance. And as a result, we have a very stabilized financial basis as you can see here. We've got about $167 million, again, equivalent with the ratio that I mentioned.
So we continue to be on track to file the Japan BLA submission for our SB623 TBI program, and we are seeking for approval and start marketing the product in the next fiscal year, which is 2020 year. And our vision is to becoming a pharmaceutical company, fully integrated pharma company.
In addition, we are also working very hard towards our goal of becoming the global leader in this space by 2025. And now I'd like to pass on to Mr. Yamamoto to go over the exciting latest updates in the Japan activities. So Mr. Yamamoto, please?
Hiroshi Yamamoto, SanBio Company Limited - Corporate Officer & Business Head of Japan/Asia 
Thanks, Keita, for the introduction. My name is Hiroshi Yamamoto, business head of Japan and Asia. First of all, I'd like to introduce the public announcement, which we made it on 5th August. We had concluded our 2-hub collaboration -- distribution collaboration between us and SanBio. Also, we decided to develop the Patients Assistance System with Suzuken.
Suzuken is a Japanese wholesaler or the medicine distributor. The reason we decided to the Suzuken is they have the specialized orphan drug distribution focus in Japan, especially having a special frozen control distribution and [source knowledge]. This is the main reason we had the collaboration with Suzuken.
As I mentioned, we tried to develop patient's support, also, assistance system, which we call R-SAT system. The reason we call that is R-SAT is R is regenerative medicine, S is safety, A is accurate, T is traceability. By using this like a first-grader, we call this is R-SAT. We are also applying for the trademark, also the patent.
This R-SAT covers many components, also the function such as patients' registration, also products like serial number management. Also, this product will be the expensive product. We tried to avoid the fake product. That's why we are putting for the temperature logger, also the GPS. Then we try to secure the product's traceability. At the same time, so we try to do is we try to follow-up for the administration for the patients before, during or after the administration. This is we call R-SAT system.
This slide shows the -- all over the logistics concept. For the manufacturer of the cell, we outsource for the Hitachi Chemical. Once Hitachi Chemical manufactured our cell, then this cell will be transferred to the Suzuken distributor -- distribution center. Also, it's like a subcomponent of the SB623, syringe and scent cannula. Also, washing suspension will be also reserved to the distribution center in Suzuken.
This -- inside of the distribution center, we tried to put the GCTP control area. Thus, our SB623 cell, also syringe, cannula, also the washing suspension will be controlled, also the reserves under the [dist area].
Then under the dist area, then we will finalize our product by using the [Tradiper]. We are under the control of minus 150 degrees. Then all this final product will be shipped to the -- also delivered to the medical institute, one day before that administration by using this R-SAT system.
As I mentioned, R-SAT system is kind of the information control, also information sharing system by using for the (inaudible) database system. This is information flow from the (inaudible). Once doctor input administration date, also the patient's information to the system in the database, our SanBio, also the wholesaler like Suzuken or the drug driver. The -- we try to get some schedule to share the other members. Then once we get those scheduled, then we start to manufacture from the -- in the distribution center.
Then this -- in the distribution center, we get a cell stretch tank, move it to the transport tank by using the Tradiper. Then this final product will be registered under the [dist] system. Then under the minus 150 control, we deliver the dist final product to the medical institute, also the hospital for the 1 day before the administration.
This is a whole information for the next -- this is a part of the R-SAT system. As I mentioned, so we -- once we reshift our operation, also the patient's information, we schedule all the process, then share the dist information to all the stakeholders. Then dist information will be shared with us, not only for the patients, also doctor, also our Suzuken, also SanBio members. This is a part of the R-SAT system.
We think R-SAT system has many advantage not only for us, also like our patients, also doctor and hospital. For example, doctor is very busy. They are very easy to forget to conduct a PMS, post-marketing survey. Then we get a reminder e-mail to the doctor also as well as our medical member. Also, medical science liaison, also like distributor. Then we can remind to the doctor, then we will tell the doctor, "Oh, please conduct a post-marketing survey to the patients."
This kind of many benefit we have from [Dist R-SAT system]. Dist R-SAT system is not cheap. It's to develop for the dist ecosystem. It's very expensive. However, the reason we want to develop the Dist R-SAT system is we have a dream. The dream is we want to develop for the regenerative medicine practical concept in Japan.
Japanese government, PMDA, they create the attractive approval system for regenerative medicine called Sakigake consultation. However, many foreign company, U.S. company, they still think our U.S. market is a focus. Second priority will be China. Then they think, "Oh, Japan market is very unique, very complicated." That's why they are reluctant to enter the market of Japan. Then domestic and oversea bio venture, there are shortage of the cash. That's why they cannot make a promotion with that -- to selling the product. Also, they cannot register the product because they don't have a regulatory member.
However, SanBio, we have all the platform, such as we have medical member to approach the doctor. Also, we have regulatory member to register, also to get the approval for the regenerative medicine. Also we can conduct a PMS. Also, we have R-SAT system. That's why SanBio want to make easy access platform for the regenerative medicine in Japan.
At the same time, as Keita mentioned, we will be the pharmaceutical company. We're now converting from the bio venture to the pharmaceutical company. We need a scientific approach. That's why we try to continue to publish the data. Also, we want to continue to create a clinical data.
April 2019. So after the STEMTRA trial application following Japan, U.S. and China, we continue publishing the data. We will continue for creating a data. Lastly, this is a schedule for the TBI approval process in Japan. We are trying to get the best and rapid approval process and the target filing submission is by the end of January 2020. Once we get -- once we submit all the filing data, then we are looking for get approval within 1 year. Then after we get the approval, we are trying to get the reimbursement price in 3 months. That's why at least, we track to launch the product by January 2021.
That's all. Thank you very much.
Bijan Nejadnik, SanBio Company Limited - Corporate Officer, Chief Medical Officer & Head of Research 
Good afternoon. It's an honor to be with you, ladies and gentlemen and with the SanBio team here. I'm delighted to go over our global clinical development update with you today.
So first, please allow me to introduce myself. I am a physician. I trained in medical school in Belgium, went to U.S., and I trained in several other universities, including Cornell University and Johns Hopkins, in which I got interested in immunotherapy and cell therapy.
I joined at Johnson & Johnson, where I did focus on immunotherapy for multiple diseases, including Alzheimer's disease, cancer and other immune-mediated diseases, and later on, moved on to Jazz Pharmaceutical, we're working Acute Lymphoblastic Leukemia and the complications of bone marrow transplant. During those activities at Johnson & Johnson and Jazz, I have the honor of filing several Biological License Applications and get approved. And I've been Chief Medical Officer at Galena Therapeutics, where I was working immunotherapy for cancer and then later on at Eureka Therapeutics, where I worked on cell therapy or specifically T-cell therapy.
I joined SanBio about 4 months ago. So why I joined SanBio? Because I saw the strong signs of success. I like to be associated with success. And regenerative medicine is, of course, a cutting-edge medicine in which success has been hard to come by. However, I think that this is an area on expansion. And this is really a new paradigm for medical therapy. In the past, all the diseases, we treat them either by killing the agent or killing the cancer or trying to take care of the patient, one way or the other. Here, we are trying to reverse the path of the disease, regenerate the tissue which has been lost.
This is a new paradigm. It's a new path that we are pushing forward and SanBio is real pioneer in this area. And there are signs of success. What are the signs of success, really? This is the press release, the last press release we've put out. It's RMAT, which is the Regenerative Medicine accelerated approval -- breakthrough approval from the FDA.
So I know that most of you know RMAT what it is, but allow me to compare a little bit with the Breakthrough. The Breakthrough therapy has been so far one of the best designation you can have for any drug approval. It's the dream of the drug developers.
Now RMAT was -- has been designed recently by the FDA to be more focused on Regenerative Medicine Advanced Therapy. And that designation is not only as good as Breakthrough, but also an additional feature is really adapted to the regenerative medicine cell therapy, et cetera. So what is the condition to have? So you have to be in regenerative medicine, but then do you have to be intended to treat, modify, reverse or cure serious condition. The keyword here is reverse. Now when you look at the Traumatic Brain Injury and the Chronic Motor Deficit, that the people who cannot move their upper or lower extremities or both. Reversing this has been almost the miracle or something that we could not think about it easily.
Now when you look at how SanBio came in with this new treatment, and in some patients, that was reversed, and those patients were able to move the lower or upper extremity for the first time after years of damage to their brain. Then this is a very an eye-opening and very important moment actually in medicine.
So the other condition is that you have to have preliminary clinical evidence. And then that allows you to really being as close as possible to the FDA in order to FDA becoming invested in you so you can move forward. So unless you are very promising, I don't think the FDA will put themselves in the situation in which they have to have the assistance for you that it's needed.
Now why FDA thought that we can be successful, why they allowed us to have the RMAT designation. Well, first of all, based on our Phase II trial, in which that was a trial, STEMTRA trial, that you have probably heard and discussed about it, is in Chronic Traumatic Brain Injury patients with upper or lower Extremity Motor Deficit. They cannot move their limbs. And then we gave drug to those patients, and those patients were able to improve their motor function enough, that was statistically significant across the board.
In a Phase II trial, having a statistical significance is really a strong indication of potential for that drug. So the RMAT constitute, of course, a major recognition by the FDA and providing a strong -- the strong endorsement and increasing the potential for SanBio's product, SB623, to have a successful path to approval. So of course, it's not an approval, but this is as much as you can ask, really, from FDA to do, and that's where we are right now. So this is in addition to the Sakigake in Japan that you're aware of. And that's moving forward very fast as well in order to get approval in Japan.
So now what we are going to do? Of course, we have our Phase II data analyzed and we published, and we were able to get the Advanced Therapy Medicinal product classification by EU, EMA. We have our RMAT now. And now the next step, of course, is to design our Phase III trial. We are moving towards getting approved as fast as possible. We have already a strong indication as to how our Phase III would look like for chronic TBI. We already discussed with the key opinion leaders across the world, including U.S. and Europe. And this study design is underway and we'll be activating our sites. A great number of sites have been identified so far. And we are going to have our manufacturing in line and move on to the Phase III.
What else? Are we enough confident for the stroke program to move forward? The answer at this point is a resounding yes. We'll be moving on to continue our stroke programs with an additional trial, and then later on, move on to also a Phase III trial later on.
So I'm going to stop here. And thank you very much for listening to me. I'm going to move on to...
Keita Mori, SanBio Company Limited - Co-Founder, President, Executive Officer & Representative Director 
Hi again. As Hiro and Bijan went through the exciting update in Japan and globally, we are getting really ready for the rapid approval and launch in Japan. And this also we -- this is a prime time for us to prepare the global launch and path to the global leader.
So I'd like to spend the rest of the time to talk about our vision to become the global leader. So first of all, I'd like to mention, this is the market size based on the various research we have conducted in the TBI as well as the stroke number of patients. The sort of the big message here is you take either TBI or stroke, both of these diseases have a large number of patients, about 20 million patients globally for each indication. TBI, a little bit less than 20 million; stroke, somewhat a little bit more than 20 million. But in each case, this is a very serious population of patients in need.
So we plan on launching first in Japan, TBI. This market may not be the biggest market, but globally speaking, we have a very, very big market and important underserved patients. Looking at the competition in TBI, as you can see, there are several products that are in the clinical development. But as you can see, most of them are for acute TBI, and there's nothing in the clinical development which is targeted for chronic TBI, the patients that we are developing for.
So as Hiro and Bijan mentioned, globally in the regulatory framework, we have just recently obtained RMAT, R-M-A-T designation in the United States and also, we got Sakigake designation in Japan. This is a great indication of the support from agencies throughout the world.
So our plan for the commercialization is, basically for the TBI, we are striving for developing by ourselves, Japan, U.S. and elsewhere worldwide. In terms of the commercialization, we would like to seek commercialization by ourselves, starting in Japan. But at the same time, we will keep an eye on other options, such as business alliance partnering.
In order to make sure that we capture the global market, it's really the key is the team and the people. We have been fortunate to be able to attract really strong talents in many, many areas. Here, you see that Aki Tsujimura, a very strong business and management, who has a successful track record from Santen Pharmaceutical, making their business the global business to be a substantial size in a relatively short time. And he and his team has made Santen the #1 in many of the Asian countries in this time frame. And Hiro and Bijan, you just saw them speak, I think we really have been fortunate to have this kind of strong leaders coming to SanBio.
We continue to strongly believe people is the key for success. And we like to make sure that we'll have an exciting product, exciting vision, exciting plans as well as all the processes and systems and compensations as well to be equitable to these strong leaders and everyone throughout the company. So this is sort of a quick recap to the leadership on our global scale.
To summarize our value proposition or market potential or major potential in TBI, this is the summary. Efficacy-wise, this is the only one in the world having proven the brain regeneration in a double-blinded clinical trial fashion. On top of this, we have a confirmation of safety in over 200 subjects, which is a huge safety supporting data.
In the regulatory area, as I mentioned and as we mentioned several times, we got RMAT and Sakigake, and this is a strong endorsement. Market size, number of patients in TBI is really comparable to stroke. And these 2 are major serious diseases that we face in our society today. And in this big population of patients, competition is very, very limited. And there are no competing products for the chronic stage of the TBI, and we believe that this is a blue ocean of the area that we need to pursue for these patients.
In order to make it available to this wide number of patients, we have the manufacturing and distribution, both of them we have made a substantial progress, which enables us to deliver our product to these many, many patients.
We will start from the TBI Japan launching next year, and then we will expand the territories on a global basis by conducting, as Bijan mentioned, in multiple countries, including United States. And then also at the same time, we will grow this product, SB623, in many, many indications, TBI, stroke, hemorrhage and beyond, and we'd like to go all the way up to Alzheimer's and even beyond.
We believe that the SB623 has a huge potential. And in becoming a global leader, we have set SB623 at the center. And we also, as Hiro mentioned, we have a, also, substantial opportunity to attract additional product pipelines based on our capabilities and the system that we are creating right now.
So all this together, we are set to become a global leader in regenerative medicine and we are continuing to commit to deliver this novel therapeutics to patients as rapidly as possible and deliver to these patients as rapidly as possible. Thank you very much.