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Solasia Pharma

Solasia Pharma 4597

ソレイジア・ファーマ
Recent Updates
2022-05-16
Q1 FY12/22 flash update
2022-04-25
Start of data analysis for the SP-05 Phase III study
2022-04-12
Formation of a capital and business alliance with HikariQ Health Co., Ltd.
Get in touch
4F, Sumitomo Fudosan Shiba-koen Tower, 2-11-1, Shiba-koen, Minato-ku, Tokyo 105-0011, Japan
https://www.solasia.co.jp/
03-5843-8045
Summary
Solasia Pharma is a biotech venture that in-licenses development and sales rights for new drugs developed in the US and Europe to commercialize them in Japan and other parts of Asia.
Biotechnology
Key dates
2017-10-31
Coverage initiation
Full Report
2022-05-16
Q1 FY12/22 flash update
2022-05-16
Full-year FY12/21 flash update
2022-02-10
Q3 FY12/21 flash update
2021-11-11
Download

Executive summary

Biotech venture that conducts clinical development and commercialization in Asia by in-licensing new assets from the US, Europe, and other areas

Solasia Pharma K.K. is a biotech venture that in-licenses development and sales rights for new drugs developed in the US and Europe to commercialize them in Japan and other parts of Asia. It sources new drug candidates that have low risk of development being halted, then conducts clinical trials and obtains approval, mainly in Japan and China. It monetizes these drugs using a hybrid business model: through a combination of sales via its own medical representatives (MRs) in some territories, and out-licensing sales rights to pharmaceutical companies in tandem with development in other territories. Led by President Yoshihiro Arai, who has experience with clinical development at international pharmaceutical companies, the company’s management team selects drugs based on clinical need and perceived development risk. The company then accelerates their clinical development, using development staff with extensive experience at large Japanese and international pharmaceutical companies. The company launched its pipeline product for the first time in May 2018.

Solasia Pharma focuses on oncology. This is mainly for two reasons. First, despite cancer being the leading cause of mortality in Japan and China, with the number of cases trending upward, a full range of treatments is not available. Second, even in the case where there is a first-line treatment available, new drugs can secure a market presence if they can offer increased efficacy when used in combination therapy. The company also focuses on the area of supportive care (drugs and medical devices that reduce side effects of cancer treatments and boost the cure rate by helping cancer treatments progress as planned). An unmet medical need exists in supportive care because cancer treatment has strong side effects, and if these side effects cannot be controlled, treatment such as radiotherapy and chemotherapy will be halted, and subsequent treatment cannot be continued.

Within the drug value chain, Solasia Pharma focuses on clinical development. The company does not conduct basic research or manufacturing, and typically out-licenses sales rights to pharmaceutical companies. That said, it plans to keep the rights to conduct sales in the three major Chinese cities (Beijing, Shanghai, and Guangzhou) to add value. These three cities have a concentration of cancer patients who are looking for advanced medical treatment, and by focusing on oncology, Solasia Pharma has concluded it can conduct sales activities efficiently with relatively few resources.

Solasia Pharma was established by Itochu Corporation (TSE1: 8001) and a large US biotech venture capital, MPM Capital, with a focus on drug lag (when efficacious drugs are sold in the West but not yet approved for sale in Japan). A preparatory company was set up in the US in December 2006. Operations began in Japan in September 2007, with the Japanese company established in April 2008. Initially named JapanBridge, Inc., Solasia Pharma’s original intent was to source new drugs from the US and Europe to develop and sell in Japan. The company later extended its horizons to China and other Asian countries, and changed the company name to include “asia.”

In September 2017, Solasia Pharma signed a distribution agreement with Itochu, its largest shareholder, aimed at securing a distribution network of its products within China. Itochu Group is already developing drug distribution related businesses with several Chinese companies.

Earnings trends and pipeline status

Solasia Pharma currently has five drugs in its development pipeline, two of which are already on the market. Sancuso® (development code: SP-01) is used to reduce chemotherapy-induced nausea and vomiting, using a transdermal system for delivering 5-HT3 receptor antagonist. In July 2018, the company obtained approval for SP-01 in China, and in March 2019 SP-01 became the first of the company’s products to launch in China. A pipeline product, episil® (SP-03) is an oral fluid for reducing pain from oral mucositis caused by cancer chemotherapy. In July 2017, Solasia Pharma obtained manufacturing and sales approval for SP-03 in Japan as a medical device. It was listed on the National Health Insurance (NHI) reimbursement price list in April 2018, and launched in May the same year. SP-03 also obtained approval in China in February 2019, and was launched in July the same year. In September 2020, it was launched in South Korea after receiving approval in October 2019. 

SP-02 (darinaparsin) is a low-molecular-weight organoarsenic compound with a new mechanism of action (MOA) that induces cancer cell apoptosis via the mitochondria (organelles that produce energy) within cancer cells. Global Phase II clinical trials (pivotal study) for SP-02 in Japan, South Korea, Taiwan, and Hong Kong came to a close, and in June 2021 the company applied for marketing approval of the drug in Japan ahead of the rest of the world. The target indication is peripheral T-cell lymphoma, a type of hematologic cancer with few available therapies. The company expects to receive approval by end-1H FY12/22, and if approved, it would be the company's first anticancer drug to be commercialized.

SP-04 (PledOx®), which was in-licensed from Pled Pharma AB (currently Egetis Therapeutics AB) of Sweden in November 2017, is indicated for Chemotherapy-Induced Peripheral Neuropathy (CIPN). Phase I clinical trials of the drug in Japanese subjects closed in February 2018, and global Phase III clinical trials of SP-04, which started in Japan, South Korea, Taiwan, and Hong Kong at the end of 2018, concluded early in Q3 2020. Preliminary statistical analysis of the results showed that primary endpoints were not met. In May 2021, the company evaluated its comprehensive development policy of SP-04 based on the results of analysis of the secondary endpoints of the global Phase III studies, and put on hold the development of SP-04 for oxaliplatin (platinum antitumor agent)-induced peripheral neuropathy. To explore feasibility of clinical development of SP-04 in patients with taxane-induced peripheral neuropathy, the company decided to conduct additional animal studies. According to the company, depending on the results of the animal studies obtained in FY12/22, clinical trials could resume in 2023.

In August 2020, Solasia Pharma in-licensed SP-05 (arfolitixorin), its fifth pipeline product. The company has exclusive development and sales rights for SP-05 in Japan and has been conducting global Phase III clinical trials in colorectal cancer patients in Japan. The company plans to release top-line data from the Phase III clinical trial in 1H FY12/22 and then prepare a marketing approval filing. 

In FY12/20, Solasia Pharma posted revenue of JPY559mn (+23.1% YoY), an operating loss of JPY2.4bn (loss of JPY4.1bn in FY12/20), a pre-tax loss of JPY2.4bn (loss of JPY4.2bn in FY12/20), and a loss of JPY2.5bn (loss of JPY4.1bn in FY12/20). Revenue comprised product sales of Sancuso® (SP-01) and episil® (SP-03), as well as an upfront payment for out-licensing SP-02. R&D spending amounted to JPY845mn (-56.2% YoY), due mainly to costs for Phase II clinical trials (pivotal study) and marketing approval filing of SP-02, and costs for Phase III clinical trials (pivotal study) of SP-05. SG&A expenses were JPY1.9bn (-19.9% YoY).

For FY12/22, the company forecasts revenue of JPY2.3–3.8bn. The forecast for operating and pre-tax profit (loss) ranges from a loss of JPY1.1bn to a profit of JPY150mn. The forecast for bottom-line profit (loss) ranges from a loss of JPY1.2bn to a profit of JPY50mn. The company has factored in the impact of COVID-19 to some extent. The revenue forecast assumes contributions from sales of episil® (SP-03) in Japan, China, and South Korea and of Sancuso® (SP-01) in China, as well as sales of SP-02 (scheduled for launch in 2H) in Japan. Solasia Pharma notes that these products have not been on the market for long and accordingly have yet to develop adequate brand recognition versus the company’s assumption of business scale. The company also assumes revenue from out-licensing agreements in the range of JPY1.2bn–2.7bn, comprising milestone payments for SP-02 and SP-05, and upfront payments for new out-licensing agreements. It expects operating expenses of JPY3.4bn–3.7bn, including spending on marketing activities and intangible asset amortization. Other expected outlays are expenses for the approval filing of SP-02, costs for Phase III clinical trials of SP-05, and development costs for new pipeline products.

Solasia Pharma does not release a medium-term business plan with numerical targets. The company aims to expand its development pipeline, focusing on drug candidates with a high probability of success. Solasia Pharma also plans to pursue marketing activities and management at its organization in China, as well as building strong sales partnerships. Important events to watch for include sales plans, including sales of Sancuso® and episil® using the company’s own sales structure in China, approval of SP-02 by the local authorities (application filed in June 2021), a readout of Phase III clinical trials of SP-05, news of out-licensing the rights to pipeline products under development, and in-licensing of new pipeline products. (See the “Trends and outlook” section.)

Strengths and weaknesses

Shared Research sees Solasia Pharma’s three core strengths as extensive experience and networks held by the management and development team; a hybrid business model (a combination of selling on its own and out-licensing sales rights) focusing on clinical development, which allows the company to monetize in-licensed drugs early on with limited risks; and a development pipeline focused on oncology, which has high unmet medical needs.

We believe Solasia Pharma’s three weaknesses to be a business structure dependent on the underlying expertise of the management team rather than brands or propriety business processes; a certain degree of dependence on drug sales in China in the near future, which is expected to see volatile healthcare reforms and has some geopolitical risks; and the outlook of limited market penetration for products in the initial stages post-launch. (See the “Strengths and weaknesses” section.)

Key financial data


Income statementFY12/14FY12/15FY12/16FY12/17FY12/18FY12/19FY12/20FY12/21FY12/22
(JPYmn)IFRS cons.IFRS cons.IFRS cons.IFRS cons.IFRS cons.IFRS cons.IFRS cons.IFRS cons.Est.
Revenue112295014113181,3104545592,300~3,800
YoY10.0%1,981.8%118.8%-18.0%-22.6%311.9%-65.3%23.1%311.4~579.8%
Gross profit112295014111051,244244373-
YoY-1,981.8%118.8%-18.0%-74.4%1,084.8%-80.4%52.9%-
Gross profit margin100.0%100.0%100.0%100.0%33.0%95.0%53.7%66.7%-
Operating profit-702-702-463-1,010-2,420-1,762-4,116-2,419-1,100~150
YoY---------
Operating profit margin---------
Pre-tax profit-701-710-494-1,016-2,445-1,797-4,159-2,442-1,100~150
YoY---------
Pre-tax margin---------
Profit-677-643-474-1,007-2,422-1,867-4,127-2,478-1,200~50
YoY---------
Profit margin---------
Per-share data (JPY)
Shares issued (year-end; '000)32,77138,96364,60887,754105,022116,836123,081133,946
EPS-26.9-24.8-18.5-12.2-26.0-17.8-35.2-19.0-8.99~0.37
EPS (fully diluted)---------
Dividend per share---------
Book value per share-132.0-134.753.170.867.759.429.819.4-
Balance sheet (JPYmn)
Cash and cash equivalents5012,0991,0383,3704,0464,1162,964714
Total current assets5232,1241,1233,5254,5044,3023,269894
Tangible fixed assets121158464336
Other noncurrent assets5554342454649
Intangible assets1,3481,9872,5753,0853,1233,4852,3562,079
Total assets1,8784,1193,7046,6557,7287,9465,7753,144
Trade and other receivables154143199372580800987386
Short-term debt00000000
Total current liabilities1651602274126199252,079489
Long-term debt1,3212,867000000
Total noncurrent liabilities1,4592,9594435211034367
Total liabilities1,6253,1202714476411,0292,123556
Total equity2539983,4336,2097,0876,9173,6522,587
Total liabilities and equity1,8784,1193,7046,6557,7287,9465,7753,143
Cash flow statement (JPYmn)
Cash flows from operating activities-631-700-465-911-2,323-828-2,789-2,473
Cash flows from investing activities-149-633-558-537-256-735-171-164
Cash flows from financing activities8352,934-343,7813,2601,6411,829361
Financial ratios
ROA (pre-tax profit-based)--23.7%-12.6%-19.6%-34.0%-22.9%-60.6%-54.8%
ROE--102.8%-21.4%-20.9%-36.4%-26.7%-78.1%-79.4%
Equity ratio13.5%24.2%92.7%93.3%91.7%87.0%63.2%82.3%
Source: Shared Research based on company data
Note: Figures in the table may differ from company data due to differences in rounding methods.
Note: The company adopted IFRS in FY12/14.
Note: Shares issued refers to common stock. Multiple types of preferred stock existed previously, but these were all converted to common stock in November 2016.
  

Recent updates

Start of data analysis for the SP-05 Phase III study

2022-04-25

Solasia Pharma K.K. announces the start of data analysis for the SP-05 Phase III clinical trial. 

The company reported that SP-05 (arfolitixorin) originator/licensor and development partner Sweden-based Isofol Medical AB (STO: ISOFOL) announced the start of data analysis for the international multi-center Phase III trial (AGENT Study) evaluating SP-05 in combination with 5-FU, oxaliplatin, and bevacizumab for the treatment of advanced, metastatic colorectal cancer. Isofol is conducting a multi-center trial encompassing the US, Canada, Europe, Australia, and Japan. Solasia Pharma acquired exclusive development rights for Japan from Isofol in August 2020 and has continued the domestic clinical trials.

Initiation of the data analysis was determined after consultation with the US Food and Drug Administration (FDA) on the number of progression-free survival (PFS; a secondary endpoint in the study) events (i.e., trial subject disease progression or death) needed to begin the analysis. Isofol estimates the analysis will take 2–4 months before topline results can be communicated.

Solasia Pharma notes this will have minimal impact on FY12/22 earnings and has not revised company earnings forecasts issued on February 9. 

Formation of a capital and business alliance with HikariQ Health Co., Ltd.

2022-04-12

Solasia Pharma K.K. announced the formation of a capital and business alliance with HikariQ Health Co., Ltd.

Solasia Pharma announced that through an investment in HikariQ Health Co., Ltd. (unlisted), it has entered into a capital and business alliance with HikariQ for the purpose of research and development into antibody drugs mainly in the oncology field, utilizing HikariQ's antibody modification technology. With this investment, Solasia Pharma will have a 25% stake in HikariQ.

HikariQ is a venture company founded in 2021, originating from the Tokyo Institute of Technology. According to Solasia Pharma, HikariQ's core Q-body* technology is a unique and innovative technology with the potential to become a new immunoassay method to replace those currently in use. Solasia hopes that application of Q-body technology will lead to the creation of new types of nucleic acid drugs and antibody drug conjugates (ADCs), thereby enhancing the company's development pipeline.

*Q-body is an antibody modification technology with an added quick and convenient sensor function that does not compromise the performance of conventional immunoassays. The Q-body function can be added with virtually no increase in cost. The technology harnesses the fluorescent quenching phenomenon discovered through research by the Tokyo Institute of Technology, detecting antigens (target proteins, etc.) in a shorter and simpler process.

Announcement concerning a reduction in the amounts of capital stock and legal capital surplus and appropriation of surplus (to supplement the deficit in retained earnings brought forward), as well as a partial amendment to the Articles of Incorporation and the reappointment of directors

2022-02-22

Solasia Pharma K.K. made an announcement concerning a reduction in the amounts of capital stock and legal capital surplus and appropriation of surplus (to supplement the deficit in retained earnings brought forward), as well as a partial amendment to the Articles of Incorporation and the reappointment of directors.  

Solasia Pharma announced that its Board of Directors' meeting the same day had resolved to reduce the company’s legal capital surplus and make an appropriation of surplus to supplement the deficit in retained earnings brought forward. Research and development for pharmaceutical and other related products require a large amount of upfront investment, and as of December 31, 2021, the company reported a retained loss brought forward of JPY7.5bn on a non-consolidated basis due to such upfront investment. The company will reduce its capital stock of approximately JPY2.1bn to JPY100mn, and reduce its legal capital surplus of approximately JPY5.9bn to about JPY411mn, and make an appropriation of the surplus to supplement the JPY7.5bn deficit in retained earnings brought forward.

The reduction in amounts of capital stock and legal capital surplus, and appropriation of surplus represent an accounting transfer within the net assets category and will not cause changes to net assets or affect the total number of issued shares. They will have only a minor impact on business results, and the company will not change its consolidated earnings forecast for FY12/22.

Trends and outlook

Quarterly trends and results

CumulativeFY12/20FY12/21FY12/22FY12/22
(JPYmn)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1% of Est.FY Est.
Revenue15624028745491278283559113-2,300~3,800
YoY155.7%84.6%-1.4%-65.3%-41.7%15.8%-1.4%23.1%24.2%311.4~579.8%
Gross profit1121751862445012012537382
YoY83.6%57.7%-23.5%-80.4%-55.4%-31.4%-32.8%52.9%64.0%
Gross profit margin71.8%72.9%64.8%53.7%54.9%43.2%44.2%66.7%72.6%
R&D expenses2557191,0031,928258617822845177
YoY4.9%58.0%40.1%69.4%1.2%-14.2%-18.0%-56.2%-31.4%
R&D ratio163.5%299.6%349.5%424.7%283.5%221.9%290.5%151.2%156.6%
SG&A expenses3917241,0852,4324348651,3671,948505
YoY25.7%8.7%-2.5%30.2%11.0%19.5%26.0%-19.9%16.4%
SG&A ratio250.6%301.7%378.0%535.7%476.9%311.2%483.0%348.5%446.9%
Operating profit-534-1,268-1,902-4,116-642-1,362-2,063-2,419-600--1,100~150
YoY----------
Operating profit margin----------
Pre-tax profit-537-1,283-1,928-4,159-650-1,383-2,084-2,442-606--1,100~150
YoY----------
Pre-tax margin----------
Profit-531-1,272-1,937-4,127-656-1,394-2,111-2,478-615--1,200~50
YoY----------
Profit margin----------
QuarterlyFY12/20FY12/21FY12/22
(JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4Q1
Revenue1568447167911875276113
YoY155.7%21.7%-70.8%-83.6%-41.7%122.6%-89.4%65.3%24.2%
Gross profit1126311585070524882
YoY83.6%26.0%-91.7%-94.2%-55.4%11.1%-54.5%327.6%64.0%
Gross profit margin71.8%75.0%23.4%34.7%54.9%37.4%44.2%66.7%72.6%
R&D expenses25546428492525835920423177
YoY4.9%118.9%8.8%119.2%1.2%-22.6%-28.2%-97.5%-31.4%
R&D ratio163.5%552.4%604.3%553.9%283.5%192.0%4,080.0%8.3%156.6%
SG&A expenses3913333611,347434431502581505
YoY25.7%-6.2%-19.2%78.4%11.0%29.4%39.1%-56.9%16.4%
SG&A ratio250.6%396.4%768.1%806.6%476.9%230.5%10,040.0%210.5%446.9%
Operating profit-534-734-634-2,214-642-720-701-356-600
YoY---------
Operating profit margin---------
Pre-tax profit-537-746-645-2,231-650-733-700-358-606
YoY---------
Pre-tax margin---------
Profit-531-741-665-2,190-656-738-716-367-615
YoY---------
Profit margin---------
Source: Shared Research based on company data
Note: Figures in the table may differ from company data due to differences in rounding methods.
Note: The company adopted IFRS from FY12/14.

Q1 FY12/22 results (out May 13, 2022)

Earnings summary

Q1 FY12/22 (January–March 2022) results

  • Revenue: JPY113mn (+24.2% YoY)
  • Gross profit: JPY82mn (+64.0% YoY)
  • Operating loss: JPY600mn (JPY642mn operating loss in Q1 FY12/21)
  • Pre-tax loss: JPY606mn (JPY650mn pre-tax loss in Q1 FY12/21)
  • Loss: JPY615mn (JPY656mn loss in Q1 FY12/21) 

Revenue: Mainly came from product sales of Sancuso® and episil®.

R&D expenses: JPY177mn (-31.4% YoY); mainly development costs for SP-05 Phase III clinical trials (pivotal study)

SG&A expenses: JPY505mn (+16.4% YoY), up JPY70mn YoY

Capitalization of intangible assets: JPY3mn of development costs were recognized as assets among development pipeline investment outlays and were recorded as intangible assets.

Amortization of intangible fixed assets: The company had JPY109mn in amortization expenses. It began amortizing intangible assets related to Chinese business for episil® (SP-03) with the start of product shipments (sales) in June 2019. Amortization of intangible assets related to the Japanese business for the same product and intangible assets for Sancuso® began in FY12/18. The balance of intangible assets totaled JPY2.0bn.

Progress with R&D pipeline

Progress toward commercialization of pipeline products

Total pipeline investment: JPY181mn comprising a JPY3mn increase in intangible assets and JPY177mn in R&D expenses

According to international financial reporting standards (IFRS), the company books all development costs, in addition to contract payments and milestone payments, as “capitalized development costs” under intangible assets for pipeline products with approval records overseas, regardless of the scope of rights. For pipeline products with no approval records, the company books contract payments and milestone payments as intangible assets.

Status of development pipeline at the time of Q1 FY12/22 results announcement (May 13, 2022)

SP-01 (Sancuso®): Transdermal antiemetic drug (company holds rights in China and other regions)

China: On sale since March 2019. In June 2019, SP-01 was recommended in the “Guidelines of prevention and treatment of nausea and vomiting caused by antitumor therapies” published by the Chinese Society of Clinical Oncology (CSCO). In October 2021, it was added to the drug purchase list of Guandong, China, where the company conducts in-house sales. In Q1 FY12/22, shipment volumes to regions Solasia markets drugs independently (Shanghai, Beijing, and Guandong) were up 38% YoY to 8,342 units despite the Chinese New Year holidays (Jan–Feb) and fallout from the pandemic. For other regions, marketing is outsourced to agents such as Lee's Pharma based on licensing agreements.

SP-02 (darinaparsin): Anti-cancer agent with a novel mechanism of action (planned indication: recurrent or relapsed peripheral T-cell lymphoma)

The company has global rights to SP-02, which is out-licensed to Nippon Kayaku in Japan and HB Human Bio Science in Latin America.

Japan: The primary endpoint was achieved in Phase II clinical trials in June 2020, and the company applied for marketing approval in June 2021. In October 2021, the company concluded an out-licensing agreement with Nippon Kayaku, aiming for approval in Japan during 1H FY12/22 and commercialization from 2H FY12/22.

Korea, Taiwan, and Hong Kong: The company plans to apply for marketing approval to the regulatory authorities of each country/region after concluding out-licensing agreements for the marketing rights to the drug.

Expansion of indications: Non-clinical studies underway for other hematologic cancers (adult T-cell leukemia/lymphoma [ATLL] and acute myeloid leukemia [AML])

SP-03 (episil®): Locally applied wound covering/protective hydrogel material (indicated for pain associated with oral mucositis)

The company holds rights to SP-03 in Japan, China (including Hong Kong and Macau), and South Korea.

Japan: Listed on the NHI reimbursement price list in April 2018, launched by Meiji Seika Pharma in May 2018.

China: Obtained approval in February 2019, launched in July 2019. In May 2021, SP-03 was recommended as a new treatment option in the “Clinical guidelines of prevention and treatment of acute oral mucositis caused by antitumor therapies” published by the Chinese Society of Clinical Oncology (CSCO). In Q1 FY12/22, shipment volumes to regions Solasia Pharma markets drugs independently increased 30% YoY to 1,045 units despite the Chinese New Year holiday season (Jan–Feb) and COVID-19 fallout. Marketing in other regions is outsourced to agents such as Lee's Pharma based on licensing agreements. 

South Korea: Obtained approval in October 2019, launched by Synex in September 2020.

Solasia Pharma acquired exclusive development and marketing rights in Japan, China, and South Korea from Sweden's Camurus AB (STO: CAMX). The licensing agreement was concluded in March 2015 and extends for 10 years after commercialization in each country. A disagreement emerged between the two companies over subsequent continuity of the agreement and Camurus issued a notice of cancellation in April 2022. After reviewing the issues, Solasia rejects Camurus' claims. Discussions are underway to continue this business, including product supply over the near term. Management noted the cancellation does not impact current earnings, so FY12/22 consolidated earnings forecasts were not changed. 

SP-04 (PledOx®): Intracellular superoxide removing agent (planned indication: cancer chemotherapy-induced peripheral neuropathy)

The company has rights to SP-04 in Japan, China, South Korea, Taiwan, Hong Kong, and Macao, and has out-licensed marketing rights in Japan to Maruho Co., Ltd.

Japan and other regions: The company conducted Phase III clinical trials targeting patients with oxaliplatin-induced peripheral neuropathy in the US, Europe, Japan, South Korea, Taiwan, and Hong Kong. The trials were closed early in Q3 FY12/20, and in December 2020, the company announced that the primary endpoint had not been met. The company halted the development of SP-04 for oxaliplatin-induced peripheral neuropathy; instead, it is conducting additional animal studies with the aim of developing the product for taxane-induced peripheral neuropathy.

SP-05 (arfolitixorin): Increases antitumor efficacy of fluorouracil

Japan: In August 2020, in-licensed exclusive rights to develop SP-05, and currently conducting a Phase III clinical trial. Patient enrollment for the trial completed in May 2021.

Europe and other regions: Global Phase III study in patients with advanced colorectal cancer underway in Japan, the US, Canada, Europe, and Australia. In March 2021, target enrollment was set at 440 based on interim analysis results (enrollment of 440 patients had already been completed in December 2020).

After consultations with the US Food and Drug Administration (FDA), licensor Isofol began analysis of the clinical trial results from April 2022 with an eye on releasing topline results in Q2 or Q3 FY12/22 and submitting an approval filing in 2H 2022. 

New drug candidates:

Drug discovery project utilizing RNA editing technology (gene therapy)

Solasia concluded a joint R&D agreement with biotech startup EditForce (unlisted, originating from Kyusyu University) in 2019 to secure a means to acquire development candidates over the medium to long term. The goal is to develop gene therapies for new oncological areas based on EditForce's RNA editing technology.

Drug candidate for the treatment of peritoneal metastases (nucleic acid drug)

In 2020, the company entered into an option agreement for exclusive negotiating rights with drug discovery startup GeneCare Research Institute Co., Ltd. to in-license RECQL1-siRNA, a nucleic acid drug candidate, and related technologies. RECQL1-siRNA was developed by GeneCare based on licensed technology from Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY). Solasia Pharma will decide whether to exercise its option depending on the progress of non-clinical studies.

Pipeline status
Development code: NameIndication/effectRegionProgressPartner
SP-01: Sancuso®Nausea, vomiting (CINV)ChinaLaunched in 2019In-house sales (Beijing, Shanghai, Guangzhou),Lee’s Pharma (Other areas in China)
SP-03: episil®oral liquidAlleviating pain associated with oral mucositis (medical device) JapanLaunched in 2018Meiji Seika Pharma(Japan)
ChinaLaunched in 2019In-house sales (Beijing, Shanghai, Guangzhou), Lee’s Pharma (Other areas in China)
South KoreaLaunched in 2020Synex (South Korea)
Development code: NameTarget diseaseRegionProgressPartner
SP-02: darinaparsinPeripheral T-cell lymphoma (PTCL) JapanSubmitted NDANippon Kayaku (Japan)
Korea, Taiwan, Hong Kong(Phase II pivotal study completed: primary endpoint achieved, preparing for NDA filingHB Human BioScience (South America)
ChinaPhase II/III in preparation
USPhase IIa completed
EuropePhase II/III in preparation
SP-04: PledOx®Peripheral neuropathy (CIPN)JapanNon-clinical study in progress* (in taxane-induced peripheral neuropathy) *Phase II study in oxaliplatin-induced peripheral neuropathy closed (Ox) : primary endpoint was not metMaruho Co., Ltd. (Japan)
SP-05: arfolitixorinColorectal cancerJapanGlobal Phase III study in progress: completed patient enrollment, started analysis of clinical trial results
Development candidates
Drug discovery using RNA editing technology (for gene therapy in oncology) Using EditForce’s pentatricopeptide repeat (PPR) protein platform technology, Solasia is carrying out multiple projects (varying by target disease, target gene sequence, mechanism of action) based on RNA editing in the field of oncology.Co-development partner: EditForce Inc.
Peritoneal metastases treatment (nucleic acid drug) Carries out R&D of nucleic acid drug candidate RECQL1-siRNA expected to be used for treatment of peritoneal metastases (disseminated metastases developing in the peritoneum) of gastrointestinal cancer and ovarian cancer and related malignant ascitesGeneCare Research Institute Co., Ltd.
Source: Shared Research based on company data (as of May 2022)

Full-year FY12/22 company forecasts


FY12/20FY12/21FY12/22
(JPYmn)1H Act.2H Act.FY Act.1H Act.2H Act.FY Act.FY Est.
Revenue2402144542782815592,300~3,800
YoY84.6%-81.9%-65.3%15.8%31.3%23.1%311.4~579.8%
R&D expenses7191,2091,928617228845
YoY58.0%77.0%69.4%-14.2%-81.1%-56.2%
R&D ratio299.6%565.0%424.7%221.9%81.1%151.2%
SG&A expenses7241,7082,4328651,0831,948
YoY8.7%42.1%30.2%19.5%-36.6%-19.9%
SG&A ratio301.7%798.1%535.7%311.2%385.4%348.5%
Operating profit-1,268-2,848-4,116-1,362-1,057-2,419-1,100~150
YoY-------
Operating profit margin-------
Pre-tax profit-1,283-2,876-4,159-1,383-1,059-2,442-1,100~150
YoY-------
Recurring profit margin-------
Net income-1,272-2,855-4,127-1,394-1,084-2,478-1,200~50
YoY-------
Net margin-------
Source: Shared Research based on company data
Note: Figures in the table may differ from company data due to differences in rounding methods.
Full-year FY12/22 company forecast (announced February 9, 2022)
  • Revenue: JPY2.3–3.8bn (+311.4–579.8% YoY)
  • Operating profit (loss): loss of JPY1.1bn to profit of 150mn (operating loss of JPY2.4bn in FY12/21)
  • Pre-tax profit (loss): loss of JPY1.1bn to profit of 150mn (pre-tax loss of JPY2.4bn in FY12/21)
  • Profit (loss): loss of JPY1.2bn to profit of 50mn (JPY2.5bn loss in the previous year)

For 12/22, the company forecasts revenue of JPY2.3–3.8bn. The forecast for operating and pre-tax profit (loss) ranges from a loss of JPY1.1bn to a profit of JPY150mn. The forecast for bottom-line profit (loss) ranges from a loss of JPY1.2bn to a profit of JPY50mn. The company has factored in the impact of COVID-19 to some extent. The company indicated that it may book its first profit in FY12/22 mainly due to approval and commercialization of SP-02. When reporting Q1 earnings results, the company did not revise its forecasts. 

The company’s revenue forecast assumes contributions from the two launched products: episil® (SP-03) launched in Japan, China, and South Korea in FY12/18 and later; and Sancuso® (SP-01) launched in China in FY12/19. The company also expects a total of JPY1.1bn in revenue from SP-02 in Japan, which it plans to launch in 2H. Solasia Pharma notes that these products have not been on the market for long and accordingly have yet to develop adequate brand recognition versus the company’s assumption of business scale. In the three Chinese cities that it conducts marketing activities independently (Shanghai, Beijing, and  Guangzhou), the company forecasts shipments of Sancuso® will increase 93.5% YoY while episil® shipments increase 110.1%.

In addition, the company expects a total of JPY1.2bn–2.7bn from milestone revenue for SP-02 or SP-05 and upfront payments from new licensing agreements. Regarding SP-02, Shared Research expects licensing out to Europe, China, and the US to be from 2H FY12/22 as prospective licensees plan to confirm approval in Japan before concluding a licensing agreement. As for SP-05, Solasia Pharma notes several potential licensees are awaiting the Phase III results. 

The company expects operating expenses of JPY3.4–3.7bn, including cost of revenue for launched products (Sancuso®, episil®, and SP-02), operation expenses for the in-house sales force in China, upfront spending on marketing activities, and amortization of intangible assets. Other expected outlays are expenses for the approval filing, manufacturing, and development in China of SP-02, costs for Phase III clinical trials of SP-05, and development costs for new pipeline products.

Sales status in three Chinese cities (Shanghai, Beijing, and Guangzhou; based on shipment volumes)
FY12/19FY12/20FY12/21FY12/22
Act.Act.Act.Est.
Sancuso® (SP-01) 10,64915,23630,74659,500
YoY-43.1%101.8%93.5%
FY12/19FY12/20FY12/21FY12/22
Act.Act.Act.Est.
episil® (SP-03) 1,1492,5264,75910,000
YoY-119.8%88.4%110.1%
Source: Shared Research based on company data
*Shipment volumes to hospitals and pharmacies in regions Solasia Pharma markets drugs (Beijing, Shanghai, and Guangzhou)

SP-02 is being developed for the indication of relapsed or refractory peripheral T-cell lymphoma (PTCL), a type of hematologic cancer, and the company announced in June 2020 that the primary endpoint of “anti-tumor effect” had been achieved in the Phase II (pivotal) study. Accordingly, the company filed with the Ministry of Health, Labour and Welfare for regulatory approval for marketing of SP-02 as an anti-cancer agent (darinaparsin) in June 2021. The company expect to begin sales of the drug in 2022 after receiving approval from the authorities. In October 2021, the company changed its sales partner in Japan from Meiji Seika Pharma to Nippon Kayaku. The company has global rights to SP-02, and is in negotiations for out-licensing the drug in regions outside Japan and South America, where it already has out-licensed the drug. However, it changed its projections for concluding out-licensing agreements and receiving upfront payments to end-FY12/22, because potential licensees prefer to sign after the pipeline product has been approved in Japan.

Shared Research thinks that market interest in SP-02 is high, as the drug has a unique mechanism of action, and that out-licensing agreements may have a value of several billion yen to about ten billion yen. The company said it was conducting joint development with universities to investigate the possibility of expanding target indications for the drug. Once the company files for approval of SP-02 for the treatment of PTCL, it expects to start making preparations to develop the drug in China as well as for additional indications and started raising funds in March 2022.

In September 2020, the company decided to close early the Phase III clinical trials for SP-04 targeting chemotherapy-induced peripheral neuropathy, including in Europe and the US, reducing the enrollment plan from the initial 700 to 592 patients. On December 15, 2020, the company released the preliminary results of the studies, which failed to achieve the primary endpoints. In May 2021, the company put on hold the development of SP-04 for oxaliplatin-induced peripheral neuropathy after a comprehensive evaluation of its development policy based on the analysis of the secondary endpoints. To explore feasibility of clinical development of SP-04 for the treatment of taxane-induced peripheral neuropathy, the company decided to conduct additional animal studies. The company expects to receive the results of the animal studies in mid FY12/22.

In August 2020, the company acquired exclusive rights to develop and commercialize SP-05 in Japan. The licensor, Isofol, was already conducting global Phase III clinical trials in Japan, and Solasia Pharma took over development and commercialization in Japan. Patient enrollment reached 440 in December 2020. In March 2021, the results of the interim analysis on data of 330 patients were announced. Based on the results of this interim analysis, an independent data safety monitoring board (DSMB) recommended on March 22, 2022 that the Phase III clinical trial for SP-05 should continue with a target sample size of 440 patients. In May 2021, patient enrollment was completed for the target figure, including 56 patients in Japan. The company plans to announced topline data in 1H FY12/22, and changed the timing of concluding out-licensing agreements and receiving upfront payments from end-FY12/21 to end-FY12/22, because potential licensees prefer to confirm topline data from Phase III clinical trials before signing.

Medium-term outlook

In FY12/18, the company launched in Japan SP-03 (episil® oral liquid), the first of its pipeline products to be launched. In FY12/19, it launched Sancuso® and episil® in China (in March and July 2019, respectively), and the resulting revenue is thought to be the key to the company’s future earnings. Also worth watching are SP-02, the company's first anticancer agent candidate, for which the company filed for approval following the completion of the final phase of clinical trials; ongoing Phase III studies of SP-05; out-licensing activities for pipeline products; and in-licensing of new pipeline products to follow SP-05.

Medium-term management issues: Progress in the development pipeline and appropriate management of the Chinese business

Solasia Pharma does not release financial targets under a mid-term business plan. It is a venture company with limited management resources and although episil® was launched in Japan in May 2018 and Sancuso® was launched in China in March 2019, half of the current pipeline is in the development stage and probability of development success is a top priority for the company in pursuing business strategies. Solasia Pharma is working to commercialize the products currently in its pipeline, maintain a sales structure for its operations in China, strengthen organizational and internal controls, and secure the funds necessary for smooth business operations.

The progress of Solasia Pharma’s business activities can be understood with news regarding sales of Sancuso® and episil® in China, approval filing for SP-02, progress in clinical trials of SP-05, and out-licensing of pipeline products (for the latest progress of the development pipeline, see the Quarterly trends and results section or the Business model section).

Episil® oral liquid (SP-03), a medical device for alleviating pain of oral mucositis caused by cancer chemotherapy launched in three countries

Solasia Pharma out-licensed sales rights for the medical device SP-03 in Japan to Meiji Seika Pharma. The company provides SP-03 to the licensee, and accordingly has booked product sales and royalty revenues. Episil® oral liquid was listed in the National Health Insurance (NHI) reimbursement price list in April 2018 with the reimbursement price of JPY752/ml (JPY766/ml as of October 2019; episil® oral liquid is prescribed in 10ml bottles), and launched in May 2018. 

Outside of Japan, it was approved in China in February 2019 and launched in July 2019. The company signed a distribution agreement with Itochu Corp., the buyer from an accounting perspective, and established sales channels leveraging Itochu group’s resources. The company is conducting sales promotion activities in cities where it has established a sales infrastructure: Beijing, Shanghai, and Guangzhou. Outside these cities, Lee’s Pharmaceutical Holdings Limited (HK: 0950, hereafter Lee's Pharma), with whom the company concluded a sales license agreement, sells SP-03 in China. 

In March 2019, the company filed for approval of episil® oral liquid in South Korea, to follow earlier approvals in Japan and China, and approval was granted in October the same year. In September 2020, Synex, the licensee in South Korea, launched the product.

Oral mucositis occurs in 30–40% of patients treated with anti-cancer agents* and in nearly 100% of patients treated for head and neck cancers (undergoing combination therapy of radiation and anti-cancer agents). The company estimates the number of target oral mucositis patients in Japan at over 150,000 and about 800,000 in China. 

*Treatment plan using anti-cancer agents:
Strong side effects are a concern when using anticancer therapies. Of particular concern are the various side effects from the anticancer agents used in chemotherapy, which uses chemical substances to kill cancer cells. For this reason, anticancer agents are administered in one- to two-week courses that include days when drugs are administered and rest days (washout period) and are repeated several times, taking the physical burden into consideration. The effect of a typical course of therapy can be seen after around six courses, although the number differs depending on the type of drugs used and whether the treatment is single-drug or combination therapy. (Based on the website of the National Cancer Center’s Center for Cancer Control and Information Services, summarized by Shared Research)  

Promoted SP-02, an anti-cancer agent with a new MOA that directly acts on cancer cell mitochondria

Patient enrollment was completed in September 2019 for global Phase II clinical trials (conducted in Japan, South Korea, Taiwan, and Hong Kong) on SP-02, Solasia Pharma’s new anti-cancer drug candidate, and results of this study were released in June 2020. The company is filed for its approval as an anti-cancer agent (darinaparsin) in June 2021, as the trial met the primary endpoint (antitumor efficacy). The company plans to submit marketing approval applications to regulatory authorities in Japan and other countries by end-1H 2021. It has global rights to SP-02, and is in negotiations for out-licensing the drug in regions outside Japan and South America, where it already has out-licensed the drug. Prospective licensees are inclined to wait until it has been cleared for approval in Japan, so the company assumes any licensing agreements and associated upfront payments will likely be by end-FY12/22. 

The indication is for relapsed or refractory PTCL, for which no standard therapy has been established, so the company applied for manufacture and marketing approval on the basis of research data (mainly Phase II trial results). With a view to extending its use to other applications beyond PTCL, the company is conducting non-clinical studies for the indications of other hematologic cancers such as adult T-cell leukemia/lymphoma (ATLL) and acute myeloid leukemia (AML) in the US among other countries. Also, the company is preparing to initiate clinical trials in China. We plan to keep an eye on future development and sales plans for SP-02.

Thanks to its unique mechanism of action, SP-02 may be effective in treating cancers other than PTCL. Because of its potential efficacy against other cancers, the company stated that the market is already paying attention to the drug even before the release of clinical trial results. The company, which holds global development and marketing rights of the drug, concluded an out-licensing agreement with Nippon Kayaku for the rights in Japan and with HB Human BioScience SAS for the rights in Latin America (Columbia, Peru, Ecuador, Venezuela, Chile, Panama, Costa Rica, and Guatemala).

Launch of business in China, building and steering in-house sales structure

The company obtained approval of SP-01 (transdermal antiemetic drug) in China in July 2018. It then applied for approval of SP-03 (bio-adhesive oral liquid intended for alleviating pain associated with oral mucositis) in May 2016, which was approved in February 2019. Since 2015, the China National Drug Administration (CNDA) has taken steps to upgrade its evaluation and approval system with a view to quickly clearing applications that have long been awaiting approval.

Sancuso® (SP-01) was launched in China in March 2019 and episil® (SP-03) in July 2019. In-house sales of SP-01 and SP-03 in the three cities of Beijing, Shanghai, and Guangzhou through the company’s Chinese subsidiary are primarily the responsibility of the following three individuals.

A wholly owned subsidiary Solasia Medical Information Consulting (Shanghai) Co., Ltd. is in charge of the company’s own marketing activities in China. In December 2018 the company established a base in Guangzhou to join those already set up in Beijing and Shanghai and has been running its own sales team comprised of 10 medical representatives (MRs) each in Beijing, Shanghai, and Guangzhou, for a total of roughly 40 MRs.

In-licensed exclusive rights to SP-05 (arfolitixorin) from Isofol Medical AB in August 2020 

On August 13, 2020, the company in-licensed exclusive rights to develop and commercialize an investigational new compound SP-05 (arfolitixorin) in Japan from Isofol Medical AB of Sweden. The target indication of SP-05 is to enhance the anti-tumor effect of fluorouracil, an existing anticancer drug used as standard therapy for various cancers including colorectal cancer. Clinical trials up to Phase II performed by Isofol suggest that arfolitixorin has the effect of enhancing the anti-tumor effect of fluorouracil in patients with advanced colorectal cancer.
SP-05 is a key active metabolite of the widely used folate-based drugs and can potentially benefit many patients with advanced colorectal cancer, because it does not require complicated metabolic activation to become effective. In addition to colorectal cancer, SP-05 can potentially be effective in the treatment of pancreatic cancer, breast cancer, stomach cancer, and head and neck cancer.

In December 2018, licensor Isofol began global Phase III clinical trials (AGENT Study) in the US, Canada, Europe, Australia, and Japan. After in-licensing SP-05, the company has taken over clinical trials in Japan and is developing the product in partnership with Isofol.

The primary endpoint is overall response rate (ORR)*. An interim analysis will be performed on data of 330 patients, and the final target sample size will be set based on the results. In March 2021, the results of this interim analysis were announced. Base on the results, an independent data safety monitoring board (DSMB) recommended that the phase III clinical trial of SP-05 should continue with a target sample size of 440 patients. 

In May 2021, patient enrollment was completed for the target figure, including 56 patients in Japan.

*Overall response rate (ORR): Proportion of patients who have a partial or complete objective tumor response to therapy

Efforts in drug discovery using RNA editing technology

In December 2019, the company entered a joint R&D agreement with EditForce Inc., a biotech company originating in Kyushu University. This is part of the company’s efforts to acquire new drug development candidates with a focus on oncology in the medium and long term, using EditForce’s RNA editing technology.

Acquired exclusive negotiating rights for a nucleic acid drug candidate for peritoneal metastases treatment

In July 2020, the company entered into an option agreement for exclusive negotiating rights with drug discovery start-up GeneCare Research Institute to in-license RECQL1-siRNA, a nucleic acid drug candidate, and related technologies, developed using a license from Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY). Solasia Pharma will decide whether to exercise its option depending on the progress of non-clinical studies.

Business

Business model

Biotech venture that conducts clinical development and commercialization in Asia by in-licensing new assets from US, Europe, and other regions

Solasia Pharma is a drug discovery venture established to in-license new drugs already developed in the West and propel their clinical development in Japan, China, and other parts of Asia.

Solasia Pharma’s origins go back to 2006, when the so-called drug lag* (when efficacious drugs were being sold in the West but were not yet approved for use in Japan) became a social issue in Japan. Itochu Corporation (TSE1: 8001) and MPM Capital—one of the largest US venture capital companies focused on healthcare—seeing this as a business opportunity, established Japan Bridge Inc. as a preparatory company in the US in December 2006. The company began operating in Japan in September 2007, and in April 2008, JapanBridge, Inc., was established as a Japanese entity. The original intent was to source new drugs from the West and develop and sell them in Japan. However, the company’s horizons were later extended beyond Japan to include the rapidly growing Chinese markets and other parts of Asia. The company’s name was changed to Sol“asia” Pharma to reflect this new focus on “Asia.”

*Drug lag: The delayed use of certain drugs in Japan (as they have not yet been approved) that are already in standard use overseas. In some cases, patients (and the families of patients) with refractory diseases such as cancer and rheumatoid arthritis paid high prices for personal imports of new therapy drugs that were not yet approved in Japan. Several reasons exist for this lag. In many cases, clinical development in Japan began after the completion of overseas trials (the clinical trials required for manufacturing approval). Also, trials took longer to close in Japan, as the core hospitals where such trials were conducted were not as well-equipped to conduct trials as their counterparts in the West. A weak system (in terms of personnel capacity) for approving new drugs was another factor. In 2005, when Prime Minister Koizumi was in power in Japan, the Ministry of Health, Labour and Welfare established the Review Conference on Unapproved Drugs. During the first Abe administration, the Commission to Investigate the Rapid Provision of Efficacious and Safe Drugs met nine times between October 2006 and July 2007 to summarize national policy on the issue. Revisions to the drug pricing system in 2010 led to the introduction, on a trial basis, of a pricing premium for the promotion of new drug development and the elimination/resolution of off-label use, encouraging pharmaceutical companies to develop unapproved and off-label drugs. The Pharmaceuticals and Medical Devices Agency (PMDA), which approves pharmaceuticals, encouraged pharmaceutical companies to conduct global trials and enhanced clinical trial research networks, as well as increased its number of screening personnel. As a result, the drug lag has been rapidly decreasing.

Solasia Pharma’s basic management policy is to acquire the development and sales rights for new drug candidates that have undergone clinical development overseas, and have had efficacy confirmed to a certain degree based on their assumed mechanism of action, but have not yet been developed and commercialized in Japan and other parts of Asia. The drugs Solasia Pharma develops are in the area of cancer—where there is unmet demand for life-prolonging treatment—and rare diseases. The rare disease category is one that leading Japanese pharmaceutical companies are reluctant to address, due to their relatively low earning potential. To achieve its management philosophy of “Better Medicine for a Brighter Tomorrow” the company is working to quickly shore up its financial base and become self-sufficient.

The pharmaceutical value chain and Solasia Pharma’s role

Within the pharmaceutical value chain, Solasia Pharma’s strategy focuses on the process following clinical development. As it was not founded based on university or other research institutions, the company does not conduct basic research such as synthesizing new compounds expected to generate groundbreaking treatment outcomes. Due to limited funding, the company does not participate in the formulation of biotech products. Given the higher potential profits, the company would like to engage in sales and marketing activities in the future, but due to limited manpower and funding, the company has elected to forego these activities in Japan for the time being. Instead, Solasia Pharma intends to out-license sales rights to Japanese drug companies and receive royalties. That said, Solasia Pharma is planning to conduct its own sales activities in three major Chinese cities (Beijing, Shanghai, and Guangzhou). Despite the country’s large area, Solasia Pharma evaluated that patients requiring advanced medical treatment for cancer will be concentrated at the advanced medical institutions in these cities, resulting in efficient sales activities in the country with limited resources.

Pharmaceutical business value chain and Solasia Pharma’s position
Source: Shared Research based on the company’s annual securities report
Limiting risk by focusing on clinical development

Given its limited human resources and funds, Solasia Pharma has chosen a business model that does not involve risky upstream basic research* or drug-manufacturing facilities. Company President Yoshihiro Arai has previous experience as head of clinical development at the Japanese arm of major pharmaceutical company Amgen. Personnel involved in development at large Japanese and international pharmaceutical companies are now key staff at Solasia Pharma. The company defines its functions as drafting appropriate clinical development plans, communicating with key opinion leaders (KOLs), steadily obtaining manufacturing and sales approval, and providing useful therapeutic medications in Asia.

The status of Solasia Pharma’s in-licensed new drug candidates at the time of in-licensing was as follows: SP-03 was already launched in the US and European markets; approval of SP-01 was pending in the US and Europe; and SP-02 and SP-04 were undergoing early or late Phase II clinical trials overseas, including in the US; and SP-05 (in-licensed from Isofol in August 2020) is undergoing Phase III trials in Japan as well as in the US and elsewhere.

Out of these five candidates, the company has already launched two, has filed approval applications for one candidate (as Phase II clinical trials [pivotal study] were completed), and has one candidate in ongoing Phase III study. Solasia Pharma is still at an early stage of establishment, but it is confident in its clinical development expertise and its ability to identify quality in-licensing opportunities

*Risks associated with drug discovery:
In general, R&D activities surrounding the development of a new drug require more than 10 years. The Japan Pharmaceutical Manufacturers Association’s explanation of this situation is outlined below.
Basic research (two–three years) includes the processes of creating a library of compound groups through synthesis, cultivation, and extraction; identifying target molecules that actively contribute to a disease; and searching for new drug candidate compounds. Lead compounds are determined after conducting screening based on test-tube experiments. Compounds are modified to increase absorbability, and optimal compounds are determined. Organizations may file for substance patents on target molecules and lead compounds.
Preclinical trials (three–five years) involve testing on animals and cultivated cells to study toxicity, efficacy, and pharmacokinetics from the time of absorption into the body through excretion.
Clinical trials (three–seven years) involve testing for efficacy and safety in humans. Referred to both as clinical tests and clinical trials, this is the process of accumulating the data necessary to apply for sales and marketing approval. Clinical trials are divided into the following three phases.
In Phase I (clinical pharmacology ), new drug candidates are administered to healthy individuals to study side effects and other effects on the human body, from absorption through to excretion. In trials of anti-cancer agents, however, drugs are also administered to cancer patients. Types and degrees of toxicity are evaluated, and dosage recommendations for Phase II trials are determined.
In Phase II (exploratory trials), new drug candidates are administered for the first time to patients, in small groups of around 50 people, to determine optimal dosages and dosage intervals. Phase II trials are divided into two stages. The first stage involves confirming efficacy, safety, and pharmacokinetics. The second stage involves determining dosages that achieve the desired status.
In Phase III (confirmatory trials), new drug candidates are administered to anywhere from several hundred to more than 1,000 patients to compare efficacy against existing drugs. For rare diseases with few patients (diseases contracted by fewer than six out of 100,000 patients per year, or diseases whose total number of patients is estimated at less than 50,000), finding patients for comparative trials is difficult. For this reason, orphan drugs may be approved without undergoing Phase III trials.
After all of these processes have been completed, companies apply to the Ministry of Health, Labour and Welfare for sales and marketing approval. Approval generally requires around one year after the application is submitted.
Phase IV clinical trials are also performed on products that are already being manufactured and sold to confirm continued safety and appropriate use.
According to the Japan Pharmaceutical Manufacturers Association’s “DATA BOOK 2020,” in the past five years one out of 3,900 (0.03%) new drug candidate compounds (low-molecular-weight compounds) developed in-house by Japan’s major pharmaceutical companies reached preclinical trials. One in 9,400 candidate compounds reached the start of clinical trials, and one in 22,000 obtained manufacturing and sales approval. Also, of new drug candidates for which preclinical trials were begun, around 17% reached the approval stage, as did 42% of new drug candidates that began clinical trials (five-year average). According to the association, taking into account the cost of failed projects and personnel expenses, the cost of commercializing a single new drug exceeds JPY100bn. The table below shows that the number of compounds awaiting evaluation for approval has fallen in recent years; this is because an enhanced evaluation system has meant that the evaluation period has shortened to within one year.

201520162017201820192020
All compounds134,860123,218105,64289,94992,29894,034
Nonclinical trial starts242921462651
Domestic clinical trial starts1611127715
Obtained approval (ex. licensees)463743
Companies surveyed252221222021
Source: Shared Research, based on the Japan Pharmaceutical Manufacturers Association’s “DATABOOK 2022”
Note: Data is from members of the Japan Pharmaceutical Manufacturers Association R&D committee that are capitalized in Japan. Figures indicate only products developed in-house, and additional dosage forms and indications are excluded. The transition rate refers to the ratio of compounds that transition to the next phase to all compounds

Development targets are focused on oncology

Solasia Pharma focuses on oncology. This is mainly for two reasons. First, despite cancer being the leading cause of mortality in Japan, with the number of cases trending upward, a full range of treatments is not available. Second, even in the case where there is a first-line treatment available, new drugs can secure a market presence if they can offer increased efficacy when used in combination therapy. Also, since anti-cancer drugs are segmented by types of cancer, in some areas few competing drugs exist. For its future development pipeline, Solasia Pharma says it will also consider in-licensing and developing drugs to treat rare diseases.

Major causes of mortality
Source: Shared Research based on “Vital Statistics of Japan,” Ministry of Health, Labour and Welfare 

The following figure is based on the results of a questionnaire conducted by the Japan Health Sciences Foundation to determine drug discovery needs. Mainly targeting doctors of internal medicine at national hospitals, these surveys have been conducted roughly once every five years since 1994. The survey conducted in 2014 was the fifth such survey (158 valid responses). It looks at the correlation between physician satisfaction with current treatments and their degree of contribution. 

Hypertension ranks above 90% on both axes (high levels of satisfaction and high levels of drug contribution). Heart diseases such as myocardial infarction and arrhythmia scored above 80% for both axes, as did allergic rhinitis. For malignant growths (cancer), pancreatic cancer ranked along with dementia for low levels of satisfaction with treatment (16.9%) and drug contribution (38.5%). For lung cancer, the score was not high for satisfaction (37.3%) but was relatively high for drug contribution (72.5%). Ten years ago, both scores were below 20%, and Shared Research believes this major improvement was due to the drug Iressa (July 2002, sold by AstraZeneca, generic name: gefitinib), which was approved in Japan earlier than in other parts of the world. Interstitial pneumonia emerged as a side effect following Iressa’s launch, and data from post-launch clinical trials indicated a high degree of success (limited to non-smoking women in East Asia). Satisfaction with drugs for other types of cancer has also increased, with positive evaluations on recently launched molecularly targeted drugs, particularly antibody drugs. However, because few physicians are satisfied with current drugs*, cancer was chosen as the leading disease category in which new treatment methods, drugs, and medical devices are desired.

Major diseases and the contribution of drugs to their treatment 
Source: “Survey of Medical Needs for 60 Diseases and New Medical Needs II,” part of fiscal 2015 survey report of domestic core technologies, the Japan Health Sciences Foundation

*Dissatisfaction with anticancer drugs, even recent antibody drugs:
In September 2014, Ono Pharmaceutical Co., Ltd. (TSE1: 4528) launched Opdivo (human anti-PD-1 monoclonal antibody, generic name: nivolumab), with the indication of malignant melanoma that could not be completely cured through resection. Thereafter, approval was expanded to include such indications as cancers of the lungs (non-small-cell lung cancer, from secondary therapy), kidney (renal cell carcinoma, from secondary therapy), and blood (Hodgkin’s lymphoma). The company is pursuing further efficacy trials in other areas, such as in primary therapy for lung and renal cancer. Opdivo gained attention for being approved as the world’s first anticancer drug with a new action mechanism as an immune checkpoint inhibitor, different from plant alkaloid-derived anticancer drugs (such as Taxotere), hormone drugs, and conventional molecularly targeted drugs.

Action mechanism
Animals’ bodies contain immune cells, which attack and remove foreign bodies, including early-stage cancer cells, of which there are few. However, if immune cell action is too strong, these cells can attack normally functioning cells, causing muscular dystrophy (a hereditary muscle disorder in which damage or changes to muscle fiber results in loss of muscle strength), myocarditis, interstitial pneumonia, and other autoimmune diseases. To inhibit the immune reaction, molecules (the immune checkpoint being the PD-1 receptor) are placed on the surface of major immune cells, or T-cells. A substance called PD-L1 is produced within cancer cells in combination with this immune checkpoint, and the PD-1 receptors combined with the T-cells weaken the immune function. Opdivo (an anti-PD-1 antibody) combines with T-cells’ PD-1 receptors to prevent these receptors from combining with the PD-L1 of cancer cells, allowing T-cells to keep attacking cancer cells.

Although the drug Opdivo had a higher response rate (life-prolonging effect) than the standard drug Taxotere, its response rate (the percentage of cases in which tumor size is reduced by 30% or more) was around 30% for malignant melanoma and 20% for non-small-cell lung cancer. Immune system side effects were also reported, requiring caution against using Opdivo on patients with autoimmune diseases.

Major anticancer drugs using highly toxic plant alkaloids are Sanofi-Aventis’s Taxotere (generic name: docetaxel; indications include breast cancer, non-small-cell lung cancer, stomach cancer, ovarian cancer, and esophageal cancer), Yakult Honsha Co., Ltd.’s (TSE1: 2267) Campto, and Daiichi Sankyo Co., Ltd.’s (TSE1: 4568) Topotecin-branded irinotecan (an anticancer agent developed in Japan; indications include lung cancer, cervical cancer, ovarian cancer, non-Hodgkin’s lymphoma, inoperable or recurrent stomach cancer, colorectal cancer, and breast cancer).

Business structure and overview

The Solasia Pharma Group comprises two companies: Solasia Pharma and consolidated subsidiary Solasia Medical Information Consulting (Shanghai) Co., Ltd., established in December 2014. The group in-licenses the development and sales rights of new drug and medical device candidates (referred to collectively as new drug candidates), which it develops and monetizes. 

Sourcing new drug candidates


Description
Key playersArai (President and CEO), Nagahama (Head of Product Development Division), Shinozaki (Head of Business Development Division)
FunctionNetworking at international academic meetings and study sessions. Project referrals through networks of Shinozaki's and outside directors'; decisions on development feasibility
PartnerContract advisors including Kazuto Nishio MD, PhD (Professor, Kinki University School of Medicine) and outside directors
Solasia Pharma's strengthsAbility to make decisions on development candidates based on key players' experience; capability to gather information through outside directors; trust as a capable licensee based on development track record
Source: Shared Research based on company data

Solasia Pharma identifies new drug candidates that have reached certain stages of development, and in-licenses the rights for development and sales in Japan and other parts of Asia. It chooses drug candidates that have already completed non-clinical trials, ranging from the point before clinical trials begin to the point in Phase II clinical trials when human efficacy is presumed and drug candidates that have obtained manufacturing and sales approval. As previously mentioned, SP-03 was in-licensed after it had already reached the market in the US and Europe. 

Solasia Pharma explains that basic research and formulation research have become more complex and diverse in recent years, because many disease causes are being identified through gene analysis. Solasia Pharma believes that research activities are best taken on by universities (basic research), core hospitals (clinical research), and biotech ventures that have been established based on such research achievements, as well as large, internationally active pharmaceutical manufacturers. Solasia Pharma concentrates on in-licensing new drug candidates from research-focused biotech ventures and pharmaceutical companies that lack effective clinical development functions in Asia. 

For the in-licensing process, expertise to select new drug candidates with the potential to successfully obtain approval is important. President Arai and Product Development Division Head Fumiko Nagahama have this strength. Shared Research believes that their previous careers and the company’s clinical development track record help push forward in-licensing negotiations with candidate drug developers. Koji Shinozaki, head of the Business Development Division and formerly of Itochu Corporation, was involved with the plan to establish Solasia Pharma. We believe he contributes to the company by gathering information about development candidates from biotech ventures, and that outside directors are also using their networks to help source new drug candidates. Furthermore, Solasia Pharma has advisory agreements in place with Kazuto Nishio, professor at Kinki University School of Medicine. 


Developing new drug candidates 


Description
Key playersArai (President and CEO), Nagahama (Head of Product Development Division)
FunctionFormulate protocols of clinical trials without failure and standard operating procedure (SOP); selection of sites and physicians for clinical trials; management of development expenses; monitoring
PartnerLicensors, CROs, influential clinicians
Solasia Pharma's strengthsTrust of development track records of key players; network of influential clinicians
Source: Shared Research based on company data

A number of actions are necessary to move new drug candidates though clinical development as quickly as possible. 

  • Evaluate challenges with target disease treatments on-site.
  • Select diseases and patients for specific clinical trials in which the indication can be expanded.
  • Design optimal dosages and administration methods for new drug candidates.
  • Set the end point (indicators for evaluating efficacy) (above is related to crafting clinical trial plans).
  • Select KOLs for the target disease and hold discussions with these KOLs on clinical trial details.
  • Evaluate and select regions and medical facilities where clinical trials will be conducted (upon initiation of clinical trials).
  • Administer actual dosage and conduct monitoring (confirm that clinical trials are proceeding according to plan).
  • Gather, analyze, and evaluate data on efficacy and safety (activities conducted during and after clinical trials) 

Solasia Pharma’s Product Development Division leads these activities for the clinical development of new drug candidates. The company uses Japanese and overseas contract research organizations (CROs) to handle labor-intensive tasks (administering and monitoring dosages). Preventing failures in progressing clinical trials as planned requires that data up to the previous trial stage be suitably evaluated. The selection of indications, recommendation of optimal dosages, and determination of end points also require accuracy. CROs generally operate under outsourcing contracts, but there is no formal information provision between the contractor and the CRO while operations are underway, nor does the contractor provide orders to be followed. Rather, CROs act like a contractor’s own development project team, with both sides exchanging information and opinions. Contractors and CROs work to agree on the essential elements of planning and conducting clinical trials, and work to conduct operations efficiently. For this reason, Solasia Pharma concentrates on hiring personnel who either have experience with the clinical development of anti-cancer agents and in global clinical trials (clinical trials conducted simultaneously in multiple countries) or who have the ability to communicate with regulatory authorities about the direction of the clinical trials. 

Shared Research understands that President Arai and Product Development Division Head Nagahama have gained expertise in clinical development activities through numerous successes in their previous careers, and that they have strong connections with key opinion leaders (KOLs; influential physicians who actively publish papers and lead conferences), which can smooth the process of clinical trials.  

Monetizing new drug candidates (out-licenses to pharmaceutical companies or sells through its own sales structure in China)

Description
Key playersArai (President and CEO), Shinozaki (Head of Business Development Division)/Zhang (General Manger, Chinese subsidiary)
FunctionOut-licensing marketing rights: negotiation with existing partners, handling new connections at international academic meetings and others
China business: Build up medical representatives, formulate marketing strategies, network influential clinicians, communicate with existing partners
PartnerMeiji Seika Pharma, Lee’s Pharmaceutical, Itochu, Maruho, Nippon Kayaku, etc.
Solasia Pharma's strengthsOut-licensing marketing rights: development record without failure
China business: network Zhang cultivated at Roche; sales network in mainland China held by Lee's Pharmaceutical (rich with experience of in-licensing technologies from companies in Japan, US and Europe); Itochu's imports and wholesale of pharmaceuticals and medical devices in mainland China
Source: Shared Research based on company data

If Solasia Pharma succeeds in clinical development for a product and obtains sales and marketing approval, it has the choice of conducting sales and marketing itself or out-licensing the sales rights to another pharmaceutical company and earning up-front payments and tiered royalties. In the largest Chinese cities (Beijing, Shanghai, and Guangzhou) Solasia Pharma plans to conduct its own sales. In Japan and other areas, it plans to out-license sales rights to pharmaceutical companies. 

Selling independently in China

In preparation for sales in China’s three key cities, the company’s consolidated subsidiary, Solasia Medical Information Consulting (Shanghai), is establishing a sales structure composed of about 40 MRs, in total. The size of the Chinese market has surpassed that of the Japanese market and has grown to become the world’s second largest. To achieve major success in the Chinese market, the company believes its marketing activities need to extend beyond sales in the three major cities to building brand recognition throughout all of China. To achieve this, Solasia Pharma intends to conduct independent marketing activities across China, not just relying on Lee’s Pharmaceutical Holdings Limited (HKSE: 0950), its sales partner for the areas of China outside the three principal cities. 

Ten leading causes of mortality in urban China
RankingCause of deathMortality rate (deaths per 100,000 persons)
20002005201020152016201720182019
1Malignant tumor (cancer)124.90114.10153.48159.78158.26159.05161.33161.32
2Heart diseases85.4677.65120.26140.20144.02146.92152.72154.87
3Cerebrovascular diseases119.82111.43135.44139.38139.95139.40141.54140.92
4Respiratory system diseases119.62100.2478.3076.2674.4471.9271.9268.80
5Injury and poisoning54.2744.9645.5244.5944.6543.2242.0441.98
6Endocrine, nutritional, and metabolic diseases;10.889.4414.2317.0218.4218.7919.4820.01
7Digestive system diseases21.8917.5415.8614.2714.1614.4814.5514.71
8Nervous system diseases4.244.944.846.737.527.738.538.93
9Genitourinary system diseases4.963.364.287.197.016.697.086.87
10Infectious diseases (incl. tuberculosis)9.187.676.756.826.927.076.496.38
Source: China Health and Family Planning Yearbook 2020

Solasia Pharma entered the Chinese market in December 2011 by setting up a representative office in Beijing and enlisting help from consultants. However, recognizing that controlling operations in China from its base in Japan would be problematic, in 2013 Solasia Pharma appointed Vivian Zhang as general manager for China. A licensed medical doctor, Ms. Zhang previously worked in China for Roche, a global leader in oncology products. Attracting executives of this caliber gave Solasia Pharma the knowledge of, and contacts in the Chinese oncology market, which contributed to building a marketing structure for the Chinese business. 

Securing earnings in Japan and other regions

Outside Japan and China’s three principal cities, Solasia Pharma intends to out-license sales rights to pharmaceutical companies that have a track record of sales in the same disease categories as its candidate compounds. With this approach, Solasia Pharma receives lump-sum contract payments, milestone revenue (lump sum in line with development progress), and tiered royalties depending on revenue from sales partners’ drug sales and sales partners’ selling performance.

Solasia Pharma out-licensed sales rights for four of its five pipeline and launched products to partners including Meiji Seika Pharma, Maruho, Lee’s Pharmaceutical, and Nippon Kayaku. For future out-licensing, in addition to existing sales partners, Solasia Pharma will also consider partners through talks following results announcements at international conferences (the company has gained further attention through its IPO).

Lee’s Pharmaceutical group has more than 20 years of experience in the Chinese pharmaceutical market. The group sells 14 prescription drugs for cardiovascular and infectious disease as well as anti-cancer agents. The group has a development pipeline of more than 20 compounds, through its own R&D and by in-licensing from Western and Japanese pharmaceutical companies. In FY12/20, Lee’s had revenue of HKD1.2bn (-1.6% YoY), operating profit of HKD182mn (+48.2%), and profit of HKD167mn (+33.2%), with FY12/20-end total assets of HKD3.6bn (+21.1%) and shareholders’ equity of HKD2.5bn (+10.7%).

Aiming to secure a distribution network of its products in China, Solasia Pharma entered into a sales and distribution agreement with Itochu, its largest shareholder, in September 2017, and a business outsourcing agreement with Itochu in February 2020. Itochu Group is already developing drug distribution businesses with several Chinese companies:

In 2003, Itochu entered into a business collaboration agreement for drug distribution with Chongqing Pharmaceutical Group Co., Ltd., a large drug wholesaler that also operates a chain of pharmacies. 

In 2005, Itochu and Alfresa Holdings Corporation (TSE1: 2784; hereafter Alfresa) set up Remeje Pharmaceuticals (China) Co., Ltd., as a joint venture to provide Japanese pharmaceuticals and healthcare products within China. 

In 2011, Itochu, Toho Holdings Co., Ltd. (TSE1: 8129), and Jointown Pharmaceutical Group Co., Ltd. (a Chinese wholesaler of pharmaceuticals and medical products) set up joint venture Hubei Kyoso Pharmaceutical Co., Ltd. The JV’s focus is on wholesaling pharmaceuticals, medical devices, health foods, and health appliances—mainly produced by Japanese and overseas manufacturers—to hospitals, clinics, and pharmacies in China. 

In 2013, Itochu established a joint venture with Cocokara Fine Inc. (TSE1: 3098); Alfresa; and CDFY Pharmacy Chain Investment Co., Ltd., a pharmaceutical distribution subsidiary of Liaoning Chengda Co., Ltd., to operate a drugstore business in northeastern China.

In 2018, Itochu concluded a comprehensive business alliance agreement with Baheal Pharmaceutical Group (headquartered in Qingdao, China). Founded in 2005, Baheal Pharmaceutical Group is a conglomerate that undertakes advanced and innovative initiatives in the pharmaceutical and healthcare industry in China.

In 2019, Itochu invested in a large private-sector general hospital in Beijing called Beijing Century Kounre Hospital with Suntop Healthcare Group, which started out in 2003 as a sole distributor of Japanese-made dialysis equipment in China and has become a dialysis solutions provider, and Hong Kong-based CITIC Group company CITIC Capital Holdings Limited.

Solasia Pharma thinks it can smoothly launch its own sales activities in China by leveraging Itochu Group’s presence, knowledge of the pharmaceutical business, and distribution networks in the country. 

Major sales partners
CompanyDescription
Meiji Seika Pharma Co., Ltd.Pharmaceuticals subsidiary under Meiji Holdings
Specialty pharma focusing on fields including cancer, infectious disease, and central nervous system
SP-03: In-licensed marketing rights in Japan from Solasia
Lee's Pharmaceutical Holdings LimitedHolding company of pharmaceuticals group, listed on Hong Kong market
Markets 14 drugs in fields of anticancer, circulatory disease, and infectious disease Holds over 30 development pipelines based on in-house R&D and technologies in-licensed from pharmaceutical companies in Europe, US, and Japan
SP-01: In-licensed marketing rights in China (excluding three major cities) from Solasia
SP-03: In-licensed marketing rights in China (excluding three major cities), Hong Kong, and Macao from Solasia
Itochu CorporationSolasia's largest shareholder. A general trading firm with a presence in China through various businesses
Acts as Solasia's import agent in China (excluding Hong Kong and Macao); sells to pharmaceutical wholesalers in China and Lee's Pharmaceutical (marketing handled by Solasia's subsidiary and Lee's Pharmaceutical)
Distribution channel in areas covered by Solasia's sales force: Solasia → Itochu group → secondary wholesalers → hospitals and clinics
Distribution channel in other area: Solasia → Itochu group → Lee's Pharmaceutical → secondary wholesalers → hospitals and clinics
Maruho Co., Ltd.Pharmaceuticals company headquartered in Kita-ku, Osaka; engaged in research, development, manufacture and sales of prescription drugs
Established in 1915; consolidated sales JPY87.0mn in FY09/21
Has strength in dermatology
SP-04: In-licensed marketing rights in Japan from Solasia
Nippon KayakuA general chemical manufacturer; founded in 1916 as the Japan's first manufacturer of industrial explosives
The pharmaceutical business, which accounts for about 30% of revenue, was formerly a pharmaceutical company that merged in 1943.
Has strengths in anticancer drugs and cancer-related formulations.
SP-02: In-licensed marketing rights in Japan from Solasia
Source: Shared Research based on company data

Product development pipeline

Product development pipeline

Solasia Pharma currently has five products in its pipeline. Sancuso® (development code SP-01) is a transdermal system for delivering a 5-HT3 receptor antagonist indicated for chemotherapy-induced nausea and vomiting. Episil® oral liquid (SP-03) is a medical device intended for alleviating pain from oral mucositis caused by chemotherapy and radiotherapy. SP-02 (international generic name: darinaparsin) is a chemotherapy drug to treat peripheral T-cell lymphoma (PTCL), a potential indication for which few drugs have been approved. In November 2017, the company announced the in-licensing of SP-04, an active ingredient potentially indicated for cancer chemotherapy-induced peripheral neuropathy (CIPN). In August 2020, company announced the in-licensing of SP-05, whose target indication is to enhance the anti-tumor effect of fluorouracil.

Product development pipeline originator and development status
Development code: NameIndication/effectRegionProgressPartner
SP-01: Sancuso®Nausea, vomiting (CINV)ChinaLaunched in 2019In-house sales (Beijing, Shanghai, Guangzhou), Lee’s Pharma (other areas in China)
SP-03: episil® oral liquidAlleviating pain associated with oral mucositis (medical device) JapanLaunched in 2018Meiji Seika Pharma (Japan)
ChinaLaunched in 2019In-house sales (Beijing, Shanghai, Guangzhou), Lee’s Pharma (other areas in China)
South KoreaLaunched in 2020Synex (South Korea)
Development code: NameTarget diseaseRegionProgressPartner
SP-02: darinaparsinPeripheral T-cell lymphoma (PTCL) JapanSubmitted NDANippon Kayaku (Japan)
Korea, Taiwan, Hong KongPhase II pivotal study completed: primary endpoint achieved, preparing for NDA filingHB Human BioScience (South America)
ChinaPhase II/III in preparation
USPhase IIa completed
EuropePhase II/III in preparation
SP-04: PledOx®Peripheral neuropathy (CIPN)JapanNon-clinical study in progress*  (in taxane-induced peripheral neuropathy) *Phase II study in oxaliplatin-induced peripheral neuropathy closed: primary endpoint was not metMaruho (Japan)
SP-05: arfolitixorinColorectal cancerJapanGlobal Phase III study in progress: completed patient enrollment
Development candidates
Drug discovery using RNA editing technology (for gene therapy in oncology) Using EditForce’s pentatricopeptide repeat (PPR) protein platform technology, Solasia is carrying out multiple projects (varying by target disease, target gene sequence, mechanism of action) based on RNA editing in the field of oncology.Co-development partner: EditForce
Peritoneal metastases treatment (nucleic acid drug) Carries out R&D of nucleic acid drug candidate RECQL1-siRNA expected to be used for treatment of peritoneal metastases (disseminated metastases developing in the peritoneum) of gastrointestinal cancer and ovarian cancer and related malignant ascitesGeneCare Research Institute
Source: Shared Research based on company data (as of February 2022)

SP-01 (transdermal drug delivering 5-HT3 receptor antagonists; brand name: Sancuso® in China, US, Europe, and other regions)


NameDevelopment code: SP-01; generic name: granisetron; brand name: Sancuso®
IndicationControl nausea and vomiting caused by chemotherapy drugs
In-licensed fromStrakan International S.A. (a ProStrakan group company in UK; now a consolidated subsidiary of Kyowa Kirin)
Dosage formPatch
DescriptionA patch that gradually releases granisetron, a 5-HT3 receptor antagonist recommended in guidelines, for up to seven days. Expected to simplify treatment in comparison with existing drug forms such as intravenous injection
Existing drugs in ChinaPalonosetron (injection), other
Marketing tie-upSolasia Pharma's own sales; Lee's Pharmaceutical
Source: Shared Research based on Solasia Pharma’s annual securities report (as of end May 2019)

SP-01, branded Sancuso®, is intended for reducing nausea and vomiting induced by chemotherapy (chemotherapy-induced nausea and vomiting, or CINV). As oral administration is challenging for patients with these symptoms, SP-01 is the world’s only extended-release transdermal patch that can be used for outpatient treatment. Sancuso® is prescribed as standard therapy in the US and China. 

Indication: Chemotherapy-induced nausea and vomiting due to agents that are moderately or highly emetic 

Patients may experience acute nausea and vomiting within 24 hours of chemotherapy, with delayed symptoms continuing after this time. Moderately emetic agents have 30–90% frequency of emesis, while highly emetic agents have more than 90% frequency. 

A typical chemotherapy approach involves treatment cycles: anti-cancer drug administration followed by a period of rest (wash out period). Administration methods differ by type of cancer, whether it is initial or recurrent, whether it is pre- or post-operative, and by country. These approaches are summarized in treatment guidelines provided by supervising academic societies. Treatment varies from one-time to ongoing administration. Doctors may take antiemetic measures for patients who experience acute nausea and vomiting, but to treat prolonged side effects patients must return to the hospital. If symptoms worsen, therapy may be interrupted. 

After obtaining approval for SP-01 as a drug to control nausea and vomiting resulting from chemotherapy, the company is looking to expand the indication of SP-01 to include the control of these side effects from cancer radiotherapy. 

Current therapeutic methods and existing drugs: Injectable and oral drugs exist, but are inconvenient

The mechanism that prompts nausea and vomiting is thought to involve direct stimulation of a vomiting center in the brain or of the vagus nerve in the digestive tract. A number of substances stimulate the vomiting center, including a 5-HT3 receptor-binding substance (serotonin) and Substance P (activates NK1 receptors), which are in the main drugs currently in use. 

Mechanism of chemotherapy-induced nausea and vomiting
Source: Page on vomiting in “Guidelines for Diagnosing Vomiting,” Japan Society of Clinical Oncology website
Mechanism of action: Patch for the extended release of 5-HT3 receptor antagonist

SP-01 is a patch (2.5 x 3 inches, 1 inch = 25.4mm) that can be affixed to the upper arm. SP-01 contains granisetron, a 5-HT3 receptor antagonist. The patch is designed to continue releasing granisetron after being affixed to the skin, providing a steady concentration into the bloodstream for five to seven days. Attaching SP-01 onto the skin before chemotherapy prevents the need for patients to visit the hospital except when receiving chemotherapy. The company explains that SP-01, a patch, is a better solution than other drug delivery options, as oral administration may be difficult due to oral mucositis that may occur as a chemotherapy side effect, and in case of injections, patients need to visit the hospital to receive treatment. 

How to use Sancuso®
Source: Sancuso® marketing website

In the US, a guideline by the National Comprehensive Cancer Network (NCCN), which establishes treatment guidelines, recommends prescribing SP-01. SP-01 is also recommended in cancer treatment guidelines in China, where the product was launched in March 2019. In June 2019 (three months after launch), the product was listed as a standard treatment for chemotherapy-induced nausea and vomiting [CINV] in the “Guidelines of prevention and treatment of nausea and vomiting caused by anti-tumor therapies” published for the first time by the Chinese Society of Clinical Oncology (CSCO), the largest and most prestigious medical society in the cancer field in China.

Development background and monetization method

SP-01 (Sancuso®) was developed by ProStrakan Group plc of the UK (then listed in London, now a subsidiary of Kyowa Hakko Kirin and named Kyowa Kirin International plc.). In September 2008, Sancuso® obtained approval from the US Food and Drug Administration (FDA). (Note, the company entered an in-licensing agreement for this drug in May 2008, shortly before the approval was granted.) In addition to the US, Sancuso® has been launched in Europe (including the UK, Germany, and Italy), the Middle East (including Kuwait, the UAE, and Saudi Arabia) and parts of Asia (including South Korea, Taiwan, and Hong Kong). 

Solasia Pharma signed an agreement to obtain exclusive development and sales rights from Sancuso® for Japan, China, and other parts of Asia in May 2008, before Sancuso® obtained its first approval from the FDA. The company then out-licensed development and sales rights in Taiwan, Hong Kong, and other countries and territories to Kyowa Kirin. Solasia Pharma gave up its development and sales rights in Japan, recognizing it would be difficult to conduct clinical trials on the scale required after evaluating detailed development plans, given its financial condition at the time. The company decided to focus on development and sales in China instead. 

In China, between 2013 and 2014, the Solasia Pharma Group conducted pharmacokinetic trials (Phase I clinical trials, which examine the body’s absorption, distribution, metabolism, and excretion of a drug) and double-blind randomized trials (Phase III clinical trials, in which therapeutic effects are evaluated in trials in which the doctor does not know whether the trial drug or a comparative drug is being administered). In June 2014, the company applied to China’s regulatory authorities for approval, and obtained approval in July 2018. In March 2019 the company launched Sancuso® as its first product in China.

The Solasia Pharma Group plans to sell SP-01 on its own in the three major Chinese cities (Beijing, Shanghai, and Guangzhou). Outside these cities, the group intends to out-license sales to Lee’s Pharmaceutical and receive product sales revenue. In China, the market for 5-HT3 receptor antagonists is worth more than JPY80bn (injections account for 95%, according to Solasia), and as the only transdermal option offering sustained efficacy, Sancuso® has the potential to ease the burden on patients, including hospital visits. 

SP-02 (anti-cancer agent with the new MOA of targeting mitochondria in cancer cells)


Description
NameDevelopment code: SP-02; generic name: darinaparsin
Expected indicationsPeripheral T cell Lymphoma, a hematologic cancer
In-licensed fromZIOPHARM Oncology, Inc. (US-based biotech venture)
Dosage formInjection
DescriptionDarinaparsin is a small-molecule organoarsenic compound with potential antitumor activity, expected to have curative effects through apoptosis induction targeting mitochondria in cancer cells. Has relatively minor side effects and lower toxicity compared to inorganic arsenic formulations, carrying potential for expanding indications to a wide range of cancer types
Existing drugs in JapanPralatrexate (injection; Mundipharma K.K.), romidepsin (injection; Celgene Corporation), forodesine hydrochloride (capsule; Mundipharma K.K.), denileukin diftitox (injection; Eisai Co., Ltd.)
Marketing tie-upOut-licensed marketing and other rights to Nippon Kayaku in Japan and to HB in Latin America; out-licensing in other countries under consideration
Source: Shared Research based on Solasia Pharma’s annual securities report (as of August 31, 2021)

Solasia Pharma in-licensed SP-02 (international generic name: darinaparsin) from US biotech venture ZIOPHARM Oncology, Inc. (Nasdaq: ZIOP). SP-02 is a low-molecular-weight compound (organoarsenic) that exhibits the novel mechanism of action (MOA) of directly targeting the mitochondria of cancer cells. Solasia Pharma in-licensed the compound’s development and sales rights in March 2011, after the results of overseas clinical trials indicated effectiveness with hematologic and solid cancers.

Expected indication: Refractory hematologic cancers, expect line-expansion 

SP-02 is currently undergoing clinical development for the initial indication of relapsed or refractory peripheral T-cell lymphoma (PTCL), a type of hematologic cancer. There are three main classes of hematologic cancer: malignant lymphoma, leukemia, and multiple myeloma. In Japan, these three classes of hematologic cancers affect around 58,000 people each year, accounting for 7% of all instances of cancer. Malignant lymphoma is the largest of these, accounting for around 36,000 cases (in 2020, according to National Cancer Center Japan estimates). Although fewer people contract hematologic cancers compared to breast or prostate cancers, mortality rates are about the same. Cases of malignant lymphoma area also increasing. 

Forecast of cancer incidence rates (2021; thousands of people)
SiteIncidence (A)% of totalDeaths (B)% of totalMortality rate (B/A)
All cancers1,009.8100.0%378.5100.0%37.5%
Colon/rectum156.715.5%53.814.2%34.3%
Stomach130.512.9%42.011.1%32.2%
Lung, trachea127.412.6%75.019.8%58.9%
Breast (women)95.09.4%15.74.1%16.5%
Prostate95.49.4%12.93.4%13.5%
Liver39.83.9%23.96.3%60.1%
Pancreas44.04.4%37.69.9%85.5%
Malignant lymphoma36.83.6%13.43.5%36.4%
Kidney and other urinary organs (excl. bladder)30.63.0%9.92.6%32.4%
Skin25.42.5%1.80.5%7.1%
Uterus28.62.8%7.11.9%24.8%
Gallbladder and bile ducts23.42.3%18.14.8%77.4%
Oral cavity and pharynx23.02.3%7.92.1%34.3%
Esophagus26.62.6%11.12.9%41.7%
Bladder24.32.4%9.72.6%39.9%
Thyroid18.61.8%1.80.5%9.7%
Leukemia14.61.4%8.72.3%59.6%
Ovary13.11.3%4.71.2%35.9%
Multiple myeloma8.00.8%4.41.2%55.0%
Brain, nervous system6.00.6%3.10.8%51.7%
Larynx5.30.5%0.80.2%15.1%
Sum for three types of hematologic cancer59.45.9%26.57.0%44.6%
Source: Shared Research based on forecasts of cancer statistics by the National Cancer Center Japan
Incidences of hematologic cancer
Source: Shared Research based on nationwide estimates by the National Cancer Center Japan’s Center for Cancer Control and Information Services 

Peripheral T-cell lymphoma (PTCL) is a type of malignant lymphoma in which cancer cells invade the thymus, which produces lymphocytes (a type of white blood cell) known as T-cells, which then spread to the peripheral organs. PTCL is a rare cancer with few patients (designated as a rare cancer and accounting for 10–15% of malignant lymphomas, according to the National Cancer Center Japan’s Center for Cancer Control and Information Services) whose post-treatment progress is less favorable than for B-cell lymphoma (in which lymphocytes known as B-cells become cancerous). The five-year survival rate for PTCL (rate of survival five years after diagnosis or start of treatment) is reportedly around 25%.

Classes of hematologic cancer 
Source: Shared Research based on Solasia Pharma’s annual securities report
Current therapeutic methods and existing drugs: Few drugs exist, side effects strong 

Numerous therapeutic medications exist for malignant lymphoma, but until March 2017, no drugs had indications for PTCL. Treatment guidelines in the US, Europe, and Japan recommended a multidrug combination chemotherapy regimen including CHOP* (using anti-cancer agents cyclophosphamide, hydroxydaunorubicin, oncovin, and the adrenal cortex hormone prednisone) and other combination therapies as initial therapy for first-time PTCL. However, for secondary therapy for relapsed or refractory PTCL, guidelines list clinical trials along with administration of Difolta and Istodax.

*CHOP therapy: Cyclophosphamide is an injection (intravenous drip) that works by attaching to the DNA of cancer cells and halting cell growth or killing the cells. Doxorubicin is an injection (intravenous drip) that enters between cancer cell DNA to prevent cancer cells from growing or killing the cells. Vincristine, a type of plant alkaloid, is an injection (intravenous injection) aimed at preventing cancer cell proliferation and killing the cells by inhibiting the binding of proteins in microtubules (constituents of cancer cells that are necessary for their cell division). Prednisone is pill formulation with the same constituents as an adrenal cortex hormone (steroid) produced in the body. It is used as an anticancer agent, due to its lymphocytotoxicity, as well as an antiemetic. For a one-course, three-week treatment schedule, a vincristine injection and IV drips of doxorubicin and cyclophosphamide are administered on the first day, prednisone is taken internally for five consecutive days, and the sixth through 21st days are rest days. With CHOP therapy, this series of events is repeated multiple times to obtain treatment outcomes, depending on the type of cancer and state of progress. (Excerpted “An Initiation to CHOP Therapy,” supervised by the National Cancer Center Hospital) 

Drugs indicated for treatment of relapsed or refractory peripheral T-cell lymphoma were not available in Japan until 2017, but the following four drugs were launched subsequently. In the US, three drugs have been approved in the US (Beleodaq [generic name: belinostat], instead of Mundesine), but none have yet to be approved in Europe. Each has considerable side effects. 

DIFOLTA (Generic name: pralatrexate, but sold as FOLOTYN in US, approved by the FDA in September 2009. Sold by NASDAQ-listed Spectrum Pharmaceuticals, Inc., and developed by subsidiary Allos Therapeutics, Inc. Outside North America, developed by Mundipharma International Corporation Limited. Intravenous injection.) DNA synthesis occurs as cancer cells proliferate; this therapeutic medication stops this activity by inhibiting the synthesis of folic acid (inhibiting folate metabolism), one of the materials required for DNA synthesis. The main side effects are oral mucositis (incidence rate of 66.7%), thrombocytopenia (39.6%), anemia (32.4%), and neutropenia (24.3%).

ISTODAX (Generic name: romidepsin, injection, sold by NASDAQ-listed biotech venture Celgene Corporation, developed by subsidiary Gloucester Pharmaceuticals, Inc.) An anti-cancer agent that works by inhibiting target molecules of histone deacetylase (HDAC), suppressing the proliferation of cancer cells that possess abnormal genetic information (epigenome*). The main side effects are thrombocytopenia (incidence rate of 97.9%), lymphopenia (83.3%), leukopenia (81.3%), and neutropenia (81.3%).

Mundesine (Generic name: forodesine, in-licensed by Mundipharma K.K., Mundipharma’s Japanese entity, from BioCryst Pharmaceuticals, Inc. of the US. Approved first in Japan for oral dosage in March 2017). As the number of trial cases in Japan was extremely low, outcome surveys for all cases had to be submitted as a condition for approval. The mechanism of action is to inhibit purine nucleoside phosphorylase (PNP), leading to cancer cell apoptosis (cell death that occurs in multicellular organisms to maintain the organism in good condition). The main side effects are lymphopenia (incidence rate of 97.9%), leukopenia (60.4%), anemia (35.4%), and neutropenia (33.3%).

Remitoro (generic name: denileukin diftitox, injection, approved in March 2021, marketed by Eisai Co., Ltd.). As the number of trial cases in Japan was extremely low, outcome surveys for all cases will be conducted as a condition for approval. The mechanism of action is that denileukin diftitox binds to the IL-2 receptor expressed on the cell membrane of tumor cells, and after being taken up into the cells, the DT is cleaved, and the released DT (enzyme active site) inhibits protein synthesis, thereby suppressing tumor growth. Major side effects include increased AST (incidence 89.2%), increased ALT (86.5%), lymphopenia (70.3%), and hypoalbuminemia (62.2%).

At an international conference in Switzerland on malignant lymphoma held in June 2017, Spectrum Pharmaceuticals reported positive results: a 71% response rate for PTCL in small-scale clinical trials using the drug in combination with FOLOTYN and ISTODAX.

*Epigenome: Genomes contain information of a body’s DNA base sequences, and epigenomes control the genome. Epigenetics is gene regulation whereby cell traits are modified without changing the genome. One interpretation is that iPS cells are generated by rewriting the epigenome. The epigenome is based on control information such as DNA methylation and histone acetylation (histone proteins act to package DNA). Cancer cells are thought to have abnormal epigenetic information. HDAC inhibitors are thought to suppress cancer gene proliferation by stopping the replication of abnormal epigenome information.

Mechanism of action: Treating cancer on multiple fronts, such as attacking mitochondria within cancer cells

SP-02 (darinaparsin) is an organoarsenic (a low-molecular-weight arsenic compound containing carbon). An arsenic trioxide formulation of an inorganic arsenic compound (launched in December 2004 by Nippon Shinyaku Co., Ltd. [TSE1: 4516] as Trisenox, in-licensed from Cell Therapeutics, Inc. of the US) has as its indication recurrent and refractory acute promyelocytic leukemia. However, the drug has serious adverse effects, including prolonged electrocardiogram QT, arrhythmia, hepatic dysfunction, and leucopenia. Solasia Pharma explains that SP-02 has the same structure as the intermediate metabolites, creating the expectation that it will be much safer than inorganic arsenic compounds, expanding its therapeutic range. 

SP-02 is a low-molecular-weight compound that is thought to have new mechanisms of action (MOA), as follows. 

Directly damage the mitochondria (energy-producing organelles) that produce energy in cancer cells

Damage cancer cells by increasing their reactive oxygen species, or ROS (believed to damage cellular DNA)

Lead to cancer cell apoptosis by introducing caspases (a type of proteolytic enzyme that helps transmit information that leads to cell apoptosis). In addition to indirectly inducing cell apoptosis by damaging the mitochondria of cancer cells, it is also supposed to directly induce apoptosis by binding with death receptors (receptors of neurotransmitters that activate caspases) present on the surface of cancer cells 

Whereas current drugs are highly likely to cause side effects, such as bone marrow suppression and oral mucositis, the side effects associated with SP-02 in clinical trials to date have been relatively minor. As such, Solasia Pharma believes that SP-02 might be able to take market share as an alternative to existing drugs or for use in combination therapies.

SP-02’s mechanism of action (MOA)
Source: Solasia Pharma’s company presentation materials, used with permission
Development background and monetization method

ZIOPHARM Oncology, the licensor of SP-02 (darinaparsin) has closed Phase II clinical trials in the US and India for SP-02 as an injection targeting malignant lymphomas, including PTCL. In March 2011, Solasia Pharma signed a collaboration agreement on development and sales in the Asia Pacific region (lump-sum contract payment of USD5mn). When ZIOPHARM Oncology later revised its development pipeline to concentrate on projects other than low-molecular-weight compounds, Solasia Pharma’s exclusive development and sales rights were expanded to cover regions all over the world, including the US. 

In 2015, Solasia Pharma closed a Phase I clinical trial on 23 PTCL patients. Out of 14 valid cases, four were successful (complete response or partial response) and six were stable (with tumor reduction in five cases). 

Result of Phase I clinical trials
Effect (tumor size)CasesDisease categories
Complete response1PTCL-NOS (1)
Partial response (over 50% lesion reduction)3PTCL-NOS (3)
Stable disease (-50%~+50%)6PTCL-NOS (4), two others (1 each) (five cases saw reduction below 50%)
Progressive disease (over 50% increase)4PTCL-NOS (2), AITL (2)
Recurrence0-
Source: Shared Research based on Solasia Pharma’s annual securities report

Solasia Pharma is moving forward with global clinical trials (Phase II) in Japan, South Korea, Taiwan, and Hong Kong. The company published the study results in June 2020. The company filed for approval in Japan in June 2021 ahead of the rest of the world, as the trial met the primary endpoint (antitumor efficacy, best overall response) and there were no safety concerns. Moving forward, the company plans to initiate a clinical trial in China (Phase II/III). 

In January 2015, the company entered an exclusive out-licensing agreement for development and marketing of SP-02 with Meiji Seika Pharma. In October 2021, the company terminated the agreement and entered a new licensing agreement with Nippon Kayaku for the rights to commercialize SP-02 in Japan (granting exclusive sales rights in Japan). The company will receive an upfront payment and milestone payments of up to JPY7.7bn based on the progress of product development and sales. The company will earn revenue from the SP-02 business in Japan as the product supplier after launch.

In August 2018, Solasia Pharma entered into an exclusive out-licensing agreement with HB Human BioScience SAS (headquartered in Bogota, Colombia) for the marketing of SP-02 in Latin America (Colombia, Peru, Ecuador, Venezuela, Chile, Panama, Costa Rica, and Guatemala). In other regions (the US, Europe, China, and South Korea), the company plans to monetize the product by out-licensing sales to different pharmaceutical companies in each region. However, Shared Research believes that Solasia Pharma plans to retain sales rights for China’s three principal cities (selling on its own), similar to the two products already launched.

SP-03 (medical device for alleviating pain associated with oral mucositis resulting from cancer treatment among other causes; brand name: episil® oral liquid in Japan and China)

Description
NameDevelopment code: SP-03; brand name: episil® oral liquid (medical device)
Indication for useControl and relief of pain associated with mucositis caused by chemotherapy and radiotherapy through physical protection
In-licensed fromCamurus AB (Sweden)
Dosage formLiquid (press pump and coat the oral cavity)
DescriptionNonabsorbable liquid made of soy lecithin, fatty acid esters, ethanol, and others. A small amount forms a barrier over inflammatory areas in the oral cavity and relieve pain from mucositis. The protective film forms within a few minutes, and lasts for approximately eight hours, making it possible to keep the oral condition favorable by using episil 2–3 times per day
Existing drugsGargle (sodium gualenate hydrate), gargle with local anesthetic such as Lidocain, non-steroidal anti-inflammatory drug
Marketing tie-upOut-licensed to Meiji Seika Pharma in Japan; marketed in China by Solasia and through joint marketing with Lee's Pharmaceutical; out-licensed to Synex in South Korea
Source: Shared Research based on Solasia Pharma’s annual securities report (as of end February 2020)

Solasia Pharma in-licensed SP-03 (brand name: episil® oral liquid) from Swedish biotech venture Camurus AB (Stockholm Stock Exchange: CAMX). SP-03 is a bio-adhesive oral liquid (developed as a medical device, not a drug) intended for the treatment of pain associated with oral mucositis caused by chemotherapy and radiotherapy for the treatment of cancer and other diseases. 

Indication for use: management of, and relief (through physical action) from pain associated with oral mucositis caused by chemotherapy and radiotherapy
As a side effect of cancer treatment among other causes, oral mucositis occurs as a direct result of chemotherapy or as a result of bacterial infection when the body’s resistance is low due to chemotherapy or radiotherapy. According to the overseas marketing website for episil® (https://www.episil.net/), oral mucositis occurs in 30–75% of cancer patients receiving chemotherapy, and nearly all patients being treated for head and neck cancers (undergoing combination therapy of radiotherapy and chemotherapy). Symptoms of oral mucositis include pain from contact, bleeding, enlargement of the oral mucous membranes, and difficulty in swallowing. In some cases, sufferers also have difficulty speaking. 

 Occurrence of oral mucositis during administration of anti-cancer agents 
Anticancer drugs administeredExpression frequency of oral mucositis
Normal administration of anticancer drugs30–40%
Hematopoietic stem cell transplantation (high dose of anticancer drugs)70–90%
Anticancer drugs with radiotherapy to head and neckNearly 100%
Source: Shared Research based on “Response Manual by Serious Patient Side Effect: Oral Mucositis from Anti-Cancer Agents,” Ministry of Health, Labour and Welfare 
Current therapeutic methods and existing drugs: No established therapeutic method

There is currently no standard therapy for oral mucositis that occurs as a result of cancer chemotherapy and radiotherapy approved in Japan. Currently, to prevent secondary infections and keep symptoms from worsening, gargling (with mouthwashes containing azulen sodium sulfonate hydrate) is recommended. For moderate to severe mucositis, topical anesthetic or anti-inflammatory analgesic is administered. Other alternatives include collagen angiogenesis or irradiation with low-output lasers to improve blood flow and promote blood vessel angiogenesis.

Mechanism of action: relieve pain of oral mucositis by forming a bio-adhesive gel inside the oral cavity

SP-03 (episil® oral liquid) is a non-absorbent oral liquid comprising soy lecithin (a major constituent of biological membranes extracted from soybeans), fatty acid ester (a food emulsifying agent), and ethanol. When administered in drop form, it forms a bio-adhesive lipid barrier on the oral mucositis, forming a physical barrier on inflamed areas and alleviating oral pain when speaking and eating. SP-03 is quick-acting; one to three drops form a coating gel in several minutes. Clinical trials of SP-03 have demonstrated that effects last for up to eight hours. As it contains no medicinal ingredients and thus is not categorized as a drug, the occurrence of side effects is recognized as low. The product is developed on the basis of Camurus’ patented FluidCrystal® technology. 

episil® oral liquid
Source: Company material (image of the product sold in Japan) 
Development background and monetization method

When Solasia Pharma in-licensed SP-03 (episil® oral liquid), it was already being sold in Europe and the US (approval has been steadily obtained in various countries since 2009). Being a medical device that has little effect on the human body, episil® has following designations in each region and country based on pharmaceutical regulations: in Europe, as a class 1 medical device, in the same class as scalpels and tweezers; in the US as a 510(k) generic medical device that does not require clinical trials; and in Japan, as a controlled medical device (class II). Solasia Pharma in-licensed SP-03 in March 2015 and continued development based on Camurus’s clinical trial data. The company applied for manufacturing and sales approval in China in May 2016 and in Japan in October 2016. It obtained approval for SP-03 in Japan in July 2017. SP-03 was listed on the NHI reimbursement price list in April 2018 and launched in May the same year. It obtained approval in China in February 2019, and was launched in July of the same year. Further, in August 2018, the company concluded an exclusive in-licensing agreement regarding the use of development and marketing rights of the drug in South Korea, and obtained approval in October. In September 2020, the product was launched in South Korea.

Solasia Pharma has out-licensed commercialization rights for SP-03 in Japan to Meiji Seika Pharma in November 2016, and expects to book revenue and receive tiered royalties from supplying the product. In China, the company plans to sell SP-03 independently in three principal cities. For other areas in China, it has out-licensed sales rights to Lee’s Pharmaceutical, for which it expects to earn revenues. In South Korea, the company plans to earn revenues by out-licensing SP-03 to Synex.

SP-04 (drug potentially indicated for chemotherapy-induced peripheral neuropathy, brand name: PledOx®)

Description
NameDevelopment code: SP-04; brand name: PledOx® (calmangafodipir)
Expected indicationsChemotherapy Induced Peripheral Neuropathy (CIPN)
In-licensed fromEgetis Therapeutics AB (Sweden)
Dosage formInjection
DescriptionA new active ingredient with a higher effect and safety grade as a result of a structural modification of Mangafodipir, an MRI contrast agent approved in the US and Europe. The FOLFOX treatment, which uses a standard combination of anti-cancer drugs for adjuvant chemotherapy for patients with colorectal cancer (CRC), includes oxaliplatin, a platinum-containing drug. Most cases (85-95%) of patients with prescribed oxaliplatin cause peripheral neuropathy. As acute symptoms, there are dysesthesia in hands, feet, parts around lips, and others, and tightness of the pharynx and larynx accompanied by difficult breathing and dysphagia. As chronic symptoms, there are numbness, hypoesthesia, decrease in tendon reflexes, and sensory ataxia in peripheral limbs. There has been suspension of treatments or changes in treatment policies to improve these side effects
Existing drugsNo similar drug which is approved by the authorities for the indication of CIPN (source: Solasia Pharma)
Marketing tie-upOut-licensed to Maruho in Japan
Source: Shared Research based on Solasia Pharma’s annual securities report (as of end-June 2021)

SP-04 (brand name: PledOx®), a drug candidate in-licensed from the Swedish bio-venture Egetis Therapeutics AB (formerly PledPharma AB, Stockholm Stock Exchange: EGTX), has been under development for an expected indication of chemotherapy-induced peripheral neuropathy.

Expected indication: Chemotherapy-induced peripheral neuropathy (CIPN)

Among treatments for patients with colorectal cancer (CRC), FOLFOX is a representative combination of anti-cancer drugs for chemotherapy (to treat advanced and recurrent CRC, for which surgery is difficult to be conducted) and adjuvant chemotherapy after surgery. In FOLFOX, which includes oxaliplatin, a platinum-containing drug, most cases (85–95%) with prescribed oxaliplatin cause peripheral neuropathy including the following symptoms.

Acute symptoms: dysesthesia in hands, feet, parts around lips, and others, and tightness of the pharynx and larynx accompanied by difficult breathing and dysphagia
Chronic symptoms: numbness, hypoesthesia, decrease in tendon reflexes, and sensory ataxia in peripheral limbs 

There have been significant cases of peripheral neuropathy by using major drugs in cancer chemotherapy, such as plant alkaloid and platinum-containing drugs. In cases where these side effects occur, suspension of the administration of the drugs is in 80% of the cases the side effects partially recover by halting treatment, and in 40% of the cases lead to full recovery in six to eight months.

Current treatment and existing drug: There is no pharmaceutical with an indication for chemotherapy-induced peripheral neuropathy (CIPN)

There is no approved pharmaceutical with an indication for CIPN with various symptoms, and drugs for neuropathic pains, such as Pregabalin, are being used in practice. Therefore, suspension of the prescription of oxaliplatin may be required for improvement or recovery from CIPN. However, the suspension may cause the interruption of cancer chemotherapy or changes in the treatment policies, and is a critical issue in medical treatments. 

General peripheral neuropathy is believed to be caused by deformed myelin sheaths and axonal degeneration as illustrated below, but the cause for CIPN is yet to be discovered. 

Assumed cause of general peripheral neuropathy
Source: Shared Research based on company data
Mechanism of action: decomposition and removal of active oxygen that damages nerve cells

SP-04 (calmangafodipir, brand name: PledOx®) is a mimetic of a superoxide dismutase (SOD, an enzyme that decomposes active oxygen expressed in cells) containing manganese and is a strong iron chelator. The drug was created by a structural modification of Mangafodipir, an MRI contrast agent with anti-oxidative stress effects, for which sales was approved in the US and Europe but discontinued due to business reasons. The modification enabled the agent to accumulate manganese effectively and show higher effects and a higher grade of safety. Egetis has obtained an international composition of matter patent for calmangafodipir.

PledOx®(calmangafodipir)
PledOx®(calmangafodipir)
History of development and policy toward commercialization

When Solasia Pharma signed the in-licensing agreement on SP-04 (PledOx®), Egetis, the licensor, had already been conducting clinical trials for the drug. Below is an outline of the Phase IIb clinical trials (PLIANT Study), a trial of FOLFOX and PledOx® compared to FOLFOX and placebo, in the US and Europe.

Patients’ report indicated statistically significant decrease in symptoms of chronic CIPN after FOLFOX treatment

No negative effect on the efficacy of the FOLFOX treatment

Doctors’ report indicated lower frequency, and less symptoms, and duration of serious CIPN (grade 2 or above) 

No difference in serious adverse events between the treatment group with PledOx and that with placebo

Based on these results, Egetis has agreed with the FDA and European Medicines Agency on the global Phase III clinical trials for PledOx® and announced plans to begin patient enrollment in 2H 2018 (July–December). Egetis announced that it had begun global Phase III clinical trials in November 2018. Solasia Pharma considered joining the global Phase III clinical trials in Japan, South Korea, Taiwan, and Hong Kong, led by Egetis subject to regulatory consultations. Following consultation with PMDA in June 2018, it decided to join the global Phase III clinical trials led by Egetis, which commenced in December 2018. This trial consists of the POLAR-A study and POLAR-M study. Patient enrollment for the POLAR-A study was completed in December 2019, but in March 2020, the company and Egetis suspended patient enrollment and administration of the study drug for the global Phase III clinical trials to confirm patient safety, as ordered by the US authorities in January 2020 and French authorities in February 2020. In April 2020, the company decided on the early termination the study. In December 2020, the company released the preliminary results and announced that primary endpoints were not achieved. 

In May 2021, the company evaluated its comprehensive development policy of SP-04 based on the analysis results of the secondary endpoints in the global Phase III studies, and put on hold the development of SP-04 for the treatment of oxaliplatin-induced peripheral neuropathy. To explore feasibility of clinical development of SP-04 for the treatment of taxane-induced peripheral neuropathy, the company is currently conducting additional animal studies.

SP-05 (compound to enhance anti-tumor effect of anticancer drug fluorouracil; generic name: arfolitixorin)

NameDevelopment code: SP-05; generic name: arfolitixorin
Expected indicationsEnhancement of the anti-tumor effect of fluorouracil, an anticancer drug
In-licensed fromIsofol Medical AB (Sweden)
DescriptionClinical trials up to Phase II performed by Isofol suggest that arfolitixorin has the effect of enhancing the anti-tumor effect of fluorouracil in patients with advanced colorectal cancer
Existing drugsFolinate, levofolinate
Development stageIsofol has completed Phase II trials. In December 2018, Isofol began a global Phase III clinical trial (AGENT Study) in the US, Canada, Europe, Australia, and Japan. The primary endpoint is overall response rate (ORR), the proportion of patients who have a partial or complete objective tumor response to therapy. Target enrollment is 440–660 (an interim analysis will be performed in 330 cases, and the final target enrollment set based on analysis results). In March 2021, the company set the target enrollment at 440 based on the results of interim analysis. After signing the agreement with Isofol, the company took over clinical trials in Japan.
Marketing tie-upTBD
Source: Shared Research based on company data

On August 13, 2020, the company in-licensed exclusive rights to develop and commercialize an investigational new compound SP-05 (arfolitixorin) in Japan from Isofol Medical AB of Sweden. Solasia Pharma expects to pay Isofol up to JPY10.4bn in upfront and milestone payments as it progresses through development stages and achieves sales targets once development succeeds, as well as in investments in the development of SP-05. The company will pay Isofol tiered royalties on net sales.

The target indication of SP-05, an investigational new compound developed by Isofol, is to enhance the anti-tumor effect of fluorouracil, an existing anticancer drug used as standard therapy for various cancers including colorectal cancer. SP-05 is a key active metabolite of the widely used folate-based drugs and can potentially benefit many patients with advanced colorectal cancer, because it does not require complicated metabolic activation to become effective. In addition to colorectal cancer, SP-05 can potentially be effective in the treatment of pancreatic cancer, breast cancer, stomach cancer, and head and neck cancer.
Clinical trials up to Phase II performed by Isofol suggest that arfolitixorin has the effect of enhancing the anti-tumor effect of fluorouracil in patients with advanced colorectal cancer.  

In December 2018, licensor Isofol began global Phase III clinical trials (AGENT Study*) in the US, Canada, Europe, Australia, and Japan. After in-licensing SP-05, the company has taken over clinical trials in Japan and is developing the product in partnership with Isofol.

The primary endpoint is overall response rate (ORR)*. An interim analysis will be performed on data of 330 patients, and the final target sample size will be set based on the analysis results. In March 2021, the results of this interim analysis were announced. Base on the results, an independent data safety monitoring board (DSMB) recommended that the phase III clinical trial for SP-05 should continue with a target sample size of 440. After the company finished successfully recruiting a sufficient number of patients in Japan, patient enrollment for the entire global Phase III studies were completed in May 2021. Solasia Pharma plans to announce top-line results in the first half of 2022 and file for approval in the second half. It expects to conclude out-licensing agreements and receive upfront payments by end-FY12/22, because potential licensees likely prefer to confirm topline data from Phase III clinical trials before signing.

*AGENT Study: Multicenter, randomized, parallel-group Phase III study of patients with advanced colorectal cancer. Patients will receive 5-FU, oxaliplatin, and bevacizumab in combination with arfolitixorin (SP-05) or leucovorin and efficacy will be compared.
**Overall response rate (ORR): Proportion of patients who have a partial or complete objective tumor response to therapy
***Interim analysis: ARFOX treatment (SP-05 + 5-FU + oxaliplatin) + bevacizumab and mFOLFOX-6 treatment folinate ([leucovorin] + 5-FU + oxaliplatin) + bevacizumab will be compared for efficacy and significance assessed. Isofol had enrolled 330 patients as of July 2020, and released the results from interim analysis in Q1 FY12/21. 

SP-05 mechanism of action
Source: Shared Research based on company 1H FY12/20 briefing materials
Comparison of results from Phase I/IIa trial and existing therapies
TreatmentORR
5-fluorouracil/leucovorin20.0%
All-comersCapacitabine27.0%
Infusional 5-fluorouracil, l-leucovorin, oxaliplatin45.0%
Chemotherapy aloneInfusional 5-fluorouracil, l-leucovorin, irinetocan40.0%
Infusional 5-fluorouracil, arfolitixorin, oxaliplatin/58.0%*
Infusional 5-fluorouracil, arfolitixorin, irinetocan
All-comersInfusional 5-fluorouracil, l-leucovorin, oxaliplatin, bevacizumab52.0%
Chemotherapy + targeted therapiesInfusional 5-fluorouracil, l-leucovorin, irinetocan, bevacizumab53.0%
XELOX, bevacizumab50.0%
Note: *Response rate in Phase I/IIa trial
Source: Shared Research based on company 1H FY12/20 briefing materials 

Market and value chain

Growing global pharmaceutical market, stagnant Japanese market

In 2014, the global pharmaceutical market had a value of more than USD1tn and, as of 2017, a CAGR of 3.5% over the preceding five years (IQVIA World Review). Driving this growth is the US market, valued at USD465.0bn in 2017 and with CAGR of 7.4% over the same period. The US has become a center of new drug development, buoyed by mega pharma, a concentration of biotech ventures*, support by the National Institutes of Health (NIH)**, and substantial private-sector funding.