On March 26, 2020 CStone Pharmaceuticals ("CStone"; HKEX: 2616), a leading biopharmaceutical company focused on developing and commercializing innovative immuno-oncology (IO) therapies and molecularly-targeted precision medicines for the treatment of cancer, reported its audited annual financial results for the year ended December 31, 2019 (Press release, CStone Pharmaceauticals, MAR 26, 2020, View Source [SID1234555890]).
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"2019 was a transformational year for the company as we continued to advance the development of our IO and precision medicine products. Among the multiple critical milestones achieved, we initiated 9 new pivotal studies, for a total of 13 registration studies that are ongoing," said Dr. Frank Jiang, Chairman and Chief Executive Officer of CStone. "In 2019, we presented key data of our three IO backbone assets, which have demonstrated promising safety and efficacy profiles. In particular, CS1001 (anti-PD-L1), our lead IO monoclonal antibody showed efficacy in multiple tumor types, with especially outstanding activity in esophageal cancer and natural killer T-cell lymphoma ("NKTL"), indicating its potential to be a best-in-class drug candidate. We have also made major progress with our precision medicine portfolio, novel IO combinations, and other early phase programs. We have further enhanced our external partnership, including an IO combination collaboration with Bayer Healthcare LLC and a licensing partnership with Numab Therapeutics AG. In addition to the pipeline progress, we have entered into agreement for the construction of our own global R&D headquarters and manufacturing facility in Suzhou, laying the foundation for cutting-edge research and sustainable drug supply in the future. More importantly, we embarked on the journey of commercialization by having Ms. Shirley Zhao (MD, MBA) join us to lead and scale up a full-fledged commercial organization."
Looking forward, we expect to receive New Drug Application ("NDA") approval in Taiwan for TIBSOVO (ivosidenib) in relapsed/refractory acute myeloid leukemia ("R/R AML") this year. We will submit several NDAs / Biologics License Applications in China across multiple indications for our lead assets including CS1001, avapritinib and pralsetinib; and expect data readouts of seven critical clinical studies. We also aspire to establish a Pipeline 2.0 with more first-in-class/best-in-class therapies. Moreover, we anticipate to further scale up our commercialization in 2020 and drive successful launches of our lead assets in the coming years.
FINANCIAL HIGHLIGHTS
Non-International Financial Reporting Standards ("Non-IFRS") Measures:
The research and development expenses excluding the share-based payment expenses increased by RMB461.8 million from RMB726.9 million for the year ended December 31, 2018 to RMB1,188.7 million for the year ended December 31, 2019, primarily attributable to additional trials which increased clinical development costs.
The administrative expenses excluding the share-based payment expenses increased by RMB58.3 million from RMB79.3 million for the year ended December 31, 2018 to RMB137.6 million for the year ended December 31, 2019, primarily attributable to increase in employee costs.
The loss excluding the effect of the fair value changes of the conversion feature of preferred shares and share-based payment expenses increased by RMB468.7 million from RMB672.6 million for the year ended December 31, 2018 to RMB1,141.3 million for the year ended December 31, 2019, primarily due to increase in research and development expenses and administrative expenses, while partially offset by increase in interest income.
International Financial Reporting Standards ("IFRS") Numbers:
Other income increased by RMB63.5 million from RMB20.5 million for the year ended December 31, 2018 to RMB84.0 million for the year ended December 31, 2019, primarily attributable to increase in interest income from bank deposits and time deposits.
Other gains and losses decreased by RMB104.6 million from losses of RMB742.0 million for the year ended December 31, 2018 to losses of RMB637.4 million for the year ended December 31, 2019, primarily attributable to a narrowed loss on fair value changes of derivative financial liabilities, which was a non-cash, one-time adjustment upon the listing as required under the IFRS.
Research and development expenses increased by RMB545.4 million from RMB850.2 million for the year ended December 31, 2018 to RMB1,395.6 million for the year ended December 31, 2019, primarily attributable to additional trials which increased clinical development costs.
Administrative expenses increased by RMB150.5 million from RMB191.0 million for the year ended December 31, 2018 to RMB341.5 million for the year ended December 31, 2019, primarily attributable to increase in employee costs.
As a result of the above factors, the loss for the year increased by RMB515.3 million from RMB1,793.1 million for the year ended December 31, 2018 to RMB2,308.4 million for the year ended December 31, 2019, primarily due to increase in research and development expenses and administrative expenses, while partially offset by increase in interest income.
BUSINESS HIGHLIGHTS
On February 26, 2019 (the "Listing Date"), the Company was successfully listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). Over the past year, significant advancement has been made with respect to our product pipeline and business operations:
Late-stage assets:
CS1001 (PD-L1 antibody) – In 2019, we have made notable progress to advance our lead immuno-oncology ("IO") asset CS1001 in the clinic, qualifying it as a promising anti-PD-L1 with unique advantage and significant differentiation. Data presented at 3 major congresses (Chinese Society of Clinical Oncology ("CSCO"), European Society for Medical Oncology ("ESMO"), and The American Society of Hematology (ASH) (Free ASH Whitepaper) ("ASH") have demonstrated that CS1001 is safe and efficacious in multiple solid tumors and lymphomas, including esophageal, gastric, cholangiocarcinoma/ gall bladder, and microsatellite instability-high ("MSI-H")/mismatch repair deficient ("dMMR") cancer, as well as NKTL. Its outstanding activity in esophageal cancer and NKTL in particular reveals the potential of CS1001 as a best-in-class drug candidate. Based on these proof-of-concept data, we have initiated two additional registrational trials of CS1001 in China for patients with advanced gastric cancer and esophageal cancer, and dosed the first patient in April 2019 and December 2019, respectively. Together with the 4 initiated in 2018 (Stage III non- small cell lung cancer ("NSCLC"), stage IV NSCLC, NKTL and classical Hodgkin lymphoma ("cHL")), we are currently conducting 6 registrational trials for CS1001. We expect top-line results of the Phase III trial of CS1001 in combination with standard-of- care chemotherapies in patients with first-line Stage IV squamous or non-squamous NSCLC to be available in the second half of 2020. Furthermore, we plan to consult with Center for Drug Evaluation ("CDE") on our cHL and NKTL regulatory strategy and expect to submit an NDA in China for cHL and potentially also NKTL in the second half of 2020.
CS1003 (PD-1 antibody) – Preliminary data of the Phase Ia study of CS1003 monotherapy were presented at the CSCO 2019 annual meeting, which showed that CS1003 was safe and tolerable. Anti-tumor activity of CS1003 was observed in multiple tumor types. We have initiated a global Phase III trial of CS1003 in combination with LENVIMA (lenvatinib), a standard-of-care tyrosine kinase inhibitor ("TKI") in patients with advanced hepatocellular carcinoma ("HCC") and dosed the first patient in December 2019.
Ivosidenib (CS3010) – In May 2019, an NDA for the isocitrate dehydrogenase-1 inhibitor TIBSOVO (ivosidenib) has been submitted to the Taiwan Food and Drug Administration ("TFDA") for the treatment of adult patients with R/R AML containing an isocitrate dehydrogenase-1 mutation ("IDH1m"); marketing approval is expected in 2020. Two registrational trials in IDH1m AML are ongoing in China: one in IDH1m R/R AML, anticipating trial completion in 2020 and NDA submission in China by the first half of 2021; and another in newly diagnosed IDH1m AML patients who are not eligible for intensive therapy.
Avapritinib (CS3007) – On January 9, 2020, the KIT/PDGFRA inhibitor AYVAKITTM (avapritinib) received U.S. Food and Drug Administration ("U.S. FDA") approval for the treatment of adults with unresectable or metastatic gastrointestinal stromal tumor ("GIST") harboring a PDGFRA exon 18 mutation, including PDGFRA D842V mutations. As a result, we plan to submit an NDA in Taiwan in the first half of 2020 for this indication. Two registration trials for the avapritinib were initiated in China in patients with unresectable or metastatic GIST. One trial is a China pharmacokinetics bridging study for the indication of advanced GIST with a PDGFRA exon 18 mutation. We expect the top-line results from the trial to become available and to submit an NDA in China in the first half of 2020. Another trial is conducted in third-line GIST as part of a global Phase III trial comparing avapritinib with regorafenib. Enrollment has been completed for this study and top-line results from the global trial are expected to be available in the second quarter of 2020 with NDA submission in China in the second half of 2020.
Pralsetinib (CS3009) – As part of a global pivotal Phase I/II trial of pralsetinib, an investigational RET inhibitor, for the treatment of RET-altered NSCLC, medullary thyroid cancer ("MTC"), and other advanced solid tumors, we have completed enrollment in China for the cohort study for the indication of RET fusion-positive NSCLC as a second-line treatment and expect an NDA submission for this indication in China in the second half of 2020. Furthermore, we have initiated an additional registrational cohort for first-line RET fusion-positive NSCLC and expect to dose the first patient in the first half of 2020.
Early-stage assets:
Novel combinations－With combination therapy as a core strategy and the unique advantage of leveraging our 3 IO backbone agents (anti-PD-L1, anti-PD-1, and anti-CTLA4), a total of six combinations with assets from our internal pipeline and external partners are in development: i) CS1002 (CTLA-4 antibody) plus CS1003 (PD-1 antibody), with the first patient dosed in January 2020; ii) CS1001 with fisogatinib (CS3008; FGFR4 inhibitor) in HCC; iii) CS1001 with regorafenib; iv) CS1003 with regorafenib; all with first-patient- dosed achieved in December 2019; and two other combination studies planned, including v) CS1001 with a PARP inhibitor (IMP4297); and vi) CS1001 with a multi-kinase inhibitor (donafenib).
Other early-stage assets－We have also made significant headway on other early clinical- stage programs including CS3005 (A2aR antagonist), CS3002 (CDK4/6 inhibitor), CS3003 (HDAC6 inhibitor) and CS3006 (MEK inhibitor). In January 2020, we dosed the first patient for CS3002 and CS3005 in the respective phase I studies.
Business development and other key activities:
We have continued to enhance our value through external collaborations with global leading biotechs and biopharmaceutical companies.
– In May 2019, we entered into a global clinical collaboration with Bayer HealthCare LLC ("Bayer") to evaluate CS1001 in combination with Bayer’s oral multi-kinase inhibitor Stivarga (regorafenib) (targeting VEGFR, KIT, RET, BRAF, FGFR and CSF1R, etc.), as a treatment for multiple types of cancer including gastric cancer. In December 2019, the first patient was dosed in a Phase Ib trial of CS1001 in combination with regorafenib.
– In April 2019, we entered into an exclusive regional licensing agreement with Numab Therapeutics AG ("Numab") for the development and commercialization of NM21-1480 (ND021), a potential best-in-class monovalent, tri-specific antibody- based molecule targeting PD-L1, 4-1BB, and human serum albumin. The agreement provides us exclusive rights to develop and commercialize NM21-1480 in Greater China, South Korea and Singapore and can potentially provide us with access to Numab’s novel multi-specific technology platform.
Moving forward, we will focus on pursuing strategic partnership that will accelerate CStone value creation.
In March 2019, we appointed four internationally-renowned oncologists: Paul A. Bunn, Jr., MD, Elizabeth M. Jaffee, MD, Weiping Zou, MD, Ph.D. and Richard S. Finn, MD, as members of our Scientific Advisory Board. The addition of these four experts will considerably augment our public profile in the oncology field and provide valuable insights into our R&D strategies and processes.
In August 2019, we entered into an agreement (with a state-owned enterprise under the Suzhou Industrial Park) to build an approximately 100,000 square meters R&D center and manufacturing facility in the Suzhou Industrial Park for large and small molecule drug development and commercial production. We expect the construction of the facility to commence in the first half of 2020.
In October 2019, we entered into an agreement with Jiangsu Industrial Technology Research Institute (JITRI) and formed JITRI-CStone Innovation Center to further promote a two-way collaboration with industry partners and innovation centers in China and around the world.
In December 2019, Ms. Shirley Zhao, MD, MBA, joined us as the General Manager for Greater China and Head of Commercial to lead and scale up a full-fledged commercial organization. Ms. Zhao will be responsible for continuing to scale up the commercial team and infrastructure in preparation for multiple product launches in mainland China, Hong Kong and Taiwan over the next two years. Upon regulatory approval, we expect to launch ivosidenib by the end of 2020 and avapritinib in 2021 in Taiwan, and to launch avapritinib, pralsetinib and CS1001 (PD-L1 antibody) in 2021 in mainland China with well-established local operation.
Since the outbreak of the novel coronavirus ("COVID – 19"), the Company has adopted immediate measures to maintain effective and high-quality level of operation. We are proactively managing the progress of ongoing trials to ensure that study protocols are followed and no significant disruptions will affect delivery of the results. Also, we are actively supporting the nation’s battle against the coronavirus with a donation to Suzhou Charity Federation after the outbreak in Suzhou. We will make our best efforts to advance our development, aim to deliver data and launch our products within the expected timeline, while maintaining our commitment to our patients, employees and a broader community.
Conference Call Information
The Company will host a live conference call and webcast at 10AM HKT, March 27, 2020 to present its financial results for the year ended December 31, 2019. The conference call may be accessed by dialing 4001203170 (China Mainland), +852 30082034 (Hong Kong), +18455071610 (US) and +61 283733610 (International) and referring to conference ID / Passcode 8576303 / CStone. A webcast of the conference call will be available in the Investor Relations section of the Company’ website at View Source (Passcode : CStone).