On August 26, 2020 Concord Medical Services Holdings Limited ("Concord Medical" or the "Company") (NYSE: CCM), a healthcare provider specializing in cancer care, research and prevention by operating a network of medically advanced comprehensive cancer hospitals and standalone radiotherapy and diagnostic imaging centers in China, reported its unaudited consolidated financial results for the six months ended June 30, 2020[1] (Press release, Concord Medical Services Holdings, AUG 26, 2020, View Source [SID1234564077]).

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2020 First Half Highlights

Total net revenues were RMB83.0 million ($11.7 million) in the first half of 2020, representing a 16.6% decrease from total net revenues of RMB99.5 million in the same period last year. Total net revenues included the net revenues from the network business of RMB37.7 million ($5.3 million) and the net revenues from hospital business of RMB45.3 million ($6.4 million).
Gross loss was RMB3.5 million ($0.5 million) in the first half of 2020, compared to the gross profit of RMB3.1 million in the first half of 2019. The gross loss margin was 4.2% for the first half of 2020, compared to the gross profit margin of 3.1% for the same period last year.
Net loss attributable to ordinary shareholders in the first half of 2020 was RMB128.8 million ($18.2 million), compared to RMB140.1 million in the same period last year.
Basic and diluted loss per share for Class A and Class B ordinary shares[2] in the first half of 2020 were both RMB2.23 ($0.32), compared to RMB2.03, respectively, in the same period last year.
Non-GAAP net loss in the first half of 2020 was RMB155.0 million ($21.9 million), compared to non-GAAP net loss of RMB149.3 million in the same period last year. Non-GAAP basic and diluted loss per share for Class A and Class B ordinary shares in the first half of 2020 were both RMB2.15 ($0.30), compared to RMB1.95 in the same period last year.
Adjusted EBITDA[3] (non-GAAP) was negative RMB113.1 million ($16.0 million) in the first half of 2020, compared to negative RMB108.3 million in the same period last year.
Dr. Jianyu Yang, Chairman and Chief Executive Officer of Concord Medical, commented, "In the first half of 2020, the Company’s business was affected by the coronavirus disease (COVID-19) epidemic. As the epidemic situation is under control in China, the Company’s business has returned to normal. In particular, compared with the same period in 2019, our Shanghai Meizhong Jiahe Cancer Center nearly doubled its revenue."

"The Company’s Shanghai Meizhong Jiahe Medical Imaging Diagnostic Center (the "Imaging Diagnosis Center") has been officially opened in April 2020, which will expand the Company’s business income."

"The proton equipment of Guangzhou Concord Cancer Center (the "Cancer Center") has arrived and is expected to be hoisted in the recent months. Besides, the construction of the Cancer Center (exclude the proton part) is nearly competed, and the Company is starting the preparation for the opening of the Cancer Center. With the gradual operation of the Cancer Center to the mature stage, the Company’s revenue will also be greatly improved in the next few years."

2020 First Half Financial Results

Network Business

Net revenues from the network business were RMB37.7 million ($5.3 million), representing a 44.6% decrease from net revenues of RMB68.0 million in the first half of 2019, primarily attributable to the effect of the COVID-19 epidemic and the closure of certain centers in our network of centers. With four centers closed in the first half of 2020, the Company operated a network of 27 centers in 20 cities in China as of June 30, 2020.

Cost of revenues of the network business was RMB14.6 million ($2.1 million), representing a 58.0% decrease from RMB34.8 million in the first half of 2019.

Gross profit from the network business was RMB23.1 million ($3.3 million), representing a 30.4% decrease from RMB33.2 million in the first half of 2019. The gross profit margin of the network business for the first half of 2020 was 61.3%, compared to the gross profit margin of 48.8% for the same period last year.

Selling expenses of the network business were RMB19.4 million ($2.7 million), representing a 108.6% increase from RMB9.3 million in the first half of 2019. Selling expenses as a percentage of net revenues from the network business was 51.5% in the first half of 2020, compared to 13.7% in the first half of 2019. The increase in selling expenses of the network business was mainly due to the increase in advertisement and promotion expenses.

General and administrative expenses of the network business were RMB56.9 million ($8.1 million), representing a 30.1% decrease from RMB81.4 million in the first half of 2019. General and administrative expenses as a percentage of net revenues from the network business were 150.9% in the first half of 2020, compared to 119.7% in the same period last year. The decrease was mainly because Zhongrong Fund management fees have been fully settled in the second half of 2019.

Comparing to RMB24.8 million in the same period last year, capital expenditures decreased to RMB3.9 million ($0.6 million) in the first half of 2020, primarily for procuring equipment for network centers.

Accounts receivable were RMB61.1 million ($8.6 million) as of June 30, 2020, compared to RMB67.1 million as of December 31, 2019. The average period of sales outstanding for accounts receivable (also known as "Days Sales Outstanding") was 298 days in the first half of 2020.

During the first half of 2020, the Company handled 3,837 patient treatment cases and 40,444 patient diagnostic cases, representing a 28.1% decrease and a 45.9% decrease from the same period last year, respectively. The decreases in patient treatment and diagnostic cases were mainly due to the influence of the COVID-19 epidemic.

Hospital Business

Net revenues from the hospital business were RMB45.3 million ($6.4 million) in the first half of 2020, representing a 43.8% increase from net revenues of RMB31.5 million in the first half of 2019, mainly because the operation of Shanghai Meizhong Jiahe Cancer Center Co., Ltd. has gradually matured and the Imaging Diagnostic Center opened in this April.

Cost of revenues of the hospital business in the first half of 2020 was RMB71.8 million ($10.2 million), representing a 16.6% increase from cost of revenues of RMB61.6 million in the first half of 2019, mainly because of the preparation and operation of the Imaging Diagnostic Center.

Gross loss from the hospital business was RMB26.5 million ($3.8 million) in the first half of 2020, compared to RMB30.1 million in same period last year. The gross loss margin of the hospital business for the first half of 2020 was 58.5%, compared to the gross loss margin of 95.8% for the same period last year.

Selling expenses of the hospital business were RMB2.7 million ($0.4 million) in the first half of 2020, representing an 80.0% increase from selling expenses of RMB1.5 million in the first half of 2019. Selling expenses as a percentage of net revenues from the hospital business was 6.0% in the first half of 2020, compared to 4.8% in the first half of 2019. The increase was mainly because the market research cost increase for the Imaging Diagnosis Center and the Cancer Center.

General and administrative expenses of the hospital business were RMB77.5 million ($11.0 million) in the first half of 2020, of which employee benefit expenses were RMB31.7 million ($4.5 million). In the same period of last year, general and administrative expenses of the hospital business were RMB58.1 million. The increase was mainly due to the increase in salary and rental fees for hospitals. General and administrative expenses as a percentage of net revenues from the hospital business was 171.1% in the first half of 2020, compared to 184.4% in the first half of 2019.

Comparing to RMB410.5 million in the first half of 2019, capital expenditures of the hospital were RMB364.9 million ($51.6 million) in the first half of 2020. The decrease was mainly related to the decrease in construction fees and medical equipment payment for Beijing Proton Medical Center, Shanghai Concord Cancer Center and the Cancer Center.

As of June 30, 2020, accounts receivable from hospital business were RMB11.2 million ($1.6 million), representing an 18.2% decrease from accounts receivable of RMB13.7 million as of December 31, 2019. The number of Days Sales Outstanding was 50 days in the first half of 2020.

As of June 30, 2020, the Company had bank loans and other borrowings totaling RMB2.0 billion ($288.6 million).

Recent Developments

The Imaging Diagnosis Center commenced operation in April 2020. The Imaging Diagnosis Center is located on the second floor of the Medical Technology Center of Shanghai Xinhongqiao International Medical Park (the "Park"), which is the center of the Park. The Imaging Diagnosis Center provides high-quality diagnostic imaging services, such as radiology, ultrasound and nuclear medicine, diagnosis and remote consultation, education and training, to all the medical institutions, premium clinics and medical institutions around the Park. Advanced imaging diagnostic equipment, such as CT, magnetic resonance, PET-CT and PET-MRI, have been installed in the Imaging Diagnosis Center.

On August 26, 2020 Phosplatin Therapeutics LLC, a clinical stage pharmaceutical company focused on oncology therapeutics, reported the completion of an oversubscribed $18.4 million private financing round (Press release, Phosplatin, AUG 26, 2020, View Source [SID1234564076]). Participation included new and existing investors, inclusive of family offices from the US, Europe and Asia-Pacific, and high net worth individuals .

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Robert Fallon, President and Chief Executive Officer of Phosplatin Therapeutics, commented, "The success of the financing underscores the breadth of our data from three different Phase I trials and the broad potential of our lead compound, PT-112, which is advancing through clinical development as a monotherapy, including in mCRPC and multiple myeloma, and in combination with PD-L1 immune checkpoint inhibition. We plan to utilize the proceeds of this capital raise to complete Phase 2 development of PT-112, and our continued planning prior to launching intended pivotal trials."

Phosplatin Therapeutics has raised $56 million in equity capital since inception, and receives milestone fees from its sub-licensee for Greater China.

About PT-112

PT-112 is the first small molecule conjugate of pyrophosphate developed in oncology therapeutics. PT-112 promotes immunogenic cell death (ICD), or the release of damage associated molecular patterns (DAMPs) that lead to downstream immune effector cell recruitment in the tumor microenvironment. PT-112 represents a potential best-in-class small molecule inducer of this immunological form of cancer cell death, and is under Phase 2 development. The first-in-human study of PT-112 demonstrated an attractive safety profile and evidence of long-lasting responses among heavily pre-treated patients, and won "Best Poster" at the ESMO (Free ESMO Whitepaper) 2018 Annual Congress within the Developmental Therapeutics category. The novelty of its pyrophosphate moiety also results in osteotropism, or the propensity of the drug to reach the mineralized bone. This property is of interest in cancer types that originate in bone, or frequently lead to metastatic bone involvement, such as metastatic castrate-resistant prostate cancer (mCRPC). The first human clinical results in mCRPC were presented at the 2020 Genitourinary Cancers Symposium.

On August 26, 2020 RareCyte reported a new dual biomarker liquid biopsy assay for androgen receptor splice variant 7 (ARv7) and the neuroendocrine marker, synaptophysin (SYP), enabling customers to evaluate both ARv7 and SYP expression on circulating tumor cells (CTCs) with industry leading accuracy and precision in patients with prostate cancer (Press release, RareCyte, AUG 26, 2020, https://www.prnewswire.com/news-releases/rarecyte-announces-first-commercially-available-arv7synaptophysin-ctc-assay-for-blood-based-characterization-of-treatment-resistant-prostate-cancer-301118268.html [SID1234564074]). The ARv7/Synaptophysin Panel Kit was validated based on rigorous requirements set to clinical standards and enables blood-based investigation of two prominent mechanisms by which tumors become resistant to second-line endocrine therapies.

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"Resistance to second-line anti-androgen therapies has emerged as an important clinical challenge," explained Eric Kaldjian, MD, Chief Medical Officer of RareCyte. "New therapies are in development to target the resistance mechanisms. Identification of ARv7 and synaptophysin on CTCs via a non-invasive blood sample will allow investigational monitoring for tumor transformation, as well as confirmation of clinically suspected resistance in multi-center clinical trials."

The assay comprises processing blood to slides with the AccuCyte Sample Preparation System followed by staining with the RarePlex 0919-LB ARv7/Synaptophysin CTC Panel Kit and imaging on a CyteFinder Instrument. Machine learning enabled analysis and scoring maximizes reviewer concordance. In addition, the RareCyte platform enables cell-free DNA analysis on the same sample, providing a comprehensive liquid biopsy assessment of tumor status.

"In prostate cancer, ARv7 has been associated with resistance to certain therapies, and SYP is a commonly used histologic marker for the neuroendocrine phenotype," said Amir Goldkorn, MD, an oncologist at University of Southern California (USC) Norris Cancer Center and associate professor of medicine at Keck School of Medicine of USC. Goldkorn and his collaborators at USC Norris Cancer Center collaborated with RareCyte to validate the assay. "Using the ARv7/SYP assay, it will be exciting to test whether CTCs bearing these markers are associated with unique biological phenotypes or clinical outcomes in men with prostate cancer."

The ARv7/Synaptophysin CTC Panel Kit is now available for purchase; more information on the kit and the RareCyte platform is available at View Source

On August 26, 2020 Debiopharm (www.debiopharm.com), a Swiss-based, global biopharmaceutical company, reported the first patient dosed in the multicenter, single-arm, open-label Phase 1 study assessing the safety, distribution, and dosing of Debio 1124 in patients with advanced, unresectable pulmonary and extrapulmonary small cell carcinoma. This targeted, investigational radiotherapy belongs to the emerging class of Peptide Receptor Radionuclide Therapies (PRRT), having been designed to selectively deliver molecular radiotherapy to tumor cells expressing the cholecystokinin 2 receptor (CCK2R) (Press release, Debiopharm, AUG 26, 2020, View Source [SID1234564073]). Research will leverage a theranostic approach, combining both diagnostic and therapeutic capacities of the compound. This will allow the pre-identification of patients who have the CCK2R receptors necessary to respond to the targeted radiotherapy using an imaging dose of Debio 1124 followed by a therapeutic dose of the same compound for qualifying patients only.

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The advancement of the Debio 1124 program is part of Debiopharm’s expanding radio-oncology pipeline including other radio-pharmaceutical and chemoradiotherapy enhancing compounds. Initially discovered by the Swiss based Paul Scherrer Institute (PSI), before being licensed by Debiopharm, Debio 1124 has shown anti-tumor activity in pre-clinical cancer models. The advancement of Debio 1124 into this clinical study may reveal improved therapeutic results for suffering from pulmonary and extrapulmonary small cell carcinoma.

"We’re very excited to bring the potential benefit of molecular radiotherapy to patients with small cell lung cancer showing expression of CCK2R. PRRT has the potential to impact the tumor while minimizing the off-target effects," explained Carlos Chanquia, Medical Director of Oncology at Debiopharm.

SCLC is a highly aggressive cancer associated with patients over 65 years old with a history of smoking. Without treatment, extensive stage small cell lung cancer (ES-SCLC), representing approximately two-thirds of all cases, is rapidly and invariably fatal.1 Combination chemotherapy induce dramatic but short-lived responses, with median overall survival in the third line setting <6 months. Ongoing research will evaluate if SCLC could potentially benefit from this specifically targeted radiotherapy.

About Debio 1124
Debio 1124 is a new-generation peptide analogue of minigastrin, coupled to the isotope Lutetium 177 (177Lu) designed to selectively deliver molecular radiotherapy to tumor cells expressing the Cholecystokinin B Receptor (CCK2R). The compound can be used as both a diagnostic tool during initial imaging step and subsequently as an intravenous radio-pharmaceutical for treatment. This targeted, theragnostic compound is being researched in various cancer types including advanced Medullary Thyroid Cancer (MTC) and SCLC.

Debiopharm’s commitment to cancer patients
Debiopharm aims to develop innovative therapies that target high unmet medical needs in oncology. Bridging the gap between disruptive discovery products and real-world patient reach, we identify high-potential compounds for in-licensing, clinically demonstrate their safety and efficacy and then select large pharmaceutical commercialization partners to maximize patient access globally.

On August 26, 2020 Shanghai Fosun Pharmaceutical (Group) Co., Ltd ("Fosun Pharma"; Stock Code: 600196.SH, 02196.HK), a leading healthcare group in China, reported its interim results for the year 2020 ("the Reporting Period") (Press release, Fosun Pharma, AUG 26, 2020, View Source [SID1234564072]).

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During the Reporting Period：

The revenue achieved RMB 14,028 million;
The net profit attributable to shareholders of the listed company amounted to RMB 1,715 million, representing a respective increase of 13.1%;
The net profit attributable to shareholders of the listed company after deduction of non-recurring amounted to RMB 1,304 million, representing a respective increase of 11.71%.
Wu Yifang, President and CEO of Fosun Pharma, expressed that "the COVID-19 brings relatively huge influence and uncertainty to the global and China’s economy. In the first half of 2020, with the orderly work resumption, the production and operation resumed in Q2. The operating revenue in Q2 increased by 38.6% compared with Q1. On the basis of properly carrying out the existing business and industrial upgrading, Fosun Pharma is firmly committed to the path of innovation and international development, thereby maintaining the long-term growth of our performance."

Actively promoted innovation transformation and strengthened the global R&D system together with the capacity building of pharmaceuticals

Fosun Pharma continues to be guided by innovation and internationalization, vigorously develop strategic products, improve the "Combination of integrates biosimilars and innovative drugs" R&D system, and further strengthen R&D investment. In the first half of 2020, Fosun Pharma invested RMB 1,689 million in R&D, an increase of 25.02% compared to the same period last year, of which the R&D expenditure was RMB 1,204 million, an increase of 41.81% compared to the same period in 2019. As of the end of the Reporting Period, Fosun Pharma had 248 pipeline innovative drugs, generic drugs, biosimilars and consistency evaluation projects of generic drugs.

In order to strengthen the global R&D system and capacity building of pharmaceuticals, Fosun Pharma established the Global R&D Center in early 2020, which is responsible for the overall management of the Group’s innovative R&D projects. Focusing on China, the United States and Europe to strengthen preclinical drug research, the ability of clinical development and transforming medicine. Currently, Fosun Pharma has already established interactive and integrated R&D systems in China, the United States and India, and created international R&D platforms including biological drugs, small molecular innovative drugs, high-value generic drugs, new technology therapy.

In the Reporting Period, sales of Rituximab injection (汉利康) increased rapidly after the approval of the new production scale (2,000L), with revenue of RMB 224 million in the first half of the year and more than RMB 100 million revenue in June; Avatrombopag maleate tablets (苏可欣), the first licensed drug for selective thrombocytopenia treatment of adult patients with chronic liver disease undergoing diagnostic procedures or surgery had been approved to market. As of the end of the Reporting Period, Fosun Pharma has obtained approval for clinical trial in Chinese Mainland on 10 small molecule innovative products (including 1 improved new drug) and 11 indications; as well as approval for overseas clinical trials for 5 small molecule innovative drugs and 5 indications. In particular, ORIN1001 had launched phase I clinical trials in the U.S. and recognized by the U.S. Food and Drug Administration (”U.S. FDA”) under the Fast Track Development Program. SAT-189 had been approved to phase II clinical trials in the U.S.; and 10 monoclonal antibody products and 8 combination therapies had launched more than 20 clinical trials worldwide; Axicabtagene Ciloleucel (code FKC876, i.e. anti-human CD19 CAR-T cell injection) of Fosun Kite, a joint venture, completed the bridging clinical trial of the Product for the treatment of adult patients with relapsed and refractory large B-cell lymphoma in Chinese Mainland and commenced clinical trials in Chinese Mainland and was granted priority review status for the launch and registration of drugs. During the Reporting Period, the subsidiary Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd. ("Fosun Pharmaceutical Industrial") was approved to conduct clinical trial in Chinese Mainland by the National Medical Products Administration (the "NMPA") for the mRNA-based COVID-19 vaccine candidate which had been approved by BioNTech.

Integrated operation, improved efficiency and steady international development

Fosun Pharma adheres to actively promote the development of innovation field. Meanwhile, Fosun Pharma continues to strengthen the construction and integration of the marketing system, and the marketing mode is transformed towards specialization, branding and digitalization. Fosun Pharma has formed a domestic and foreign marketing network and marketing team matched with the existing products and products to be listed on the market. In particular, domestic marketing has built a strong ability and management system in the field of high-end diagnosis and treatment of hematological tumors. By the end of the Reporting Period, Fosun Pharma had formed a marketing team of nearly 5,800 people, and nearly 1,000 staff for overseas drugs and medical devices are included. In the field of drug and device distribution and retailing, Fosun Pharma gives full play to the advantages of Sinopharm’s distribution network and logistics through cooperation and linkage with Sinopharm Industrial Investment Co., Ltd. to promote the expansion of drug sales channels of Fosun Pharma.

During the Reporting Period, Fosun Pharma achieved RMB 4,071 million operating revenue, accounting for 29.02% of the total. In terms of international expansion, Fosun Pharma not only established subsidiaries and developed its operating capability in mature markets such as the US and Europe, but also developed markets and production capacity through self-development and M&A in emerging markets such as Africa and India. Meanwhile, Fosun Pharma further consolidated its competitiveness in the African market, build marketing platforms in the United States and Europe, promoted in-depth cooperation with multinational pharmaceutical companies, and increased the drug sales scale of Fosun Pharma in the international market.

Fought against COVID-19 with science and technology to practice social responsibility

In the first half of 2020, in the face of the unexpected COVID-19 pandemic, Fosun Pharma fully combined its own business characteristics and global resource advantages, quickly respond to the epidemic and actively assumed social responsibility during the process of fighting the COVID-19.

In order to meet the needs of medical materials for epidemic prevention and control in time, Fosun Pharma joined hands with global member enterprises to ensure the research, development, procurement and production of medical materials. In particular, the independently-developed 2019-nCoV nucleic acid detection kit (PCR) passed the emergency examination and obtained the approval of the National Medical Products Administration (NMPA) and the medical device registration certificate (in vitro diagnostic reagent). A number of COVID-19 test kits have obtained the relevant qualifications and certification from the United States, the European Union, Australia and other countries and regions. In addition, Fosun Pharma also actively cooperates with BioNTech in Germany to develop mRNA vaccine, undertake the production of national negative pressure ambulances, produce and dispatch global supply of ventilators, and provide mobile CT innovative medical equipment to help reduce the risk of multi-department cross-infection caused by patient transfer.

As of the Reporting Period, the cumulative value of cash or medical masks, protective clothing, medical non-invasive ventilators, negative pressure ambulances and other medical equipment and daily necessities donated by Fosun Pharma to the epidemic area had exceeded RMB 30 million. In Wuhan, Wuhan Jihe Hospital, a designated medical institution under COVID-19, cured 515 patients, with a mortality rate of 0 and an infection rate of 0 for medical personnel.