On October 24, 2023 Chugai Pharmaceutical Co., Ltd. (TOKYO: 4519) reported its financial results for the third quarter of fiscal year 2023 (Press release, Chugai, OCT 24, 2023, View Source [SID1234636296]).
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"In the third quarter of this year, we saw a continuation of the increase in both revenue and profits on a Core-basis from the first half. Sales increased both in domestic and overseas, driven by steady growth in new products such as Polivy, Vabysmo in Japan and by more than double-digit growth overseas in mainstay products Hemlibra and Alecensa. In R&D, Chugai made steady progress with in-house projects, mainly in late-stage development. An application for crovalimab in the treatment of paroxysmal nocturnal hemoglobinuria (PNH) was accepted for filing in the U.S. In addition, Alecensa achieved its primary endpoint in a global phase III study as a post-operative adjuvant therapy for early-stage ALK-positive non-small cell lung cancer (NSCLC), and Enspryng started a global phase III study for thyroid ophthalmopathy (TED), its fifth indication, and is being simultaneously developed in multiple diseases. We will continue to drive innovation to deliver innovative new drugs to patients as quickly as possible," said Dr. Osamu Okuda, Chugai’s President and CEO.
< Third Quarter Financial Results (Core results, January to September 2023) >
Chugai reported increased revenue and operating profit for the first nine months (Core-basis) compared to the same period of the previous fiscal year, consistent with second-quarter results.
Revenue increased in approximately 15% overall, with growth in both domestic and overseas sales and other revenue. Domestic sales increased by approximately 10%. In the oncology field, the growth was approximately 3% year-on-year due to the contribution of steady market penetration of new product Polivy, and the growth of mainstay product Tecentriq despite the impact of biosimilars and NHI drug price revisions on mature products such as Avastin and Herceptin. In the specialty field, sales increased by approximately 20%, driven by the penetration of new products Vabysmo for ophthalmology and Evrysdi for neuroscience, as well as the contribution of mainstay products Hemlibra for hemophilia and Enspryng for neuroscience, and the supply of Ronapreve for COVID-19 treatment to the government in the first quarter. Overseas sales increased by approximately 20% due to solid growth in exports of Hemlibra and Alecensa. Other revenue increased by approximately 13%, mainly due to the increase in royalties and profit-sharing income related to Hemlibra. Revenue on IFRS basis, including Non-Core items, decreased due to the one-time impact of the lump-sum income from the settlement agreement with Alexion Pharmaceuticals, Inc in the previous year.
Cost to sales ratio rose by 2.4% points year-on-year to 43.1%, mainly due to the impact of foreign exchange. Research and development expenses increased due to investments into drug discovery and early development, including the start of operation of Chugai Life Science Park Yokohama, and the progress of development projects. Also selling, general and administration expenses increased mainly due to various expenses. For other operating income (expense), an income of ¥16.3 billion was recorded, mainly due to the recognition of income from disposal of product rights and gain on sale of property, plant and equipment. As a result, Core operating profit totaled ¥340.5 billion (+13.9%).
The company also made good progress in research and development. Among our in-house projects, Actemra obtained approval for an additional indication of cytokine release syndrome induced by cancer therapy. Late-stage projects progressed including the U.S. Food and Drug Administration (FDA) acceptance of application of crovalimab for the treatment of PNH, and Alecensa achieving the primary endpoint in a global phase III study in patients with early-stage ALK-positive NSCLC, demonstrating the efficacy in adjuvant therapy for the first time as an ALK inhibitor. A global phase III study for Enspryng for treatment of TED, an ophthalmic disease, has been initiated. The drug is now being developed for four diseases simultaneously. As for projects in-licensed from Roche, Phesgo, a subcutaneous combination of Perjeta and Herceptin, which are standard treatments for HER2-positive breast cancer administered by intravenous injections, has received approval in Japan as a treatment for HER2-positive breast cancer and colorectal cancer. In addition, a new immune checkpoint inhibitor tobemstomig (RG6139) in solid tumors has entered the pipeline.
[2023 third quarter results]
Billion JPY 2023
Jan – Sep 2022
Jan – Sep % change
Core results
Revenue 837.6 729.3 +14.8%
Sales 742.1 644.7 +15.1%
Other revenue 95.5 84.6 +12.9%
Operating profit 340.5 299.0 +13.9%
Net income 250.3 213.0 +17.5%
IFRS results*
Revenue 837.6 821.2 +2.0%
Operating profit 317.6 383.8 -17.2%
Net income 234.3 271.9 -13.8%
*IFRS results in 2022 include non-Core items, such as the income and other related items, which totaled ¥90.7 billion associated with the settlement agreement between Chugai and Alexion Pharmaceuticals, Inc., which are excluded from the Core results Chugai adopts to manage recurring business activities.
[Sales breakdown]
Billion JPY 2023
Jan – Sep 2022
Jan – Sep % change
Sales 742.1 644.7 +15.1%
Domestic sales 429.2 387.6 +10.7%
Oncology 191.4 186.5 +2.6%
Specialty 237.9 201.0 +18.4%
Overseas sales 312.9 257.1 +21.7%
[Oncology field (Domestic) Top5-selling medicines]
Billion JPY 2023
Jan – Sep 2022
Jan – Sep % change
Tecentriq 47.9 43.9 +9.1%
Avastin 38.2 50.9 -25.0%
Polivy 25.5 9.1 +180.2%
Perjeta 24.6 23.5 +4.7%
Alecensa 22.0 20.9 +5.3%
[Specialty field (Domestic) Top5-selling medicines]
Billion JPY 2023
Jan – Sep 2022
Jan – Sep % change
Ronapreve* 81.2 60.8 +33.6%
Hemlibra 40.5 35.2 +15.1%
Actemra 32.2 31.2 +3.2%
Enspryng 16.9 11.5 +47.0%
Vabysmo 10.8 3.2 +237.5%
*Ronapreve has not been listed in the National Health Insurance (NHI) price list.
About Core results
Chugai discloses its results on a Core basis from 2013 in conjunction with its decision to apply IFRS. Core results are the results after adjusting Non-Core items to IFRS results. Chugai’s recognition of non-recurring items may differ from that of Roche due to the difference in the scale of operations, the scope of business and other factors. Core results are used by Chugai as an internal performance indicator, for explaining the underlying business performance both internally and externally, and as the basis for payment-by-results such as a return to shareholders.