On April 25, 2022 Chugai Pharmaceutical Co., Ltd. (TOKYO: 4519) reported its financial results for the first quarter of fiscal year 2022 (Press release, Chugai, APR 25, 2022, View Source [SID1234612893]).
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"The first quarter marked a strong start to 2022. Significant increases in both domestic and overseas sales resulted in record revenues and profits for the quarter. Domestic sales were driven by the supply of Ronapreve to the government and good penetration of our new products Enspryng, Polivy, and Evrysdi, while Hemlibra posted a remarkable increase in overseas sales. These products are on track to become our next growth drivers. In R&D, Vabysmo, a bispecific antibody in-licensed from Roche, obtained regulatory approval for two diseases that may potentially lead to vision loss. This unlocks Chugai’s first full-scale entry into ophthalmology. For Mitchga, the anti-IL-31 receptor A inhibitor created by Chugai, regulatory approval for itching associated with atopic dermatitis was obtained by Maruho, our partner for the Japanese market. Both of these products have novel modes of action, and I am very pleased that we can provide new treatment options based on innovation. We will continue to challenge ourselves to create innovative new drugs," said Dr. Osamu Okuda, Chugai’s President and CEO.
[First quarter results for 2022]
Chugai reported a significant growth in revenues and operating profit, achieving record highs for the first quarter (Core-basis).
Revenues increased by approximately 60% over the same period last year. Sales increased sharply by almost 90%, while royalties and other operating income decreased by approximately 30%. Domestic sales increased by approximately 70%. In the oncology field, sales remained almost flat over the same period last year. The contribution of the new product Polivy offset declines in mature products, including Avastin and Herceptin, due to NHI drug price revisions last year and biosimilars. In the primary field, sales almost tripled year-on-year due to the supply of Ronapreve to the government and the contribution of new products, Enspryng and Evrysdi. Overseas sales more than doubled given a five-hold growth of Hemlibra owing to the full-scale export to Roche at regular shipping price, and a 50% increase in Actemra, which obtained emergency use authorization and regulatory approval for severe COVID-19 in the U.S. and Europe, respectively, since last June. On the other hand, royalties and other operating income decreased by approximately 30%, mainly due to a significant decrease in royalty income related to the initial shipments of Hemlibra. Revenues on IFRS basis including Non-Core items totaled ¥360.6 billion (+113.6%), including the lump-sum income of ¥91.9 billion from the settlement agreement with Alexion Pharmaceuticals, Inc.
Cost to sales ratio rose by 4.8% points year-on-year to 47.0%, mainly due to a change in the product mix. Marketing and distribution, research and development, and general and administration expenses have all increased, resulting in an overall increase in operating expenses by almost 15%. Marketing and distribution expenses increased due to an increase in activities at overseas group companies and the effects of foreign exchange. Research and development expenses increased due to the progress of projects. General and administration expenses increased due to the enterprise tax and various expenses. As a result, Core operating profit totaled ¥98.9 billion (+51.2%).
The Company also made good progress in research and development. Chugai obtained regulatory approval in March 2021 for Vabysmo for neovascular age-related macular degeneration (nAMD) and diabetic macular edema (DME). Vabysmo, in-licensed from Roche, is the first bispecific antibody in ophthalmology. Clinical development of RG6321, the port delivery system with ranibizumab in-licensed from Roche, was newly initiated also in the field of ophthalmology. In-house projects that will drive the company’s mid-to-long-term growth also progressed well, including Mitchga and several projects applying Chugai’s proprietary antibody engineering technologies. Maruho, the licensee of anti-IL-31 receptor A antibody Mitchga in Japan, obtained regulatory approval for the product in March for the treatment of pruritus associated with atopic dermatitis (only when existing treatment is insufficiently effective). As for the anti-C5 recycling antibody crovalimab, a phase III clinical trial conducted in China in paroxysmal nocturnal hemoglobinuria (PNH) met its primary endpoint. Application for regulatory approval will be filed in China ahead of other countries by the end of this year. Also, Roche started clinical development in sickle cell disease outside Japan.
Regarding development of treatments for COVID-19, WHO granted prequalification of Actemra for patients with severe or critical COVID-19 in February. Furthermore, in April, the U.S. Food and Drug Administration (FDA) accepted Genentech’s supplemental Biologics License Application (sBLA) for Actemra for the treatment of COVID-19 in hospitalized adults, granting priority review. In the U.S., Actemra has been used under the Emergency Use Authorization (EUA) since June 2021.
2022 Q1 R&D Progress
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 the basis for payment-by-results such as a return to shareholders.