On July 26, 2021 Chugai Pharmaceutical Co., Ltd. (TOKYO: 4519) reported its financial results for the first half of fiscal year 2021 (Press release, Chugai, JUL 26, 2021, View Source [SID1234585179]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
"We had a very good second quarter with strong earnings and steady progress in R&D activities. Revenues and profits grew significantly due to increases in domestic and overseas sales as well as Hemlibra royalties. As a result, both revenues and profits for the first half turned to growth, despite declines in the first quarter. As for new products, in-house product Enspryng received regulatory approval in Europe and is now being rolled out in Japan, the U.S. and Europe. In Japan, we launched Polivy and received approval for Evrysdi, two products we expect will drive future growth. Progress has also been made in the development of COVID-19 treatments. Actemra received Emergency Use Authorization from the U.S. FDA, and Ronapreve received Special Approval in Japan. In addition, I am pleased that we are able to report progress in many other projects in both our early- and late-stage pipelines. We will continue focusing on the creation of innovation to achieve our mission of contributing to the medical community and human health around the world." said Dr. Osamu Okuda, Chugai’s President and CEO.
[Half year results for 2021]
Revenues increased by 6% and Core operating profit increased by approximately 15% for the half year (Core-basis), mainly due to a significant, roughly 40% increase in royalties and other operating income.
Revenues, which declined by 10% year-on-year in the first quarter, were almost flat compared to the same period of the previous year, while royalties and other operating income increased significantly, resulting in an overall increase in revenues. Sales, both domestic and overseas, remained at the same level as the first half of last year. Domestic sales in the oncology field increased by a little less than 10%, with the continued sales growth in Tecentriq and Kadcyla. On the other hand, domestic sales in the primary field decreased by double digits, despite the contribution of the new product Enspryng, due to the significant impact of the NHI drug price revision and generic competition. In total, domestic sales were almost flat compared with the same period of the previous year. As for overseas sales, increases in the sales of Hemlibra, which nearly doubled year-on-year, and other products offset the decrease in the sales of Actemra. Royalties and other operating income increased by approximately 40% mainly due to an increase in royalties and profit-sharing income relating to Hemlibra.
Cost to sales ratio improved by 2.8 % points year-on-year to 40.1%, mainly due to an increase in the proportion of in-house products including Hemlibra. Operating expenses increased by 10% due to the double-digit increase in research and development expenses associated with the progress of development projects. Marketing and distribution, and general and administration expenses also increased as these expenses decreased last year due to lower business activities caused by the spread of COVID-19. As a result, core operating profit increased by approximately 15%.
The Company also made good progress in research and development. Among the next growth drivers, Enspryng, a recycling antibody created by Chugai, obtained regulatory approval in Europe following Japan and the U.S. for the treatment of neuromyelitis optica spectrum disorder. Evrysdi, an SMN2 splicing modifier, obtained regulatory approval in Japan in June as the first oral drug for spinal muscular atrophy. A regulatory application was filed for faricimab, the first bispecific antibody in ophthalmology, for two indications, diabetic macular edema and neovascular age-related macular degeneration. An application was also filed for the line extension of Tecentriq as adjuvant therapy for non-small cell lung cancer. In addition, both early- and late-stage development products are steadily progressing. Phase III global clinical trials for several projects started in order to examine new indications. Phase I clinical trials for an in-house project SOF10 and other projects also started in Japan.
In the efforts to develop a treatment for COVID-19, the anti-IL-6 receptor antibody Actemra, created by Chugai, received Emergency Use Authorization from the U.S. FDA in June for hospitalized adults and children. A regulatory filing in Japan is planned by the end of this year. The antibody cocktail Ronapreve, in-licensed from Roche, obtained Special Approval in Japan in July following the filing of application in June. For AT-527, an oral antiviral agent also in-licensed from Roche, Chugai participated in a Phase III global clinical trial for the treatment of mild to moderate COVID-19 in outpatient setting and advances the development. Chugai ended the antibody research collaboration with A*STAR for COVID-19 with the completion of preclinical assessment studies for the lead antibody candidates against SARS CoV2. The collaboration was announced in May 2020.
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, and are consistent with the Core concept disclosed by Roche. 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.
Trademarks used or mentioned in this release are protected by law.