Japan's biggest biotech

REPRINT FROM MARCH 18, 2013
BioCentury
T H E BE R N S T E I N RE P O R T O N BI OBU S I N E S S Japan’s biggest biotech
By Karen Bernstein
Editor-in-Chief
“The history of the
have historically been thought of as stodgy, company is the president
venture with Fujifilm Corp. called
Fujifilm Kyowa Kirin Biologics Co.
is science-based. This
fast. One year into the job, Kyowa Hakko
Kirin Co. Ltd.’s CEO is building his
affects the character of
business plan at the end of January. By the the company.”
Nobuo Hanai, Kyowa Hakko Kirin
grow global pharma sales by ¥10.2 billion he helped discover — with targets out of c a l s b u s i n e s s , l e a v i n g p h a r m a a n d billion. That includes KHK’s biochemical and their intermediates, health foods, di- years (see “Kyowa’s Sales by Segment”). ceutical sales have grown by 19% to ¥249.7 on KHK’s core antibody-related technolo- year: it forecasts net sales of ¥338 billion gies; strengthening its competitiveness in Japan in selected disease categories; expand- ing its business base in the U.S. and Europe; and building a biosimilars franchise.
The payoff is slated to come later, after vided an EU and U.S. sales force, as well as fentanyl citrate, a sublingual mucoadhesive business under then-CEO Yuzuru Matsuda.
agonist from Orexo AB, which reac-
quired the U.S. rights last year (see DAVID FLORES
KAREN BERNSTEIN, Ph.D.
BioCentury®
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BioCentury, THE BERNSTEIN REPORT ON BIOBUSINESS REPRINT FROM MARCH 18, 2013
Strategy,
is the KM mouse, which combines what was Kirin Pharma’s technology for producing human artificial chromosomes (HACs)by transferring a fragment of a human chromosome into a mouse agonist for Parkinson’s disease (PD); and KRN23, a human with Medarex Inc.’s technology for producing human antibodies.
antibody against fibroblast growth factor 23 (FGF23) for X- Medarex is owned by Bristol-Myers Squibb Co.
linked hypophosphatemic rickets/osteomalacia (XLH).
“Technology is the key to success,” Hanai said. “Kyowa Hakko Thus, the next several years are all about execution — Kirin is not a global big pharma. It’s not a small biotech company.
including testing Poteligeo in multiple cancer indications — after But as long as we have strong technology, we will have good which the big drivers for sales will be Poteligeo and istradefylline.
relationships with academics in Japan and the U.S. The basic modelis getting targets out of academia and applying our technology.” KHK typically looks for novel targets at academic institutions Not your average CV
and then applies its technologies to develop molecules against Hanai doesn’t have the typical CV for a Japanese CEO.
He did a postdoc in biochemical oncology at the Fred
Hanai cited Poteligeo as an example.
Hutchinson Cancer Research Center.
“I approached a University of Tokyo scientist, Dr. Koji
He discovered the company’s Potelligent technology, which Matsushima, and said we have Potelligent, you have chemokine enables commercial-scale production of antibodies free of fucose technology, let’s work together. That became the molecule that on their sugar chains. According to KHK, lower fucose content was just approved,” he said. Matsushima is a professor in the results in up to a hundredfold increase in antibody-dependent cell- department of molecular preventive medicine.
mediated cytotoxicity (ADCC) in animal models compared to Benralizumab’s target also came out of Japanese academia, and KHK made a humanized mAb using Potelligent.
Potelligent improves Fc receptor binding by increasing a mAb’s Although KHK hasn’t disclosed its collaborator, University affinity to Fc gamma receptor IIIa (CD16a; FCGR3A; FcgammaRIIIa), of Tokyo professor Kiyoshi Takatsu published multiple papers in the major Fc receptor for ADCC in humans. The technology also the early 1990s describing the cloning and characterization of allows lower dosing while decreasing the cost of goods.
IL5RA. Takatsu filed patents covering the discoveries and sub- In 2003, Hanai started and ran KHK’s BioWa Inc. subsidiary sequently was named on patents filed by KHK covering the in Princeton, which was created to form partnerships in the U.S.
development of antibodies against the receptor.
with antibody developers interested in Potelligent.
The cloning and characterization of the receptor at roughly Hanai also led the team that created the second KHK the same time also was reported in a series of separate publica- technology that BioWa licenses, called Complegent. It is de- tions by a team of Roche scientists.
signed to enhance complement-dependent cytotoxicity of anti- bodies via isotype chimerism, in which portions of IgG3 areintroduced into corresponding regions of IgG1.
Kyowa’s sales by segment
Hanai and his research team at KHK also discovered Poteligeo, KW-2871 and benralizumab (KHK4563), a humanized antibody Over the last four years, Kyowa Hakko Kirin Co. Ltd. (Tokyo:4151) has
against IL-5 receptor alpha (IL5RA; CD125).
simplified its business to focus on two main revenue streams — pharma- Poteligeo, the first marketed drug that uses Potelligent, was ceuticals and biochemicals. Since 2010, total sales have declined by 19% to approved in Japan in March 2012 for adult T cell leukemia- ¥333.2 billion ($4.2 billion) in 2012, as KHK shed its food business in 2009 lymphoma. A companion diagnostic was approved at almost the and its chemical business in 2011. Pharmaceutical sales, however, have risen 19% to ¥249.7 billion ($3.1 billion) in the same period. Figures represent sales Under a 2008 deal, Amgen Inc. has exclusive rights to
to external customers and do not include sales within KHK. (A) Adjusted mogamulizumab for all non-cancer indications outside of Japan, to reflect calendar year — KHK changed its fiscal year end from March 31, 2010, to Dec. 31, 2009; Source: Kyowa Hakko Kirin KW-2871 is a chimeric mAb that binds to GD3 ganglioside, a cell surface antigen expressed on 90% of melanoma cells. KHK
licensed it to Life Science Pharmaceuticals Inc. in 2007. It
is in Phase II trials in malignant melanoma.
Under a 2007 deal, benralizumab is being developed as MEDI-563 outside of Japan and other Asian countries by the MedImmune LLC unit of AstraZeneca plc.
Benralizumab is in Phase II trials in Japan and Korea to treat asthma. MedImmune has it in Phase IIb trials in severe refractory eosinophilic asthma and in Phase IIa studies for eosinophilicchronic obstructive pulmonary disease (COPD).
Hanai noted KHK’s last two presidents also were scientists.
“The history of the company is the president is science-based,”he told BioCentury. “This affects the character of the company.
I’m not a marketing guy, so I have an eye to see the long-term Indeed, Hanai is focusing the company’s strategy on organic growth based on KHK’s three technology platforms for the discovery of therapeutic antibodies.
In addition to Potelligent and Complegent, the third platform BioCentury, THE BERNSTEIN REPORT ON BIOBUSINESS REPRINT FROM MARCH 18, 2013
Strategy,
ment. “We have a team dedicated to early worldwide rights to the human mAb against the U.S. is with the La Jolla Institute for
Allergy & Immunology. “We have had
a good relationship with La Jolla for over KHK or its partners have in the clinic are 20 years,” Hanai said. “Our research facil- against novel targets. The company’s R&D ity is in the same building so the scientists Crohn’s disease and ulcerative colitis (UC).
also looks for very early technology as well “I will fight for a late-stage or mid-stage search pipeline full. That’s essential for biggest products today represent an aging our KM Mouse to produce the antibody.
Then we invited Sanofi for development.
two come from the Kyowa Hakko side.
Together they accounted for ¥135.9 bil- Kyowa’s pipeline
lion ($1.7 billion), or 54% of 2012 phar-maceutical sales (see “Kyowa’s Top 5 ProStraken from a loss-making entity into a profitable one. The unit had 2012 sales of £129 million ($204.8 million) — mainlyfrom Abstral for pain, Sancuso granisetron for chemotherapy induced nausea andvomiting (CIMV) and Rectogesic nitro-glycerin ointment for pain associated with anal fissures — but an operating loss of sales of £154 million ($254 million) and net sales above ¥20 billion ($235 million)and operating income above ¥2.5 billion($29.4 million).
Looking early
therapeutic modalities. “It’s important forpharma companies to think of using newtherapeutic technology like iPS andsiRNA,” said Hanai.
product deal with Alnylam Pharma-
ceuticals Inc. and a 2010 technology
deal with Dicerna Pharmaceuticals
tial virus-specific short interfering RNA Maraganore said the company plans toseek a partner before moving into Phase IIItesting; KHK is considering clinical trials BioCentury, THE BERNSTEIN REPORT ON BIOBUSINESS REPRINT FROM MARCH 18, 2013
Strategy,
This translates into a build-it-yourself mentality.
“Our basic strategy for globalization is based on our technol- ogy and pipeline. This is different from a strategy of M&A. I don’t The second deal gives KHK worldwide rights to therapeutics think this is a time for that. We need to integrate ProStrakan and using Dicerna’s Dicer Substrate siRNA (DsiRNA) technology Kyowa Hakko Kirin first,” said Hanai.
against a cancer target from KHK. In December 2010, KHK He added: “We don’t buy sales just for making our financials exercised an option to add immunology and inflammation better. We want to grow organically — sell products we created ourselves. There should be steady growth, not a risky jump ahead.” “There’s nothing yet in the clinic, but the research is going The company also is protecting itself against the pressures on along very well,” Hanai said. “We bring our internal liposome pharmaceutical pricing via a two-pronged drug development delivery technology — delivery is an issue for RNA. Having “In the future [the industry] may not have the high returns of Indeed, a look at the deals KHK has done indicates it is heavy the past,” Hanai said. “Our strategy is, one, to keep our with early stage partnerships: eight of the 13 deals done since technology innovative — that’s the high return strategy. And, 2010 are research/technology deals (see “Kyowa’s Deal Flow”). two, we started a biosimilar business — it’s not high return, but Unlike Japanese pharmas such as Astellas Pharma Inc.,
it is a certain, i.e., a sure, return. A mixed strategy is very which has moved its R&D core to the U.S., KHK plans to keep important for the new era of the pharma business.” major hubs in both Japan and the U.S.
Hanai is banking on biosimilars to cover revenues gaps in “For us, the Japanese market is still very important, so the center of development is in Tokyo,” Hanai said. “It is possible The company currently has plans for four biosimilars, and that in the future we would move our center of development to expects to put one per year into the clinic. In 1H13 it plans to the U.S. It depends on the stage of the company — which market begin European trials of a biosimilar of Humira adalimumab, an anti-TNF from AbbVie Inc. that goes off patent in Europe in
He added: “You need face-to-face communication. If we want to get good discoveries from academics, we need to be here. We “We want to be one of the first players when the patent also have a research force in California. So we need research in “We want to meet European and Japanese guidelines,” he KHK also is focusing on improving manufacturing — though added, noting “the U.S. pathway isn’t clear yet.” mostly for biosimilars, since changing the manufacturing process The company plans to put a biosimilar of Genentech Inc.’s
for existing drugs would likely require new clinical trials. The Avastin bevacizumab into the clinic in 2014 and hasn’t disclosed company has 200 scientists at its Bioproduction Research the other two molecules. Avastin goes off patent in the U.S. in Technology Institute, which is focused on bioprocessing.
2019 and around the same time in Europe, according to “The biosimilars business is a highly competitive area,” Hanai said. “But we already have experience with the production of KHK plans to focus its biosimilars business in the mature biologics and we can continue to make new technology. I think markets because it doesn’t believe it can compete against what only limited companies can develop high-quality biosimilars.” it sees as lower-quality competition in emerging markets.
“Our strategy for biosimilars is the U.S., Europe and Japan,” Hanai said. “Currently we don’t think we will sell our biosimilars Steady growth
in emerging markets because we guarantee very high quality and KHK, which has a market cap of $6.3 billion, does not have M&A as a centerpiece of its growth strategy.
KHK’s due diligence on data for biosimilars in emerging “Kyowa Hakko Kirin is different than Takeda,” Hanai said.
markets led to Hanai’s conclusion. “We checked their quality “Their strategy is M&A. We did M&A with ProStrakan, but — and that would not be able to be sold in the U.S., Japan or Europe,” he said. “We can’t compete in emerging marketswhere there are low-quality biosimilars.” Outside of these geographies, the company will make Kyowa’s top five drugs
The top five drugs from Kyowa Hakko Kirin Co. Ltd. (Tokyo:4151)
“We sell in China, Taiwan, Korea, but we have no plan to accounted for ¥135.9 billion ($1.7 billion) in sales, or about 54% of total expand our territory,” Hanai said. “We will not expand into net sales from the pharmaceuticals segment. Source: Kyowa Hakko Kirin Africa or the Islamic countries without a partner. ProStrakanmay be able to handle Eastern Europe, but they’re not thereyet.” 2012 sales
from 2011
Inside Japan
KHK launched two new products in Japan in 2012: Poteligeo and Parkinson’s drug Apokyn apomorphine, which it licensed
from Stada Arzneimittel AG in 2006.
The company hopes to launch three new products in Japan this year: Abstral (KW-2246) for breakthrough cancer pain, istradefylline (KW-6002) for PD and saxagliptin for Type IIdiabetes.
$1,698.8
BioCentury, THE BERNSTEIN REPORT ON BIOBUSINESS REPRINT FROM MARCH 18, 2013
Strategy,
lower sales in 2015 than in 2012, based on “I will fight for a late-stage or
mid-stage compound, but I
company’s core allergy product, the anti- and U.S. approval of istradefylline. Also histamine Allelock, in December 2012.
want to keep the research
last year, it refiled for Japanese approval of Abstral after the regulators asked for more pipeline full. That’s essential
using logic similar to its expectations for for Kyowa Hakko Kirin to
with Hisamitsu Pharmaceutical Co.
survive for the future.”
“It’s not high return, but we are ex- Partner Otsuka Pharmaceutical Co.
Tamao Watanabe, KHK
Ltd. last year filed for Japanese approval
billion ($252.5 million) in sales last year and KHK is forecasting ¥22.6 billion this (DPP-4) inhibitor developed by BMS. Otsuka granted marketing year. The company estimates it had a 30% share of the 30,000- ton global amino acids business in 2010. By 2020 it wants to In addition, KHK plans a Japanese regulatory submission this increase that share to 40% of what it estimates will be a global year for pegfilgrastim long-acting G-CSF (KRN125) for chemo- therapy-induced febrile neutropenia. And by 2015 it hopes to “We get over 20% gross margins from a new drug, and 10% launch a fifth product in Japan, recombinant antithrombin (KW- for the biosimilar and amino acid businesses,” Hanai noted.
“Operating profit on sales of pharma is about 20%.” Meanwhile, the company will hold down costs by not increas- As part of its strategy for confronting the growth challenges ing the size of its sales force. Thus, KHK doesn’t plan to add to of the mature markets, KHK also is looking at new combinations its 1,400 sales reps in Japan even if it launches two or three of players and new ways of pricing drugs.
“We can’t stay with the original pharma model,” said Hanai.
“In the past we would have increased the number of reps,” “KHK’s partners may not always be typical pharma companies or biotechs. We may need to invite other companies that have Moving forward, KHK wants to strengthen its Japanese advanced technology in different fields such as medical devices, presence in four disease areas: nephrology, which includes chemicals and nanotech — it will be a new page of pharma R&D.
diabetes and hypertension; oncology; CNS; and immunology and We need to think differently than in the past to create a new In the nephrology space, the company is enhancing its He added: “Pricing will be very important. Payment based on presence in chronic kidney disease (CKD) and maintaining its patient outcomes is probably core for the future. Package pricing leading share in the renal anemia therapy market where its [bundling] — how to get profit from it — is the new challenge.” NESP erythropoiesis stimulating agent (ESA) has the leadingmarket share; expanding the market for Regpara cinacalcet to treat secondary hyperparathyroidism; and launching AbbVie Inc. (NYSE:ABBV), Chicago, Ill.
saxagliptin. KHK has rights to Regpara from NPS Pharma-
Alnylam Pharmaceuticals Inc. (NASDAQ:ALNY), Cambridge, Mass.
ceuticals Inc.
Amgen Inc. (NASDAQ:AMGN), Thousand Oaks, Calif.
In oncology, KHK wants to build out its position in hematol- ArQule Inc. (NASDAQ:ARQL), Woburn, Mass.
ogy, primarily by establishing Poteligeo, accelerating develop- Astellas Pharma Inc. (Tokyo:4503), Tokyo, Japan
ment of tivantinib (ARQ-197) from ArQule Inc., and enhancing
AstraZeneca plc (LSE:AZN; NYSE:AZN), London, U.K.
its presence in cancer support therapies through the launch of Bristol-Myers Squibb Co. (NYSE:BMY), Princeton, N.J.
Daiichi Sankyo Co. Ltd. (Tokyo:4568; Osaka:4568), Tokyo, Japan
Tivantinib is a c-Met inhibitor in Phase II in Japan for EGFR- Dicerna Pharmaceuticals Inc., Watertown, Mass.
receptor mutated lung cancer and in Japan and Korea for gastric Fred Hutchinson Cancer Research Center, Seattle, Wash.
Fujifilm Corp., (Tokyo:4901), Tokyo, Japan
ArQule is developing it elsewhere with Daiichi Sankyo Co.
Fujifilm Kyowa Kirin Biologics Co. Ltd., Tokyo, Japan
Ltd. The partners just started Phase III testing in hepatocellular
Genentech Inc., South San Francisco, Calif.
carcinoma (HCC). The compound has failed trials in combina- Hisamitsu Pharmaceutical Co. Inc. (Tokyo:4530; Osaka:4530),
tion with Tarceva erlotinib in non-small cell lung cancer (NSCLC) and in combination with Erbitux cetuximab in metastatic colorectal Kyowa Hakko Kirin Co. Ltd. (Tokyo:4151), Tokyo, Japan
La Jolla Institute for Allergy & Immunology, La Jolla, Calif.
In CNS, KHK wants to expand products for PD and quickly Life Science Pharmaceuticals Inc., Greenwich, Conn.
launch Apokyn, as well as develop KHK6188, an agonist of MedImmune LLC, Gaithersburg, Md.
cannabinoid CB2 receptor (CNR2) that is in Phase II trials for NPS Pharmaceuticals Inc. (NASDAQ: NPSP), Parsippany, N.J.
Orexo AB (SSE:ORX), Uppsala, Sweden
In immunology and allergy, KHK wants to enhance its Otsuka Pharmaceutical Co. Ltd., Tokyo, Japan
presence in dermatology/otorhinology. This includes accelerat- Roche (SIX:ROG; OTCQX:RHHBY), Basel, Switzerland
ing development of benralizumab and KHK4827, an anti-IL-17 Sanofi (Euronext:SAN; NYSE:SNY), Paris, France
antibody in Phase II trials in psoriasis.
Stada Arzneimittel AG (Xetra:SAZ), Bad Vilbel, Germany
However, immunology/allergy is the only one of the four University of Tokyo, Tokyo, Japan
BioCentury, THE BERNSTEIN REPORT ON BIOBUSINESS REPRINT FROM MARCH 18, 2013
Kyowa’s deal flow
Since 2010, Kyowa Hakko Kirin Co. Ltd. (Tokyo:4151) has done at least 13 pipeline building deals. Nine were discovery or preclinical stage. Most recent
deals at top. (A) JV between Kyowa and Amgen Inc. (NASDAQ:AMGN); Sources: BCIQ: BioCentury Online Intelligence; Kyowa Hakko Kirin
Partner/
Status at
acquisition
Deal type
Description
Financials
time of deal
Adimab LLC
undisclosed clinicalmilestones and royaltieson antibodies licensedby Kyowa NovAliX S.A.S.
develop small molecules againstundisclosed protein-proteininteraction targets chosen byKyowa Shionogi & Co. Ltd. Research
from Shionogi’s Ezose Sciences Inc.
Genmab A/S
antibodies against undisclosedtarget from Kyowa Activiomics Ltd.
Cell Signaling (TIQUAS) massspectrometry technology toidentify signaling mechanismsof lead compounds from Kyowa Therapeutics Inc.
partners also will developpepducin therapeutics anduse the pepducin technologyto co-develop research tools Fujifilm Holdings
Corp. (Tokyo:4901)
Preclin [now planto start clinicaltesting 1H13] ImmunoCellular
Launches newco Caerus
Therapeutics Ltd.
Discovery LLC with Kyowa’s
‘It’s the BioCentury’TM
BioCentury, THE BERNSTEIN REPORT ON BIOBUSINESS REPRINT FROM MARCH 18, 2013
Kyowa’s Deal Flow,
from previous page
Partner/
Status at
acquisition
Deal type
Description
Financials
time of deal
Kirin-Amgen
including China; AMG 827is a human mAb against IL-17receptor to treat autoimmunediseases Solasia Pharma
granisetron patch (SP-01),which is approved in the U.S.
to treat chemotherapy-inducednausea and vomiting (CINV);Solasia received rights fromProStrakan Group under a2008 deal Pharmaceuticals
2011 to add undisclosedoncology target to deal Pharmaceuticals
bardoxolone for cardiovascular,renal or metabolic diseases;the small molecule activator ofnuclear factor (erythroid-derived2)-like 2 (NFE2L2; NRF2) is indevelopment to treat chronickidney disease (CKD) in patientswith Type II diabetes; additionalindications in the licensedterritories will be co-developed BioCentury makes people think
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Source: http://www.kyowa-kirin.co.jp/information/2013/pdf/info_0404.pdf