Biotech/Healthcare The comeback of ADCs

Overweight (Maintain) ADCs proving their value through strong clinical data Recently, there have been some interesting developments in the antibody-drug Industry Report conjugate (ADC) space. Market interest in ADCs appeared to be abating amid February 21, 2020 disappointing commercial performances and the advent of immuno-oncology drugs . However, the tides began to turn after last year’s announcement of an W8tr ADC deal

for Daiichi Sankyo’s (4568 JP/CP: JPY7,715) Enhertu. ADC developers have also se en sharp share price gains. Mirae Asset Daewoo Co., Ltd. The key catalyst behind this change has been clinical data. Daiichi Sankyo’s Enhertu [Biotech/Healthcare ] showed an objective response rate (ORR) of 60.9% and a disease control rate (DCR) of 97.3% in patients with breast cancer, a far better performance than that of Roche’s Taehee Kim +822 -3774 -6813 (ROG SW/CP: CHF351.15) ADC Kadcyla. Padcev, a bladder cancer treatment that was [email protected] approved around the same time as Enhertu, also showed an ORR of 71% when combined with Keytruda, vs. 29% for Keytruda as a monotherapy.

Market growth to gather steam in 2020

Led by Enhertu and Padcev, we expect the ADC market to rapidly grow in 2020. Enhertu and Padcev are expected to become blockbuster drugs, with sales of

US$3.7bn and US$1.7bn, respectively, by 2026 (GlobalData). We believe ADC market growth will be driven by a number of factors, including: 1) enhanced safety resulting from improvements in antibodies and toxins; 2) an expanding diversity of indications (from cancer to rheumatoid arthritis, systemic sclerosis, and infecti ons); 3) synergies with immuno-oncology drugs proven through combination therapy clinical trials; and 4) the development of new types of ADCs, such as bispecific antibody-toxin combos.

Domestic ADC developers: LegoChem Biosciences, Alteogen, Celltrion , and pH Pharma Companies in Korea that are working to develop ADCs include LegoChem Biosciences (141080 KQ/CP: W47,400), Alteogen (196170 KQ/CP: W102,200), Celltrion (068270 KS/Buy/TP: W260,000/CP: W179,000), and pH Pharma. Among them, we note that LegoChem Biosciences has already gained wide recognition. In addition to an out- licensing deal with China’s Fosun Pharma (600196 CH/CP: RMB26.09), the company also landed a W454.8bn out-licensing deal with Japan’s Takeda (4502 JP/CP: JPY4,163) in 2019. In addition, the company was recognized for its strong technology at the World ADC Awards in 2018 and 2019 (in the “Best ADC Platform Technology” category). While the company previously specialized in linkers, it has now secured competitiveness i n PBD toxins, which we believe raises the potential for further out-licensing deals.

ADC word cloud

Rheumatism/infection symptoms Fast track/breakthrough therapy LegoChem Biosciences Daiichi Sankyo US$6.7bn deal Use with immuno-oncology drugs Enhertu 97.3% DCR PBD toxin Celltrion Seattle Genetics 31.6% CAGR Padcev/Keytruda combination 71% ORR

Source: Mirae Asset Daewoo Research

February 21, 2020 Biotech/Healthcare

ADCs staging a comeback

In March 2019, AstraZeneca (AZN LN/CP: GBp7,615) struck an W8tr deal with Japanese drugmaker Daiichi Sankyo to jointly develop and commercialize Enhertu, an ADC candidate. The deal, which included an up-front payment of roughly W1.5tr, sent Daiichi Sankyo shares surging 108% in 2019, significantly outperforming the market (vs. +20% for the Nikkei 225).

ADCs are a “2.5-generation” class of anti-cancer drugs that combine the benefits of first- generation chemotherapy and second-generation targeted therapy. Though they were initially hailed as a major breakthrough in cancer treatment, ADCs have faced obstacles; the first one to receive FDA approval (Mylotarg) was eventually withdrawn from the market due to serious toxicity concerns. With the exception of Takeda’s Adcetris and Roche’s Kadcyla, most subsequently launched ADCs have generated marginal revenues. And a number of ADC clinical trials have ended in failure due to safety concerns.

Against this backdrop, the rise of third-generation cancer immunotherapies, including immune checkpoint inhibitors (e.g., Keytruda, Opdivo) and chimeric antigen receptor T cell (CAR-T) therapies (e.g., Kymriah, Yescarta), further weakened the position of 2.5-generation ADCs. Notably, development of AbbVie’s (ABBV US/CP: US$94.13) much-anticipated lung cancer ADC Rova-T was halted after a phase 3 clinical trial demonstrated no survival benefit for patients.

However, ADCs appear to be staging a comeback. In addition to the large-scale deal between AstraZeneca and Daiichi Sankyo signed in 2019, a number of new ADCs are expected to gain approval and hit the market in 2020. Each of the new drugs is anticipated to garner sales in excess of W1tr annually. Multinational pharmas like AbbVie, Genentech, Pfizer (PFE US/CP: US$36.23), and Bristol-Myers Squibb (BMS; BMY US/CP: US$65.71) are continuing to develop ADCs. In this report, we take a deeper look at the recent changes in ADC development and its future prospects.

Figure 1. ADC structure Figure 2. ADC mechanism of action

Source GenEngNews, Mirae Asset Daewoo Research Source ADC Review, Mirae Asset Daewoo Research

Table 1. List of marketed ADCs Trade name Generic name Company Target antibody Indication Approval Mylotarg Pfizer CD33 Acute myeloid leukemia Mar. 2000 Adcetris Seattle Genetics CD30 Hodgkin lymphoma Aug. 2011 Kadcyla emtansine Genentech HER2 Breast cancer Feb. 2013 Besponsa Pfizer CD22 B-cell acute lymphocytic leukemia Aug. 2017 Lumoxiti AstraZeneca CD22 Hairy cell leukemia Sep. 2018 Elzonris Tagraxofusp-erzs Stemline Therapeutics CD123 BPDCN Dec. 2018 Polivy Genentech CD79b Large B-cell lymphoma Oct. 2019 Padcev Astellas/Seattle Genetics Nectin-4 Metastatic transitional tract cancer Dec. 2019 Enhertu AstraZeneca/Daiichi Sankyo HER2 Breast cancer Dec. 2019 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 2 February 21, 2020 Biotech/Healthcare

Table 2. ADCs under development by big pharmas Company Candidate Indication Phase AbbVie ABBV-011 Small-cell lung cancer Phase 1 ABBV-155 Solid cancer, blood cancer Phase 1 ABBV-321 Solid cancer Phase 1 ABBV-647 Solid cancer Phase 1 ABBV-399 (telisotuzumab vedotin) Non-small cell lung cancer Phase 2 Genentech Anti-CD79b (polatuzumab vedotin) Non-Hodgkin lymphoma Phase 2 Pfizer PF-06804103 Cancer Phase 1 BMS BCMA ADC Multiple myeloma Phase 1 Bayer Anetumab ravtansine Breast cancer, stomach cancer, non-small cell lung cancer, etc. Phase 2 Source: Mirae Asset Daewoo Research

Solid clinical data and structural improvements helping to allay safety concerns

1) Solid data

a. Daiichi Sankyo’s Enhertu

At the 38 th annual JP Morgan Healthcare Conference, Daiichi Sankyo gave a presentation titled “Deliver ADC to as Many Patients as Possible as Fast as We Can.” The Japanese drugmaker, a leader in synthetic chemical research, seems to be shifting its focus to ADCs because of the clinical achievements of Enhertu.

Indeed, in a phase 2 clinical trial, Enhertu monotherapy yielded positive results in patients with HER2-positive metastatic breast cancer that had progressed following two or more other treatment regimens (e.g., Herceptin, Perjeta, Kadcyla).

The phase 2 results showed a confirmed ORR (the proportion of patients with tumor size reduction of over 30%) of 60.9%, including complete response (disappearance of all signs of cancer in response to treatment) rate of 6%. An additional 36.4% showed stable disease. This translated to a disease control rate (DCR; ORR + stable disease) of 97.3%.

Figure 3. Daiichi Sankyo positioning itself as an ADC specialist Figure 4. Enhertu phase 2 results: 60.9% ORR, 97.3% DCR

(%) 97.3% DCR 100

80 36.4

Complete response 60 Partial response

40 Stable disease 54.9

20

0 6.0 Population (n = 168)

Source: Daiichi Sankyo, Mirae Asset Daewoo Research Source: Daiichi Sankyo, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 3 February 21, 2020 Biotech/Healthcare

Based on these results, Enhertu appears to perform better than Roche’s Kadcyla, which is currently used as a second- or third-line treatment. And considering that patients in the phase 2 study had received a median of six prior treatments, we think there is room for further improvement in clinical results going forward.

We expect Enhertu to become a new option for breast cancer patients who fail to respond to Kadcyla. Notably, the US FDA’s approval of Enhertu came through on December 20, 2019—more than three months ahead of the agency’s deadline. The drug’s application had been granted “fast track” and “breakthrough therapy”, “accelerating approval” designations.

Having been approved to treat breast cancer, Enhertu delivered promising results in head- to-head clinical trials (vs. Kadcyla), which were designed to confirm its potential as a second- line treatment for gastric cancer. Daiichi Sankyo announced at end-January that Enhertu had achieved clinically meaningful improvement in ORR and overall survival in patients with HER2-positive metastatic gastric cancer. For reference, Roche failed in its own study to explore the efficacy and safety of Kadcyla as a second-line treatment in patients with gastric cancer several years ago.

Figure 5. Enhertu’s superior clinical data Figure 6. Enhertu revenue estimates

Pertuzumab + Kadcyla (US$bn) Kadcyla Kadcyla trastuzumab + (1L, failed Enhertu 4.0 (2L) (3L+) 3.7 docetaxel (1L) study) 3.5 3.1 mPFS 18.5m 14.1m 9.6m 6.2m 16.4m 3.0 2.5 DoR 20.2m 20.7m 12.6m 9.7m 14.8m 2.5

OS 56.5m 53.7m 30.9m 22.7m Not reached 2.0 1.8

ORR 80% 60% 43.6% 31% 60.9% 1.5 1.1

6 1.0 Median prior 100% prior 0.5 0.3 treatments for 0 0 1 4 Kadcyla 0.1 adv. disease 66% prior 0.0 0.0 19 20F 21F 22F 23F 24F 25F 26F

Source: Daiichi Sankyo, Mirae Asset Daewoo Research Source: GlobalData, Mirae Asset Daewoo Research

b. Padcev, jointly developed by Seattle Genetics and Astellas Pharma

Padcev is an ADC used to treat advanced urothelial cancer (the most common form of bladder cancer) that was approved by the FDA around the same time as Enhertu, in December 2019.

In the EV-201 study, results of which were presented at the 2019 American Society of Clinical Oncology (ASCO) meeting, Padcev achieved an ORR of 44% (55 out of 125 patients), including a 12% complete response (disappearance of tumor) rate and a 32% partial response (reduction in tumor size of over 30%) rate. More significantly, of 100 patients who did not respond to PD-1/PD-L1 inhibitors, 41% exhibited a partial response. As a result of this study, Padcev was approved under the FDA's “accelerated approval/breakthrough therapy/priority review” program in December 2019, three months ahead of schedule.

Meanwhile, in the EV-301 study (co-administration with Keytruda in 45 urothelial cancer patients), results of which were presented at the European Society for Medical Oncology (ESMO) meeting in September 2019, the combination of Padcev and Keytruda achieved an ORR of 71% (13% complete response and 58% partial response). An additional 22% had stable disease, translating to a DCR of 93%. This combination appears to be superior to Keytruda as a monotherapy, which showed an ORR of 29% (7% complete response and 22% partial response) in a phase 2 trial.

Mirae Asset Daewoo Research 4 February 21, 2020 Biotech/Healthcare

Figure 7. Padcev creates synergies when co-administered Figure 8. Padcev revenue estimates with an immune checkpoint inhibitor

(%) (US$bn) 100 PR 2.0 CR 1.7

80 1.5 71% ORR 1.5 1.3 60 1.0 1.0 40 58 0.7 29% ORR 0.5 0.5 20 22 0.2

13 0.1 7 0 0.0 Only Keytruda Keytruda + Padcev 19 20F 21F 22F 23F 24F 25F 26F

Source: Seattle Genetics, Mirae Asset Daewoo Research Source: GlobalData, Mirae Asset Daewoo Research

2) Structural improvements for enhanced safety

As ADCs are typically based on potent toxins, antibodies and linkers play a key role in preventing side effects.

Recently, antibodies have been designed to specifically target cancer cells and bind tightly to toxins, reducing off-target effects. And linker stability has been improved so that less of the toxic payload falls off before reaching tumor cells. With less drug reaching non-target tissue, the maximum tolerated dose has increased and the minimum effective dose has decreased, widening the therapeutic window.

Figure 9. ADCs have a wider therapeutic window

Chemotherapy ADCs

Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 5 February 21, 2020 Biotech/Healthcare

Notably, pyrrolobenzodiazepines (PBD) show strong anti-tumor activities. Until recently, attempts (by pharmas such as Seattle Genetics [SGEN US/CP: US$119.89], ImmunoGen [IMGN US/CP: US$5.70], ADC Therapeutics, and AbbVie) to incorporate PBDs into ADCs have failed, mainly due to narrow therapeutic windows.

Thanks to steady technological advances, however, PBD-based ADCs with wider therapeutic windows are now under development. A promising candidate is ADC Therapeutics’ ADCT- 301 (currently in a phase 2 trial), which is composed of a that binds to CD25. In addition, AbbVie, Takeda, AstraZeneca, and ImmunoGen all have candidates in phase 1 trials.

Table 3. Failed attempts to incorporate PBDs into ADCs Phase when Company Candidate Reasons Discontinuation discontinue d Seattle Genetics Vadastuximab talirine Phase 3 Fatal infections Jun. 2017 SGN-CD70A Phase 1 Low ORR Oct. 2016

SGN-CD123A Phase 1 Undisclosed May 2018

SGN-CD352A Phase 1 R&D portfolio adjustment Aug. 2019 ADC Therapeutics ADCT-502 Phase 1 Failed to prove safety and efficacy Apr. 2018 ImmunoGen IMGN779 Phase 1 R&D portfolio adjustment Jun. 2019 Efficacy not proven in p lacebo - AbbVie Rova-T Phase 3 Aug. 2019 controlled trials Source: Mirae Asset Daewoo Research

Table 4. PBD-based ADCs now under development Company Candidate Target antibody Phase ADC Therapeutics CD19 Phase 2 ADCT-301 CD25 Phase 2

ADCT-601 Axl Phase 1

ADCT-602 CD22 Phase 1/2 ImmunoGen/Jazz Pharmaceuticals IMGN632 CD123 Phase 1/2 AstraZeneca MEDI2228 BCMA Phase 1 AbbVie ABBV-321 EGFR Phase 1 Mitsubishi Tanabe/AstraZeneca MT-8633 c-MET Phase 1 Takeda TAK-164 GCC Phase 1 Source: Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 6 February 21, 2020 Biotech/Healthcare

2020 to mark the beginning of full-scale growth

Most anticipated ADCs: Enhertu and Padcev

Led by Enhertu and Padcev (both approved in December 2019), we expect the ADC market to rapidly grow in 2020. We expect those drugs, in addition to Polivy (developed by Genentech; launched in October 2019), to grow to become blockbuster drugs. In particular, we estimate Enhertu’s revenue will exceed W3tr by 2025, thanks to its superior efficacy to Kadcyla. We also look for ADC launches this year from Seattle Genetics, GlaxoSmithKline (GSK LN/CP: GBp1,655), and Immunomedics (IMMU US/CP: US$18.31), which all filed for FDA approval in 2H19.

GlobalData projects the ADC market to grow at a CAGR of 31.6% from 2019 (US$2.6bn) to 2025 (US$13.6bn).

Figure 10. ADC market outlook

(US$bn) 16 Other 14 Enhertu 12 Padcev Polivy 10 Adcetris 8 Kadcyla

6

4

2

0 11 12 13 14 15 16 17 18 19F 20F 21F 22F 23F 24F 25F

Source: GlobalData, Mirae Asset Daewoo Research

Table 5. ADCs expected to be launched this year Drug Company Target antibody Indication Approval filing Tisotumab vedotin Seattle Genetics Tissue factor Cervical cancer Jul. 2019 GSK BCMA Multiple myeloma Dec. 2019 Sacituzumab govitecan Immunomedics TROP2 Breast cancer Dec. 2019 Source: Mirae Asset Daewoo Research

Table 6. Expedited FDA reviews of ADC applications Brand Type of expedited review Mylotarg Accelerated approval (+ orphan drug) Adcetris Breakthrough therapy/priority review Kadcyla Breakthrough therapy/priority review Besponsa Breakthrough therapy/priority review (+ orphan drug) Lumoxiti Fast track/priority review (+ orphan drug) Elzonris Breakthrough therapy/priority review (+ orphan drug) Polivy Accelerated approval/breakthrough therapy/priority review (+ orphan drug) Padcev Accelerated approval/breakthrough therapy/priority review Enhertu Accelerated approval/breakthrough therapy/fast track Source: FDA, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 7 February 21, 2020 Biotech/Healthcare

Evolution of ADCs

1) ADCs to see a diversity of indications beyond cancer treatment

Notably, ADCs are likely to have a growing number of indications going forward. Some pharmas are exploring their potential to treat non-cancer conditions such as systemic sclerosis, graft-versus-host disease (GVHD), HIV-1 infection, systemic lupus erythematosus, and bacterial infection.

Major ADC candidates include AbbVie’s ABBV-3773 and Genentech’s DSTA4637S.

ABBV-3773, which is being investigated as a rheumatoid arthritis treatment, combines steroids with TNF-α inhibitors (e.g., Humira, Remicade, and Enbrel). A phase 2 clinical trial is underway with Humira as the comparator drug. Along with BTK and JAK inhibitors, ABBV- 3773 is expected to fill the void in AbbVie’s pipeline following Humira's patent expiry.

Meanwhile, DSTA4637S, which Genentech is developing based on Seattle Genetics’ ADC platform technology, is a novel antibody-antibiotic conjugate designed to deliver antibiotics directly to sites of infection. The candidate is currently in a phase 1 study, and is known to have outperformed antibiotic therapy when used alone.

2) Combination therapy with third-generation immuno-oncology treatments

In line with the latest trends in oncology, clinical trials are underway to evaluate ADCs in combination with immuno-oncology therapies. Clinical studies of ADCs have, since the early stage, investigated them not only as monotherapy but also in combination with immuno- oncology drugs such as Keytruda, Opdivo, and Yervoy. As evidenced by the clinical trial of Padcev in combination of Keytruda, the cytotoxic (i.e., cancer-killing) payloads used in ADCs generate synergies with immune-enhancing medicines.

Table 7. ADCs being evaluated in combination with immune checkpoint inhibitors ADC Firm Immune checkpoint inhibitor Brentuximab vedotin (Adcetris) Seattle Genetics (PD-1) (PD-1)

Ipilimumab (CTLA-4) Trastuzumab emtansine (Kadcyla) Genentech/Roche Pembrolizumab (PD-1) (PD-L1)

Utomilumab (4-1BB)

Ladiratuzumab vedotin Seattle Genetics Pembrolizumab (PD-1) Atezolizumab (PD-L1) Anetumab ravtansine Bayer Pembrolizumab (PD-1) Nivolumab (PD-1)

Atezolizumab (PD-L1)

Ipilimumab (CTLA-4)

Mirvetuximab soravtansine ImmunoGen Pembrolizumab (PD-1) Loncastuximab tesirine ADC Therapeutics Durvalumab (PD-L1) Enfortumab vedotin Astellas/Seattle Genetics Pembrolizumab (PD-1) GSK2857916 GSK Pembrolizumab (PD-1) MGC018 MacroGenics MGA012 (PD-1) BMS-986148 BMS Nivolumab (PD-1) BMS-986183 BMS Nivolumab (PD-1) Tisotumab vedotin Genmab and Seattle Genetics Pembrolizumab (PD-1) Enhertu AstraZeneca/Daiichi Sankyo Nivolumab (PD-1) Polivy Genentech Atezolizumab (PD-L1) Telisotuzumab vedotin AbbVie Nivolumab (PD-1) Source: Contract Pharma, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 8 February 21, 2020 Biotech/Healthcare

3) Bispecific ADCs

It is also worth noting the development of new types of ADCs. Bispecific (as opposed to monospecific) ADCs are one example. Using its proprietary Zymelink platform, Zymeworks (ZYME US/CP: US$47.04) developed ZW49, a bispecific anti-HER2 ADC that targets two HER2 epitopes (ECD2 and ECD4) to treat HER2-expressing solid tumors. ZW49 is currently in a phase 1 clinical trial with 150 patients. In November 2018, Zymeworks entered into a joint development agreement with China’s BeiGene (BGNE US/CP: US$173.19), granting BeiGene exclusive rights to develop and commercialize ZW49 in Asia (excluding Japan), Australia, and New Zealand. Under the deal, which includes ZW49 and ZW25 (clinical-stage bispecific ADC), Zymeworks received US$40mn up-front, with potential milestone payments of up to US$390mn.

In preclinical animal studies, ZW49 demonstrated improved outcomes in breast cancer models and a model of breast cancer brain metastases compared to existing Herceptin- ADCs. This sent Zymeworks’ stock price up 210% in 2019.

Figure 11. ADC with payload attached to bispecific antibody Figure 12. Zymeworks’ stock price

(US$) 60

50

40

30

20

10

0 7/17 1/18 7/18 1/19 7/19 1/20

Source: Zymeworks, Mirae Asset Daewoo Research Source: Bloomberg, Mirae Asset Daewoo Research

Figure 13. ZW49 outcomes (1) Figure 14. ZW49 outcomes (2)

Source: Zymeworks, Mirae Asset Daewoo Research Source: Zymeworks, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 9 February 21, 2020 Biotech/Healthcare

Korean ADC developers: LegoChem Biosciences, Alteogen, Celltrion, and pH Pharma

LegoChem Biosciences’ proven technological track record

We note that LegoChem Biosciences has already gained wide recognition from industry experts for its technology. In addition to an out-licensing deal with Fosun Pharma, the company also landed a W454.8bn out-licensing deal with Millennium Pharmaceuticals (the oncology subsidiary of Takeda) in 2019. The deal appears meaningful, given that Takeda is one of the leading multinational drug companies in the ADC field and is already jointly developing ADCs with leading ADC firms such as Seattle Genetics, ImmunoGen, and Mersana Therapeutics (MRSN US/CP: US$9.12).

It is also notable that LegoChem Biosciences was recognized for its strong technology at the World ADC Awards, being runner-up in the “Best ADC Platform Technology” category for two consecutive years in 2018 and 2019. This category recognizes technological originality as well as commercial validation. We believe LegoChem Biosciences’ strong showing proves the firm’s strong technological capability.

Table 8. LegoChem Biosciences was runner-up for “Best ADC Platform Technology” in 2018-19 Award category 2018 2019 Best ADC Platform Technology Winner Sutro Biopharma Zymeworks Runner-up LegoChem Biosciences LegoChem Biosciences Best New Drug Developer Winner Bicycle Therapeutics ADC Therapeutics Runner-up Sutro Biopharma Zymeworks Most Promising Clinical Candidate Winner Polivy Enhertu Runner-up Sacituzumab govitecan Padcev Source: Mirae Asset Daewoo Research

LegoChem Biosciences has secured competitive strengths in both linkers and toxins. The firm is applying a new technology to develop PBD-based ADCs, which many ADC firms— including AbbVie, Seattle Genetics, and ImmunoGen—have not succeeded in developing due to significant side effects. LegoChem Biosciences’ new technology combines PBD with compounds that keep the toxin inactive during circulation in blood and normal cells and active in cancer cells. In a preclinical study, the firm’s PBD-based ADC achieved high efficacy at a relatively low dosage and showed a superb safety profile compared to other drugs. LegoChem Biosciences is currently pursuing out-licensing deals with a number of companies.

Mirae Asset Daewoo Research 10 February 21, 2020 Biotech/Healthcare

Other ADC firms: Alteogen, Celltrion, pH Pharma, and IntoCell

Alteogen (196170 KQ), Celltrion (068270 KS), pH Pharma (unlisted), and IntoCell (unlisted) are also researching ADCs.

Alteogen, which has developed a proprietary ADC platform (NexMab), is conducting a phase 1 clinical trial for ALT-P7, a gastric/breast cancer treatment candidate, in HER2-positive Korean patients. In a preclinical efficacy study, ALT-P7 outperformed Roche’s Kadcyla. Notably, ALT-P7 was granted orphan drug status by the US FDA in 2018.

In April 2019, Celltrion signed a partnership deal with Canada-based iProgen Biotech for the joint development of ADCs. Under the agreement, Celltrion supplies recombinant antibodies, and iProgen Biotech is responsible for running a phase 1 clinical trial using its proprietary Antibody Delivery Enhancing Domain (ADED) platform. Under the agreement, Celltrion holds the right of first negotiation for global in-licensing (following the completion of the trial).

pH Pharma, which is set to be listed on the KOSDAQ following a successful technology review, entered out-licensing agreements with Immunome (October 2019) and Venn Therapeutics (December 2019) for its proprietary ADC. Meanwhile, IntoCell is developing a new ADC oncology treatment using its proprietary linker technology.

Mirae Asset Daewoo Research 11 February 21, 2020 Biotech/Healthcare

APPENDIX 1

Important Disclosures & Disclaimers

Stock Ratings Industry Ratings Buy : Relative performance of 20% or greater Overweight : Fundamentals are favorable or improving Trading Buy : Relative performance of 10% or greater, but with volatility Neutral : Fundamentals are steady without any material changes Hold : Relative performance of -10% and 10% Underweight : Fundamentals are unfavorable or worsening Sell : Relative performance of -10% Ratings and Target Price History (Share price ( ─), Target price (▬), Not covered ( ■), Buy ( ▲), Trading Buy ( ■), Hold ( ●), Sell ( ◆)) * Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months. * Although it is not part of the official ratings at Mirae Asset Daewoo Co., Ltd., we may call a trading opportunity in case there is a technical or short-term material development. * The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future earnings. * The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Equity Ratings Distribution & Investment Banking Services Buy Trading Buy Hold Sell Equity Ratings Distribution 84.05% 9.82% 6.13% 0.00% Investment Banking Services 76.67% 13.33% 10.00% 0.00% * Based on recommendations in the last 12-months (as of December 31, 2019)

Analyst Certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws or regulations thereof. Each Analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the personal views of the Analyst about any and all of the issuers and securities named in this report and (ii) no part of the compensation of the Analyst was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Mirae Asset Daewoo Co., Ltd. (“Mirae Asset Daewoo”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. Like all employees of Mirae Asset Daewoo, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Mirae Asset Daewoo except as otherwise stated herein.

Disclaimers This report was prepared by Mirae Asset Daewoo, a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange. Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been independently verified and Mirae Asset Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the Korean language. In case of an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws or regulations or subject Mirae Asset Daewoo or any of its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof. This report is for general information purposes only and it is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The report does not constitute investment advice to any person and such person shall not be treated as a client of Mirae Asset Daewoo by virtue of receiving this report. This report does not take into account the particular investment objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent judgment. Information and opinions contained herein are as of the date hereof and are subject to change without notice. The price and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. Mirae Asset Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising out of the use hereof. Mirae Asset Daewoo may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report. The reports may reflect different assumptions, views and analytical methods of the analysts who prepared them. Mirae Asset Daewoo may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Daewoo, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment banking, market-making or other financial services as are permitted under applicable laws and regulations. No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae Asset Daewoo.

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Mirae Asset Daewoo Research 12 February 21, 2020 Biotech/Healthcare

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