Hutchison China MediTech

AACR 2020: first surufatinib/PD-1 combo data

Update | 30 April 2020

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Data from early stage surufatinib trials was presented at the American Academy of Cancer Research (AACR) 2020 virtual meeting. Preliminary Phase I data of surufatinib in combination with PD-1 inhibitor toripalimab indicated the combination was safe, well-tolerated, and had encouraging anti-tumour activity. In the 29/30 evaluable patients (April 10, 2020 cut off) the overall response rate (ORR) was 34.5% (one complete response, nine partial responses) with a disease control rate (DCR) of 79.3%. For patients with neuroendocrine neoplasms (NEN, n=21), ORR was 33.3% (one CR, five PR, one unconfirmed PR) and DCR, 80.9%. Separately, a second presentation highlighted similar safety/toxicity and PK profiles between Chinese and US patients in the respective Phase I/II surufatinib monotherapy studies. Subject to regulatory approval, in H220 Hutchison China MediTech (Chi-Med) intends to both launch surufatinib monotherapy in its first indication in China and to embark on global pivotal trials. Ahead of these catalysts, our valuation is £5.08/share or $32.99/ADS.

Year-end: December 31201820192020E2021E
Sales (US$m)214.1204.9210.3274.2
Adj. PBT (US$m)86.7141.1202.6190.3
Net Income (US$m)(71.3)(103.7)(166.5)(151.1)
Earnings per ADS (US$)(0.57)(0.80)(1.22)(1.11)
Cash (US$m)301.1217.2145.9197.0*
Adj. EBITDA (US$m)(69.7)(100.7)(157.1)(133.5)
Source: Trinity Delta Note: Adjusted PBT excludes exceptionals, Cash includes short-term investments, Adjusted EBITDA includes equity in earnings of equity investees. *2021E cash figure includes assumed raise of $250m.
  • Exploring synergies with PD-1 inhibitors  Toripalimab is the first PD-1 inhibitor to be studied in combination with surufatinib. Preliminary Phase I combination data in advanced solid tumours revealed no unexpected safety/tolerability concerns and encouraging anti-tumour activity, including in neuroendocrine neoplasms (NEN) and in patients with negative or low PD-1 expression. Neuroendocrine tumours (NETs) are one subset of NEN; surufatinib monotherapy has already delivered two positive Phase III NET trials (albeit in less severe patient populations). In the Phase I study, three surufatinib doses were evaluated (200mg, 250mg, 300mg once daily) with a fixed toripalimab dose. 250mg was selected as the recommended Phase II dose for the 80-pt Phase II (initiated in Q419) on the basis of its safety/efficacy profile.
  • Surufatinib coming to the fore  First approval is expected in China in H220: NDAs for surufatinib monotherapy are currently under active review (non-pancreatic NET) or pending submission by mid-2020 (pancreatic NET). It will be the first self-launch by Chi-Med’s dedicated China Oncology commercial team. Global registration trials (US/Europe/Japan) for surufatinib monotherapy in NET could initiate in H220, subject to positive regulatory interactions. China and US PK data congruence, positive China Phase III data, and similar NET treatment paradigms globally increase confidence in successful global studies, and raise possibility of expedited approval.
  • Valued at £5.08/share or $32.99/ADS ahead of 2020 catalysts The $110m (net) raised in January coupled to >$300m in available cash resources at end-FY19 provides cash into 2021 and the means for Chi-Med to invest in its pipeline. We value Chi-Med at £3.51bn or $4.56bn using a DCF-based sum-of-the-parts model.

Update

30 April 2020

Price (UK share)
(US ADS)
331p
$21.95
Market Cap
 
£2.29bn
$3.03bn
Enterprise Value
 
£2.05bn
$2.73bn
Shares in issue (shares)
(ADS)
690.6m
138.1m
12-month range
 
249p-478p
$14.74-$30.66
Free float38.5%
Primary exchange
 
AIM
NASDAQ
SectorHealthcare
Company Code
 
HCM.L
HCM
Corporate clientYes

Company description

Hutchison China MediTech is a Hong Kong headquartered biopharma focused on discovering, developing, and commercialising innovative targeted therapeutics and immunotherapies to treat cancer and autoimmune disease. It has a diverse pipeline of first-in-class/best-in-class selective oral tyrosine kinase inhibitors in development for the China and global markets.

Analysts

Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043

Franc Gregori
fgregori@trinitydelta.org
+44 (0) 20 3637 5041

Exhibit 1: Summary of financials
Source: Company, Trinity Delta  Note: Adjusted PBT excludes exceptionals, Cash includes short-term investments, Adjusted EBITDA includes equity in earnings of equity investees. *2021E cash figure includes assumed raise of $250m

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