HUTCHMED

Continued H124 execution; well on-track to meet targets

Lighthouse | 2 August 2024

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  • Oncology/Immunology in-market H124 product sales grew +145% CER to $243m (H123: $101m), largely driven by US Fruzaqla sales of $130m (H123: nil) following November 2023 launch by partner Takeda, with these representing >50% of in-market sales. China in-market sales grew +16% CER to $113m (H123: $101m) with Elunate, Sulanda and Orpathys all posting double-digit CER growth despite increasing competition.
  • In-market sales resulted in consolidated product revenue growth of +64% CER to $128m (H123: 80m), which together with partnering and R&D services income of $41m (H123: $279m including partial recognition of the Takeda upfront) led to consolidated product revenues of $169m (H123: $359m). This puts HUTCHMED on-track to achieve unchanged FY24 Oncology/Immunology consolidated revenue guidance of $300-$400m, with anticipated commercial milestones from Takeda during H224 on EU and Japan launches potentially driving revenues to the upper end of the range.
  • Total H124 revenues were $306m (H123: $533m), with Other Ventures declining to $137m (H123: $174m) owing to lower COVID-related prescription drug distribution sales. Continued portfolio optimisation reduced R&D spend by 34% to $95m (H123: $145m), albeit investment is expected to increase H224. SG&A also declined to $58m (H123: $68m) and Other Items were $53m (H123: $57m) on lower FX gains. Net income was $26m (H123: $169m) despite the lack of significant milestone/partnering income that was received in H123. End-H124 cash was $802m (end-FY23: $886m).
  • The pipeline will be key for future growth, and HUTCHMED has 15+ registration/registration-intent studies ongoing across seven candidates, and there are six NDA/sNDA under review globally. These include fruquintinib in Japan in 3L colorectal cancer, fruquintinib in China in 2L gastric cancer (decision potentially Q324), sovleplenib for 2L immune thrombocytopenia (ITP) in China (decision potentially by YE24), and tazemetostat for relapsed/refractory follicular lymphoma in China. Partner AstraZeneca is expected to file savolitinib in the US for Tagrisso-refractory NSCLC by YE24. A recent R&D day highlighted the prospects for three pipeline products, including the first third-wave asset HMPL-306 (July 2024 Lighthouse).

Trinity Delta view: HUTCHMED continues to execute consistently, with in-market sales growth driving revenues, an optimised and well-balanced pipeline with near-term additional approvals and launches in China and globally, and a sharp focus on costs. These should help achieve consolidated Oncology/Immunology revenues towards the upper end of maintained FY24 guidance and could also provide sustainable profitability earlier than anticipated. Partner Takeda continues to drive Fruzaqla US sales momentum, and both EU and Japan launches are expected later this year, whilst savolitinib for lung cancer could be filed in the US by partner AstraZeneca by YE24. In China, second wave products sovleplenib for ITP and tazemetostat for follicular lymphoma could both launch within the next 6-12 months. Our current HUTCHMED valuation is $6.10bn/£5.09bn/HK$47.61bn, or $35.03/ADS and 584p/HK$54.64 per share.

Lighthouse

2 August 2024

Price (US ADS)
(UK share)
(SEHK share)
$18.48
292.0p
HK$28.80
Market Cap
 
$3.22bn
£2.54bn
HK$25.10bn
ExchangesNASDAQ
AIM London
SEHK
SectorHealthcare
Company CodesHCM
HCM.L
0013.HK
Corporate clientYes

Company description

HUTCHMED is a Hong Kong headquartered biopharma focused on discovering, developing and commercializing innovative targeted therapeutics and immunotherapies to treat cancer and autoimmune diseases. It has a diverse pipeline of first-in-class/best-in-class selective oral TKIs in development for the China and global markets.

Analysts

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

Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042

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