HUTCHMED

Profitability milestone achieved ahead of schedule

Lighthouse | 20 March 2025

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  • HUTCHMED achieved its breakeven target one year early driven by strong global Fruzaqla sales (c $291m ex-China in-market sales for its first full year) and associated milestones (including a first commercial $20m milestone on reaching $200m in sales, and Japan and EU regulatory milestones totalling $15m). The pipeline is also progressing with 13+ registration/registration-intent studies ongoing with seven drug candidates, and the first candidate from the proprietary ATTC (antibody-targeted therapy conjugate) platform (January 2025 Update) is expected to enter clinical development in H225.
  • FY24 Oncology/Immunology consolidated revenue of $363m (FY23: $529m) was at the upper end of $300m-400m guidance and included product-related revenues of $272m (FY23: $164m, +67% CER vs guidance of 30-50%), and upfront, milestones, R&D services, and other revenue of $92m (FY23: $364m). In-market oncology product sales grew +136% CER to $501m (FY23: $214m). Total FY24 revenues were $630m (FY23: $838m), including Other Ventures income of $267m (FY23: $309m). End-FY24 cash of $826m (end-FY23: $886m) will rise to c $1.4bn on close of the divestment of a 45% equity stake in Shanghai Hutchison Pharmaceuticals Ltd (SHPL).
  • Cost control and completion of several large late-stage trials reduced overall operating expenses to $674m (FY23: $820m). Cost of revenue, down 9% to $349m, reflected lower revenue from Other Ventures and improved margins on oncology products given product mix and economies of scale. R&D costs fell 30% ($212m vs $302m for FY23) largely due to lower US/Europe R&D expenses of $34m (FY23: $107m) post restructuring of global operations; China R&D investment was $178m (FY23: $195m). SG&A declined to $113m (FY23: $133m) given tight control of G&A ($64m vs $80m) and salesforce efficiencies ($49m vs $53m). Other Items were $81m (vs $82m).
  • The 2025 outlook is positive with Oncology/Immunology revenue guidance of $350m-$450m underpinned by (1) further EU launches and improved coverage for Fruzaqla, (2) China launch of the Elunate and sintilimab combination (conditional approval received in 2L EMC; potential for sNDA filing in 2L RCC), and (3) potential China approval decisions for tazemetostat (3L follicular lymphoma), sovleplenib (2L primary immune thrombocytopenia), and savolitinib (2L EGFR refractory NSCLC with MET amplification).

Trinity Delta view: HUTCHMED continues to consistently execute strategically, with sustainable profitability ahead supported by solid in-market product sales growth. Near-term top-line growth will be driven by additional global launches and new indications for current products, plus potential new product approvals. Acquisitions and/or in-licensing will be sought to support the mid-term, whilst accelerated investment in the highly promising ATTC platform (from proceeds of the SHPL disposal) should underpin longer-term growth prospects. The ATTC platform could address a wide range of oncology indications with sizeable market potential. Continued prudent cost control should also lead to ongoing margin expansion. Our most recent HUTCHMED valuation was $5.94bn/£4.95bn/ HK$46.31bn, or $34.07/ADS and 568p/HK$53.14 per share (ex SHPL disposal).

Lighthouse

20 March 2025

Price (US ADS)
(UK share)
(SEHK share)
$16.18
245.0p
HK$25.90
Market Cap
 
$2.82bn
£2.10bn
HK$22.57bn
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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