Secondary ADS offering trims CK Hutchison stake
Lighthouse | 28 June 2019
Trinity Delta view: Chi-Med’s April 2019 announcement emphasised two key objectives: (1) a Hong Kong listing and global raise, and (2) the reduction in CK Hutchison’s shareholding to below 50%. Today’s announcements indicate that the second of these objectives has been achieved just ahead of end-H119.
The closing of the secondary placement should improve Chi-Med’s liquidity and, while it may have been assumed that these events would occur in tandem, the decoupling of the two objectives should facilitate a more straightforward IPO process as it will now only be associated with a primary offering of shares.
The timing of the SEHK IPO and size and structure of the offering – neither of which have been disclosed – are of clear interest to investors. Based on expected cash burn, we assume a potential offering of $200-250m to provide new capital to support pipeline investment. The IPO should enhance Chi-Med’s access to capital, broaden its shareholder base, further raise its profile in its home market, and, like the offering, improve liquidity.
Ahead of the IPO/raise, Chi-Med remains well-funded. We continue to anticipate various clinical, regulatory, and commercial catalysts in 2019 and 2020 that will unlock further shareholder value. Our current Chi-Med valuation of $5.14bn ($38.55/ADS) or £3.95bn (£5.93/share) is a pre-money valuation pending the proposed Hong Kong IPO and global placement.
28 June 2019
|Price (US ADS) (UK share)||$30.20|
Hutchison China MediTech is a Hong Kong headquartered biopharma with an established Commercial Platform in China, and a diverse pipeline of first-in-class/best-in-class selective oral tyrosine kinase inhibitors (Innovation Platform). Its pipeline, discovered in-house, is in development for the China and global oncology markets.
+44 (0) 20 3637 5041
Mick Cooper PhD
+44 (0) 20 3637 5042
+44 (0) 20 3637 5043
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