Hutchison China MediTech

Transitioning to a global oncology player

Lighthouse | 5 March 2021

Share this note

  • Hutchison China MediTech’s name change to HUTCHMED unifies its corporate identity and better reflect its increasing global focus. FY20 results and pipeline update shows product and clinical momentum is maintained.
  • Consolidated revenues were $228m (+11.3% on $204.9m) with Oncology/ Immunology revenues of $30.2m (from $26.8m) and Other Ventures of $197.8m (+11.1% from $178.1m). Cost of Sales rose 11.7% to $188.5m (from $160.2m) and SG&A by 15.8% to $61.3m (from $52.9m). The 26.5% increase in R&D spend ($174.8m from $138.2m), highlights progress of the 10 oncology assets, six of which are in global development. Other Items were $70.9m (from $40.4m), due to the one-time land compensation gain of $28.8m. Net Loss was $125.7m ($106.0m) vs our $132.9m forecast.
  • HUTCHMED’s three leading assets are performing well. In China: Elunate (fruquintinib) is gaining share as benefits of NRDL inclusion accrue and the in-house China Oncology commercial organisation drives traction; Sulanda (surufatinib) was successfully launched in January 2021 for non-pancreatic NET; and savolitinib’s NDA in MET exon14/del NSCLC is under regulatory review, this would mark HUTCHMED’s third approval and be the first-in-class MET inhibitor in China. Globally: surufatinib has a rolling FDA NDA and Fast Track designations for pancreatic and non-pancreatic NET; fruquintinib has FDA Fast Track for advanced CRC; and savolitinib is in multiple late-stage trials. Promising data from PD-1 combinations underpin plans for registration trials including for Sulanda + toripalimab from H221.
  • The next wave of innovative products is also progressing on track. HMPL-689, arguably the best-in-class PI3Kδ, could initiate China and Global registration studies within 12 months. HMPL-523, a novel Syk inhibitor, has completed enrolment in two early-stage studies, with plans for a China Phase III in ITP in H221. HMPL-453, a highly selective FGFR 1/2/3 inhibitor, is initiating a Phase II study. HMPL-306, an innovative IDH 1&2 inhibitor, is expanding its Phase I programmes. HMPL-295, the first of several MAPK inhibitors, is entering Phase I studies.

Trinity Delta view: HUTCHMED is transitioning from a development stage company into a global commercial organisation. The successful creation of a dedicated China Oncology sales platform, now marketing two products across various indications, indicates the path for global development. FY21 guidance for oncology revenues of $110-130m (FY20: $30.2m) highlights the initial trajectory of this transition, with approval of additional assets and further indications also on the horizon. The impressive success of the in-house discovery platform has generated 10 compounds undergoing over 30 clinical trials, both as monotherapy and in combinations, in China and globally. The next waves of earlier stage assets are also progressing and appear set to maintain momentum over the longer-term. We currently value Chi-Med at $6.1bn ($41.94/ADS) or £4.7bn (645p/share), although we will be updating our forecasts and valuation following the FY20 results.

Lighthouse

5 March 2021

Price (US ADS)
(UK share)
$27.86
414p
Market Cap
 
$4.05bn
£3.01bn
ExchangesNASDAQ
AIM London
SectorHealthcare
Company CodesHCM
HCM.L
Corporate clientYes

Company description

HUTCHMED (Hutchison China MediTech is a Hong Kong headquartered biopharma focused on discovering, developing and commercializing innovative targeted therapeutics and immunotherapies for the treatment of cancer and autoimmune diseases. 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

Disclaimer

Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.

ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.

In the preparation of this report TDRL has used publicly available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.

Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.

This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.

Copyright 2021 Trinity Delta Research Limited. All rights reserved.