Hutchison China Meditech: UBS raises target price from 470p to 520p and reiterates its buy recommendation.
29 Nov '12
The shares remain undervalued, valuation raised to £292m We had previously excluded HMPL-004 from our NPV model but conservatively value the deal at £23m (based on HMPL-004 launch in 2016, peak sales of £300m and a 62% success probability). We use a sum-of-the-parts valuation that suggests a market cap of £292m (up from our previous £275m) is justified for HCM, with scope for additional upside if further elements of the R&D pipeline are partnered.
A premium valuation is deserved China Healthcare is the largest division. Placing a similar rating to its quoted Chinese peers (19.5x) gives a market cap of £218m, meaning that MediPharma, Consumer Products and the cash pile (over $20m) are essentially in for free. A sum-of-theparts valuation suggests a market cap of £275m is justified, with scope for further upside if elements of the R&D pipeline are partnered
Pharmaceutical company Hutchison China MediTech (Chi-MEd) has announced that through its majority-owned research and development company it has initiated the first-in-human phase 1 clinical trial of its Theliatinib (HMPL-309) product. The firm said the main aim of the study is to evaluate its safety and tolerability in patients with advanced solid tumours and to determine its maximum tolerated dose. The trial is the fourth oncology compound from the internal discovery programmes the R&D company to enter into clinical development in China. Theliatinib is an orally active product which targets the wild type epidermal growth factor receptor (EGFR) or resistant EGFR tumours. Phase 1 will also evaluate its preliminary efficacy against non-small cell lung cancer (NSCLC), determine the way the body responds to Theliatinib under single dose and repeat doses and explore the relationship between the Theliatinib's activity and certain biomarkers. "In pre-clinical studies, Theliatinib demonstrated strong anti-tumour activity against EGFR wild type tumours at doses that are expected to be well tolerated," the company said. "These studies also exhibited good tissue distribution and stronger anti-tumour activity in EGFR wild type and EGFR resistant tumours, compared with first generation small molecule EGFR inhibitors. If these attributes are also demonstrated in clinical studies, we believe that Theliatinib could become an important therapy in this area."
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