Remainder of Morninstar's text20 Dec 2018 13:50
LONDON (Alliance News) - Hutchison China Meditech Ltd on Thursday pointed to a wider annual loss after a change to its agreement with Eli Lilly & Co over cancer drug Fruquintinib.
Shares in Hutchison China were down 13% at 4,300.00 pence on Thursday.
The agreement is with Lilly Shanghai, an affiliate of Eli Lilly & Co, and has been amended so that Hutchison China will receive a larger share of the drug's future economic interest.
The two pharma firms signed their initial agreement over Fruquintinib back in 2013, with Lilly taking on the majority of development costs associated with the life cycle indications of the drug.
Fruquintinib is already indicated for colorectal cancer, lung cancer, and gastric cancer.
The newly signed amendment, however, grants all planning, execution and decision making responsibilities in China for Fruquintinib's life cycle indications to Hutchison China.
In return, Lilly will make a USD20 million milestone payment to Hutchison China for each new indication up to USD60 million. In addition, once the first indication is launched, Hutchison China's royalty payable on Chinese sales will increase to between 15% and 29% from 15% to 20%.
As such, Hutchison China's 2018 guidance has been updated to include a USD12 million increase in its innovation platform research and development expense to between USD142 million and USD152 million.
The firm now expects to post a total net loss of between USD71 million and USD84 million for 2018, rising from the USD39 million to USD72 million loss previously guided.
Sign In
Follow the stocks
