Beaufort Buy recommendation15 Feb 2017 09:56
Hutchison China MediTech (LON:HCM, 2,137.50p) –
HMPL-453 is a novel, highly selective and potent small molecule inhibitor targeting fibroblast growth factor receptor ('FGFR'). FGFRs are a sub-family of receptor tyrosine kinases. Activation of FGFR signaling pathways is central to several biological processes, including angiogenesis, tissue growth and repair. Given its complexity and critical role in a number of important physiological processes, aberrant FGFR signaling has been found to be a driving force in tumor growth, promotion of angiogenesis, as well as, conferring resistance to anti-tumor therapies. There are currently no approved therapies specifically targeting the FGFR signaling pathway. On a separate news, Chi-Med also announced that the Group and its partner, AstraZeneca, will present data from the ongoing Phase II clinical trial of savolitinib in patients with papillary renal cell carcinoma at the 2017 Genitourinary Cancers Symposium. Chi-Med will announce final results for the FY2016 on 13 March
Our view: The announcement follows positive pre-clinical studies which demonstrated greater potency and better kinase selectivity against other drugs in the same class, along with a good safety profile. The Phase I clinical trial will evaluate the safety, tolerability, pharmacokinetics and preliminary anti-tumor activity of HMPL-453, in patients with advanced or metastatic solid malignancies, who have failed or are unable to tolerate standard therapies or for whom no standard therapy exists. HMPL-453 was also found to have low likelihood of drug-to-drug interaction issues and the Group currently retain all rights to HMPL-453 worldwide. The presentation for savolitinib at the 2017 Genitourinary Cancers Symposium with AstraZeneca is also a positive news. Savolitinib is a highly selective inhibitor of c-Met receptor tyrosine kinase, and has shown early clinical benefit in multiple Phase I and II studies for a number of cancers. The Group has also confirmed that Chi-Med and AstraZeneca are currently initiating a global pivotal Phase III trial, the first pivotal study ever conducted in c-Met-driven PRCC and the first molecularly selected trial in RCC. We are encouraged by the Group's progress. Chi-Med is currently enrolling patients in 25 clinical trials around the world, including 4 pivotal Phase III studies the first of which, Fruquintinib in third-line colorectal cancer, will report top-line results early in 2017. For the FY2016 financial result, the Group already provided guidance with its interims, where it stated consolidated revenues should be in the range of US$190m-US$205m with net income attributable to Chi-Med in the range US$NIL-US$5m. The balance sheet of Chi-Med is expected to be enhanced following and compensation payment from the Shanghai government to its JV, which Chi-Med will book as an estimated one-time gain on the transaction of US$38.2m in the Q4 2016. Beaufort reiterates its Buy recommendation on the shares.
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