Member Info for compoundingm

I'm not sure this is accurate. Company always says that Gastric is about 2x the size of mCRC. That makes me think that the opportunity for Elunate in Gastric is 2x the size of mCRC.

Good news today. Both elunate and Suru keep the same prices on the NRDL...

Https://www.thestandard.com.hk/section-news/section/2/258113/Hutchmed-is-coming-home

"Hutchmed is confident of breaking into profit soon as the drug could bring about US$100 million (HK$780 million) in royalties from its sales partner Takeda. To also said Hutchmed doesn't need to raise more funds as it has sufficient cash for future expenses."

I think how things stand it is pretty likely that they have deprioritized suru globally. The last chance was the Japan bridging study, which apparently hasnt produced the desired result.

Up >9% in HK today with >6m volume..

Some context on the chinese economy/markets

https://research.gavekal.com/article/making-sense-of-the-china-meltdown-story/

Good, but nobody does care...its intersting. I remember when they presented the Frutiga study on gastric cancer (where they have missed 1 endpoint) the stock was up heavily..

I'm afraid this is not old...see: http://www.aastocks.com/en/stocks/analysis/stock-aafn-con/06160/NOW.1284403/hk-stock-news

My view is that in the end all this will benefit the innnovative Players like Hutchmed.

Behind paywall:

https://scrip.pharmaintelligence.informa.com/SC148833/Storm-Coming-Commercial-Compliance-Crackdown-Shocks-China-Pharma-Industry?utm_source=dailyem,sfmc&utm_medium=email,email&utm_campaign=,Scrip%20Daily%20(Tues%20-%20Fri)

I suspect that Hutch is down more today, bc last week it was the only HK biotech posting some gains thanks to the results announcement.

Unfortunately it seems that every time the company is re-gaining some momentum there are new things coming up that put us back down...

Sorry about that. There was a question from an analyst about anti-corruption measures in the most recent Hutchmed earnings call. Thats why I checked if there were articles about it.

Here a more recent one: http://www.aastocks.com/en/stocks/news/aafn-con/NOW.1282092/popular-news/HK6

Unfortunately there is not much to be found in western media...

HK/Chinese investors are worried about the announced investigations into the pharma sector

Hengrui, Beigene, Zai, Innovent, junshi were all already down quite significantly last week.

see: https://www.china-briefing.com/news/why-corruption-is-inevitable-in-chinas-pharmaceutical-industry/

"Orpathys has been included in five new treatment guidelines (including CSCO and CACA) and from March 2023 is listed on the NRDL associated with a 38% price reduction." from: https://www.trinitydelta.org/research-notes/significant-2022-achievements-catalyse-a-promising-2023/

38% is a low number. Average around 60%. Looks good!

Momentum is definitey on our side here...:-)

Fundamentals are strong, but the market doesnt seem to care at all
Market cap around 2,1bn USD.
>1bn USD cash and moderate cash burn for 2023 (around 50m)
limited cash burn until break even in 2025 (my estimate is 150m), so 900m cash will be left in 2025.
around 750-800m consolidated revenues 2023, with own product revenues growing 60-70%
Stake in SHPL JV worth 750m - 1bn USD

As long as the company is not generating cash the likelyhood of a dividend is zero.

The company should now start to think about how to deploy the 1bn+ cash and to look for opportunities to snap up good assets (inlicensing deals, assets) at potentially distressed prices.

I agree, there is no need to sell the JV, but management is keen to show the value of the asset. A separate listing would be the best option to achieve that.

Good point Jatw. I expect them to be more precise about the route to profitability and break even. The cost base should be substantially lower in 2023 vs. 2022 as nearly all the international orga should be gone now.

On Suru international: they won't purse anything standalone, the efforts must be driven by a partner. Hard to say if there is sufficient interest from partners to run a global 3 year phIII study which could cost at least 150-200m.

My view is that the whole orga was focused on the takeda deal and maybe now they start to actively engage in discussions around other assets.

they will most probably beat guidance on revenues, but thanks to the performace of elunate and suru in china. Orpathys performance was mixed in 2022. Hopefully with the NRDL inclusion 2023 will be strong.

Will get more clarity on the path for the non core JV at the annual results. The operating performance seems to have been excellent, so there is lot of value to be lifted. Either through a sale, or through a separe listing in HK/Shanghai...

the 23m include a 15m royalty payment from AZ - so not all product revenues.

Hutch is entitled to a 30% royalty rate on Orpathys revenues in china.

Orpathys revenues for 2022 are out. 33m vs. 16m last year. Interestingly no revenues in q4. From March 2023 there will be the nrdl inclusion.

Astra Zeneca says Savo/tagrisso has gotten fast track designation, but unfortunately AZ doesnt expect any results prior to 2024. It feels like this is really only slowly moving...

somewhat muted market reaction to this excellent deal...

I agree. Probably they were too inward focused and too picky on the valuations of those deals. Said this, it seems that it is a priority of the company now, and hopefully we see some activity in 2023. After the partnering announcement the path to breakeven should be much clearer and so they'll know how much they can spend on acquiring/inlicensing.

The selloff of the non-core business is still a priority and hopefully we see activity in 2023. On the other hand it doesnt make any sense to sell at a low valuation. The quality and performance of the asset is simply too good (much better than the OTC business they've sold).