Member Info for Jatw

Should AZ move its main listing to the US, they are likely to maintain a listing in London (which may not be eligible for inclusion in indices, but will reflect the prices set in the US), Santander has a similar listing deriving from its takeover of Abbey National.

You will also be able to trade the US listing if your broker allows (which they mostly will).

So not much for the UK PIs to fear……but a great deal for LSEG and HMG to ponder as they seek to grow the UK market.

I understand, i acquired mine at prices between 200 and 1500 and got used to thinking they would get to £20 (I still think they will, but it may well be another 5 years and a decade late). As long as the politics don’t get in the way too much.

There is not much synergy in cross border life insurance other than risk diversification. The way global politics is going we are going to get more divestments/inherit more shares in overseas companies.

The valuation of immature pharma contains a lot of assumptions about the future value of the product pipeline.

There have been times when this has been wildly optimistic for HCM. Many of the analysts still have high valuations which could be met if the current approvals are achieved and the product is then successful in the market. However the market price does seem to be more based on the proven value rather than hope. I see the SP rising slowly (as more royalties flow from Tak and AZ), with faster rises when new revenue streams come on line.

There are some decent prospects in the Hutchmed pipeline, Savo sales should start to increase following the SACHI approval, there seem to be several more NDAs to be made in 2026 for launch in 2027, the SACHI approval certainly derisks the FDA process, so I think we will see Savo launched in significant volume in 2027. HCM receives royalties (high teens) with no costs attached, and cost + manufacturing (if it continues to be made in China). The other significant catalyst is Sovleplenib, if that gets approved Q3 26 that should realise good sales at 50-60% profit margin.

Takeda sales of Fruzaqla should continue to rise for some time, the run rate is about $330m generating around $50m of risk free cash each year, possibly rising to $80m in the next couple of years.

We will have to see about the other products and label expansion set out by HCM. These may turn out to be more niche than expected and certainly the PDAC area is getting more crowded, as I cant read a synopsis of big pharma pipelines without pancreatic cancer being listed.

As for ATTC, this will carry little value until clinical work is much more advanced. There have been expansive partnerships signed for groups of product developments and they might be able to do such a deal, but any value is quite speculative at present.

I dont feel like selling up is right at the moment, I intend to hold for the Savo and Sovlep decisions and launches in 27/28. If the market gets too excited by ATTC then I will take some profit, having learned from experience that the SP can get well ahead of itself.

1pencil, my adverse impression was formed early (about 10mins in) that they seemed a bit uncomfortable with the results, esp the China sales. I agree that once they got onto the future they were much happier to chat away….. I just hope they dont over pay on the inward licensing deal(s).

Anyway, the market seems to have got its composure back……

I see this gradually increasing….but at a faster rate than the dividend is increased leading to a reduced yield (280p/7% yield will do)

A bit of inwards M&A might be an area they surprise us with but I wonder what opportunities exist for them

1 - a niche foreign product needing a China trial and distribution (this is the Epizyme Tazverik model) - but this may be hard to replicate as more western companies have entered China directly and have better distribution then HCM)

2 a China product without distribution (I think this is the Inmagene deal where they develop and H has options over distribution - one product is in Phase 2 trial so this is the most immediate prospect)

3 Hutchmed will not want to create a new distribution network for a new product, so looking at the areas where Fruq, Suru and Taz are focused (extending to areas where Hutchmed needs distribution in future) may be preferred products.

Overall the Inmagene (now Imagene) is most likely and least risky. Full M&A / licensing with upfront payment may cost $$$ for little return (not sure Taz is going to justify its keep - there was an upfront $20m which is along way from payback with lifetime sales around the $2m mark to date)

I know it was in the terms of the deal, but BWS immediately reduced its offer to 2.192 following the 0.8p interim dividend announcement.

What this does demonstrate is that the current market price is very close to the final deal price. Which is starting to feel mean to me.

The lunchtime spike in the market price to 214.5 shows there is still some life in the SP. We may see it trade at a premium to the bid soon.

There has also been a sell off in other bio pharma stocks this week. Innovent has dropped despite announcing a 35% growth in product sales. BeOne has also fallen. They are not down much on the week, but they gave up large gains made earlier in the week.

So Hutchmed is down about 10% more over the week than these two.

TBH I am surprised HCM is only down 6% after what was quite a shocking profit warning following a fall in home market revenue, deferral of product launches and regulatory issues.

If they continue to remove shares from the market at this rate without it impacting operating cash flow the shares have to rise significantly as the value of the company remains about $6.5bn. They will be down to about 65m by year end and 60m end 2026. This means the dividend can rise by nearly 10% per share without the cash cost increasing.

1pencil, your 277m is made up of oncology 143 and other ventures 134.

The guidance of 270-350 is for oncology only, so they are about 55% to the bottom of the range. They achieved 99m of consolidated product revenue and 44m of milestone/R&D payments…..so they have to improve on the 99m through sales recovery, increased royalties from Takeda, sales expansion on Fruq, Savo and Taz…..they will have set the 270 as a minimum and probably expect more like 300.

The management seemed to want to get through today’s presentation as quickly as possible.

If sense that 2025 has not been kind……increased competition, delay of 2 years on Sovlep (we have seen similar things before).

The loss of momentum is palpable, they have missed on Amdiz and Sovlep meaning significant gaps in product launch compared to several years ago…..(contrast with Innovent who are a decade younger and who have 18 pipeline events due in the next 12 months)

Is it time for CKHH to pull the plug? Or is ATTC potentially big enough to spark a new optimism?

Which seems to have been borne out.

The only positives are Takeda sales continue to increase and the divestment for $600m

Otherwise - AZ choosing to do another trial

Sovlep approval not expected in 25.

Significant fall in China sales of HCM products.

Seem to be pinning their hopes on ATTC…..

As anticipated sales and margins were down, the solvency position also deteriorated a few points. The business managed to add 13p to TNAV.

It remains to be seen whether the market considers the deal fair value and settled. The year end TNAV will likely be around 280p so the deal will be around 78%.

The analyst questions could be interesting today.

Gold5 - does the 3month price chart not show a steady rise…..

Pru hit 100hkd earlier today….that might as well have been your £10 target…just a number along the way.

Trend is now steadily upward - hopefully the HY results will continue to support it.

The standout element of the HY results is an 18% increase in the interim dividend.

Flows were positive and strong as well as positive market gains. Cost ratio is 70%.

The cost savings target of 50m is close to being achieved, they need to do more, but positive flows and advice charges mean it is looking good for H2.

AOP down slightly from Q1.

Strong cash generation of $290m of which 58m paid in dividend and $158m on buy back.

60% of mid point total shareholder return paid by HY..well on course to meet 2025 targets.

I am sure they will have to answer analyst questions about tariffs on Thursday. I thought they did say that a factory in Switzerland was approved for Fruquintinib as well as the Suzhou factory…….

In other non news, Junshi Bio jumped 33% today with no announcements on HKEXNEWS…it will either fall tomorrow or some organisation is leaky..

The belt and road initiative is extending China’s reach and appears to be more carrot than stick, but China is becoming the global creditor and those debts will have to be repaid.

The world will be more China and less US in the future……but that could be a long time coming to fruition…..I would not bet against China on a 20 year view. I will make sure my children have a higher exposure to china for their retirement funds as 20 years will be about my limit.

Spikey

I see Tech as any computer based activity, it has been characterised as the magnificent 6 or more on US markets, but for every US player there is an Asian (usually Chinese) equivalent for the Asian markets…..I feel it is fast paced and not being involved in Tech businesses has led me to just use a tracker fund of a sub index.

Regarding China, I am bought into the the idea that the next century will increasingly be more China and less USA. This has been a pretty disastrous strategy for the last decade as Trump and Biden have sanctioned and tariffed more. As outsiders, I think we have to used funds and look for our global companies that are making a success in China, China appears to be developing rapidly and is becoming the area of the world where innovation is found. China does exert considerable pressure on its neighbours and client states, but it has not been particularly aggressive in a militaristic way hence I am not particularly concerned about a war over Taiwan being started by China, they are more likely to squeeze Taiwan harder and influence their politics to reach a more peaceful reunification.

Overall for China I think we need to consider investments to be very long term, I can just consider owning something for 20 years, but I am perhaps buying for my children.

In terms of what I own now, I have AZ, HSBC and Pru in expectation their China operations will deliver for them. I also own some Chinese Bio Pharmas listed in HK (stellar performers in the last year) - I try to follow pharma more widely and have picked those that are getting their drugs approved in the US. I would like to buy sector ETFs on the HK market, but many contain sanctioned Chinese entities that make them off limits.