Member Info for Jatw

Beigene reported today.

It increased H1 sales by 61% and reduced its loss by 47%. It is losing nearly $400m in he half year, it is still well funded and indicated a reduced Q2 loss compared to Q1.

I think it is interesting to see what HCMs competitors do / say as comparison. Beigene is still on the go it alone as a global pharma strategy. HCM has managed to run cash positive in 24 and possibly 25 through its licensing deals…..going it alone would have put a lot more risk into Hutchmed operations in US and balance sheet, but has come at the cost of a good margin on the Takeda sales…..but I suggest Beigene is more likely to face regulatory issues in US, so this may in the long term be a price worth paying.

The 800 peak in May has proven to be a very false dawn.

Beginning to think this might start with 5 soon.

LGEN today reported it has doubled its individual annuity sales.

Either that is a sign of the market being very strong or LGEN pricing very competitively. It also wrote 5bn of bulk deals and is active on 24bn more.

I hope Just will have been active too!

Market likes it.

AUM up, better profitability - still more to come.

A very busy period for them now ahead of Reeves first budget at the end of October.

Lots of assets to tidy up / reorganise…..if you can get hold of an advisor.

20.51 as I write, up 12.5% quite a day……I get that interest rate expectations affect future value and the relative attractiveness of individual investments, but these days are so unpredictable it makes you wonder if anyone involved really knows what this company is worth.

FWIW, Trinity Delta published a minor update on 2 August with an improved valuation…..their views at FY23 were 549p, recently 566p and now 584p. Going up as it should as product launches and revenues become more certain, but detached from market reality.

It would seem we are not getting an update ahead of results…..

It will be interesting to see what the impact of Solvency II reform for the UK means for the solvency position, not sure if they will tell us this time, but the FY results will be on the new basis….so they should inform of the impact of the change well in advance.

Not a great reaction from the market to the flat sales……although management has promised an increase in margin from the switch to VLG rather than customer brands manufacturing.

Given the inflationary environment flat sales is an unexpected outcome……the reaction to the IFRS results may be better (can it be worse?) given profits are likely to have grown.

There may also be some analyst updates landing to help sentiment.

Last week provided greater clarity over the short term direction of travel and timing of additional revenue streams.

Yesterday showed Healthcare to be a highly defensive sector which may be advantageous if the US gets more volatile approaching interest rate decisions and the presidential election. ( I would much prefer the central banks to be more active rather than try to always be omniscient and infallible),

And pfffff goes $10 from the share price.

Goldilocks is on holiday….leaving the bears at home alone.

Not very brave of Cavendish…..sales of 130m and a quarterly run rate of 80m would indicate 290m without any further incremental market penetration in the US.

They should pass the $200m with the Jul-Sep quarter results from Takeda (TBC is HCM will provide a quarterly update)

Any way it is back to the macros today, JPN -5%, HK-2%.

HK reaction was muted…..despite those Takeda sales being at the top of my expectations.

And the statements by Dr Su that he thinks they will be profitable ahead of schedule in mid 2025 rather than end 2025.

Expansion for Fruq indications and Sovlep sales starting early 2025 give us hope the analysts will be positive and increase demand.

Some maths

Actual sales per quarter USD 15, 50 (+35), 80 (+30), this suggests there will be some further growth but more patients will start to drop out of treatment that started last year and Q1.

If it is going something like +40-5, +40-10, then the next quarter may be +40-20 (ie £100m)

It may then go +40-40 and be peak sales at $100m/quarter.

On this pattern playing out, the 2024 sales will be $330m and 2025 $400. HCM share $110m and $140m respectively (unless manufacturing moves to a Takeda plant)

Hopefully Takeda or HCM will provide a geographical breakdown as well

I am not hopeful of much EU volume in 2024 due to pricing negotiations, but EU and Japan should be up and running in volume in Q1 2025. As a reminder the patient population in Japan is similar to the US and the EU is 3x the size.

The US just matched HK and UK share price updates today which were not especially HCM specific. So let see what HK thinks tomorrow……

the presentation was not that illuminating….the r&d day had covered most of the pipeline update.

the progress towards profitability slide (the winding road) has been updated with more detail about the expected product submissions/approvals/launches.

q3 should see fru*****inib approved in japan and gc in china.

it seems sovlep approval is not expected until early 2025.

they were pleased with the takeda sales, but there is no clarity on how t may want to expand the product globally as yet.

eu sales are likely be low this year due to government reimbursement decisions which are by country. t has started engaging with 12 authorities (presumably all the larger and wealthier countries), with some territories expected to launch later in the year.

dr su sees r&d expenditure rising in h2 and in the future as the next waves of products need to be funded. this was in response to a question about whether the board had considered whether it has surplus capital and what its approach is to investing in the business vs shareholder returns. it seems that growing the business wins over shareholder returns at present.

You have not indicated the time for 10k tests…..

The market opportunity is many millions of patients with diabetes in the US…..1m tested annually would be 20k tests per week.

The problems are scaling the labs and educating the doctors…..

they made a profit overall of $25m, the oncology is not far off profitability and they have still not recognised $100m or so of the takeda upfront settlement.

china sales were only 10% up on last year - not perhaps surprising given no new approvals have been made in the interim period.

they have omitted mention of future approval of the frutiga study and snda for fru*****inib in gastric cancer……i wonder if this has been refused/withdrawn.

awaiting the call now at 1pm to see what they say. they should be pretty happy - the takeda sales were excellent and point to further us growth and bright prospects for eu and jpn.

Quarterly sales were 11.9bn JPY. Which at 150 JPY:USD is $78/79m

This is an additional $30m over the $50m sold in Q1 which was $35m increase on Q4 23.

Growth in patient numbers and duration still strong…..looking like atleast $300m in a full year of sales.

A strong indicator.

So little trade today…..no one second guessing the reaction to tomorrow’s results.

There are two values of interest to me tomorrow

1. Takeda US sales (will be available on their website before the results)

2. The value of additional milestone payments.

All other numbers are going to be incremental to the values reported for H2 2023.

Slater increasing its holding is possibly behind the recent uplift in the SP.

For a fund to hold 19% in a specific company is unusual (although probably reasonably common in small companies).

This concentration has its + and -.

+ a supportive owner, presumably onboard with the buy and build strategy

+ can hold management to account

- if they turn seller it will hurt the SP

Will have a decisive impact if an offer emerges for the company.

AZ reported $25m sales for H1.

HCM reported $46m of inmarket sales for 2023 with HCM revenue of $29m.

The H1 numbers should be about $15m at the HY. Still growing - within a limited indication….the big prize is Global approvals which should start to be submitted at the end of the year and approvals coming in late 2025-2027.

The psychology of when to buy/sell is intriguing and I expect many of us are guilty of anchoring what we think is a good/bad outcome around either a round number or a round % since our last transaction.

However, the machines take no notice and their algorithms work more on the direction and changes in the rate of change than whether there is a round number….so I suspect that for markets this is becoming less of a thing.

Amones - while a dividend would undoubtedly be good news, I doubt we will see one declared until Feb/Mar 26. They need to articulate a capital management strategy including BB / Dividends…..and they will want to be confident they are cash positive……

I think they will have identifiable excess capital of several hundred million dollars by early 2026….but they are just as likely to do M&A at that point as return it to Shareholders.