Hutchmed Regulatory News (HCM)

Chi-Med Reports 2019 Full Year Results and Provides Updates on Key Clinical Programs

Company to Host Annual Results Conference Call Today at 1:00 p.m. GMT / 8:00 a.m. EST / 9:00 p.m. HKT

London: Tuesday, March 3, 2020: Hutchison China MediTech Limited ("Chi-Med") (Nasdaq/AIM: HCM), a commercial-stage biopharmaceutical company with eight oncology drug candidates in development around the world and a deep commercial presence in China, today announces its audited financial results for the year ended December 31, 2019 and provides updates on key clinical and commercial developments.

"2019 was a year in which we laid the foundations for a new era for Chi-Med," said Simon To, Chairman of Chi-Med. "Our first launched drug, Elunate®, is set to broaden patient access this year due to its recent addition to the NRDL1 in China. We are scaling up our oncology commercial team in preparation for the potential launch of surufatinib, our first un-partnered oncology drug candidate, late this year in non-pancreatic NET2; and another two NDA3 submissions are imminent, one with savolitinib in lung cancer and a second with surufatinib in pancreatic NET, with launches anticipated for 2021."

"Based on extensive clinical data, we also expect to initiate multiple global registration studies this year with fruquintinib, surufatinib and potentially savolitinib. China registration studies with certain of our hematological malignancy assets are also in planning."

"We believe that the potential launches of multiple new oncology products will address a broad range of unmet medical needs and benefit a large number of patients, propelling Chi-Med rapidly forward."

RECENT OPERATING HIGHLIGHTS

Set out below are some of Chi-Med's operating highlights for 2019 and so far this year. For more details, please refer to "Operations Review" below.

· AstraZeneca4 collaboration - Prime position in EGFR TKI5 resistant NSCLC6:

o EGFRm7 NSCLC patients with acquired resistance to Tagrisso® driven by MET8 amplification: Published full results of TATTON study in The Lancet Oncology in 2020 for the savolitinib/Tagrisso® combination reporting 30% ORR9 and 5.4 months' median PFS10 in 69 patients;

The SAVANNAH Phase II study, with registration potential, underway in North and South America, Europe and Asia, is on-target for interim analysis in mid-2020 and enrollment completion by end-2020;

o EGFRm NSCLC patients with acquired resistance to Iressa® or Tarceva® driven by MET amplification: Published full results of TATTON study in Lancet Oncology for the savolitinib/Tagrisso® combination reporting 64% ORR and 9.0 months' median PFS in 93 patients; and

o Completed enrollment in 70 patients Phase II registration study - MET Exon 14 deletion NSCLC: Interim China Phase II data presented at CSCO11. As a result of our regulatory interaction with the NMPA12, we now expect to submit savolitinib NDA in early 2020.

· Papillary renal cell carcinoma ("PRCC") - Renewed global development strategy:

o Actively evaluating restart in MET-driven PRCC: In late 2018, enrollment was terminated in SAVOIR, a global Phase III registration study of savolitinib monotherapy compared with sunitinib monotherapy in MET-positive PRCC. Data from the approximately 60 patients randomized in SAVOIR prior to termination has matured during 2019 and will be presented at an upcoming scientific conference in mid-2020. Based on these data, AstraZeneca and Chi-Med are actively evaluating the opportunity to restart clinical work in PRCC for monotherapy savolitinib; and

o Preliminary signal for savolitinib/Imfinzi® (PD-L113) combination in all PRCC:  Presented data for the PRCC cohort of the CALYPSO Phase II study at ASCO GU14 showing the combination was tolerable and associated with durable efficacy. Median OS15 was 12.3 months and twelve-month OS rate was 52%. Based on these data, AstraZeneca and Chi-Med continue to explore development of the savolitinib and Imfinzi® combination.

· Promising savolitinib efficacy in MET-amplified gastric cancer: The VIKTORY Phase II umbrella trial results were published in Cancer Discovery16. VIKTORY sequenced 715 metastatic gastric cancer patients, with MET-amplification observed in 3.5% of patients. In MET-amplified gastric cancer patients, savolitinib monotherapy met pre-specified 6-week PFS rate and reported an ORR of 50%.

· First targeted therapy to address NETs of all origins:  Recently reported two positive Phase III studies, SANET-ep (mid-2019) in non-pancreatic NET and SANET-p (early 2020) in pancreatic NET. Both studies were terminated early following positive interim analyses that confirmed they had already met their median PFS primary endpoint:

o China Non-pancreatic NET: Presented full results of SANET-ep Phase III study at ESMO17 reporting a median PFS for surufatinib of 9.2 months as compared to 3.8 months for placebo (HR 0.334, pn NDA for the treatment of non-pancreatic NETs was submitted to the NMPA in China in November 2019 and Priority Review status was granted in December 2019; and

o China Pancreatic NET: Following positive interim analysis and early termination of the SANET-p Phase III study, NDA preparations are now underway.

· Initiated China Phase II/III study in biliary tract cancer ("BTC"): Based on preliminary Phase Ib/IIa data, we initiated a Phase IIb/III registration study in BTC in China in March 2019; and

· Progressed PD-118 combination development: Completed a Phase I dose-finding study in China of surufatinib plus Tuoyi®, an approved PD-1 monoclonal antibody from Junshi19, then initiated an exploratory Phase II study of the combination in early 2020 in multiple solid tumor indications. Phase I development of surufatinib plus Tyvyt®, an approved PD-1 monoclonal antibody from Innovent20, is also in planning.

· Progress on Elunate® (fruquintinib capsules) in third-line colorectal cancer ("CRC") in China: 

o $17.6 million in sales during 2019: In-market sales of Elunate® to third-parties, as provided by Lilly21, in the first full year since its late 2018 launch; and

o Inclusion in the National Reimbursement Drug List ("NRDL"): Elunate® was included in the China NRDL in November 2019, with reimbursement effective January 1, 2020. NRDL inclusion now makes Elunate® a highly attractive approved therapy in third-line CRC in China in terms of price, efficacy and safety profile. Elunate® sales22 in January-February 2020, were $6.6 million.

· Phase III interim analysis in second-line gastric cancer:  In April 2019, an interim analysis for futility of the FRUTIGA study in China was performed. The IDMC23 recommended to continue the study without changes; and

· Progressed PD-1 combination development: Approaching completion of Phase I dose-finding study in China of Elunate® plus Tyvyt® (Innovent). Phase I development of Elunate® plus genolimzumab, a PD-1 monoclonal antibody under development by Genor24, is also now underway.

· Non-Hodgkin's lymphoma ("NHL"): Advanced Phase Ib dose expansion of both of our NHL assets, HMPL-523 (selective Syk25 inhibitor) and HMPL-689 (selective PI3Kδ26 inhibitor) in China. We expect these Phase I/Ib studies to inform our China registration study decisions in 2020;

· HMPL-453 - selective FGFR27 1/2/3 inhibitor: We completed Phase I development, with a Phase II study in advanced malignant mesothelioma in China set to initiate; and

· IND28 clearance in China for HMPL-306: Our ninth in-house discovered asset, an IDH29 1/2 dual inhibitor, received China IND clearance in late 2019 with Phase I set to initiate.

· Global development footprint: Through our International organization, based in New Jersey, we have rapidly expanded our clinical and regulatory capabilities in the U.S., Europe and now Japan;

· Fruquintinib: Completed EOP230 meetings with U.S. Food and Drug Administration ("FDA") in February 2020, regarding our global Phase III, the FRESCO2 study, in colorectal cancer. Europe and Japan EOP2 meetings are planned shortly;

· Surufatinib: Data from a U.S. Phase I/Ib study were presented at ESMO. In late 2019, the U.S. FDA granted Orphan Drug designation for the treatment of pancreatic NET. Regulatory consultations in U.S., Europe and Japan are underway, to clarify registration pathway for surufatinib in NETs; and

· HMPL-523 and HMPL-689: Expanded development into the U.S. and Europe during 2019. Twenty Phase I sites are now enrolling and have completed multiple dose cohorts.

· Chi-Med Group compensation and share-based incentive policy: The Group has comprehensively reviewed its compensation and share-based incentives policies, performed benchmarking research on peer group U.S. and China biotech companies and established a new competitive policy to ensure we are able to attract and retain top talent; and

· Establishment of China oncology commercial organization: Currently over 140 commercial staff, aiming to recruit a total of 300-350 staff to support potential surufatinib launch in late 2020.

UPDATE ON IMPACT OF COVID-19

· Improvising amid COVID-19 challenges: The outbreak is posing some challenges to our operations resulting from restrictions on movement in China. Reduced patient hospital visits for clinical assessment affected the conduct of certain clinical studies and commercial team activities. To-date, none of our manufacturing operations in China have been materially affected. Our teams have adapted quickly and effectively thus far across our businesses, and we will continue to closely monitor what is an evolving situation. At this stage we are unable to assess the long-term effect of the outbreak, if any.

KEY EVENTS PLANNED FOR 2020

Early 2020:

· Savolitinib - Phase Ib/II data (CALYPSO) - PRCC cohort overall survival results for the Imfinzi® / savolitinib combination presented at ASCO GU (February 2020);

· HMPL-453 - Phase II study start - FGFR 1/2/3 inhibitor in advanced malignant mesothelioma;

· Savolitinib - NDA submission in MET exon 14 deletion NSCLC in China - first NDA submission globally for savolitinib;

· Surufatinib - NDA submission in pancreatic NET in China - following the recent positive SANET-p Phase III interim analysis;

· PD-1 combos - Initiation of multiple Phase II studies in China - for surufatinib/fruquintinib in combination with Tuoyi®/Tyvyt®; and

· PD-1 combos - Phase I dose-finding data for surufatinib plus Tuoyi® combination - presentation of preliminary data at major scientific conference.

Mid-2020:

· HMPL-306 - First in Human dose of IDH 1/2 inhibitor - initiate Phase I study in China;

· Savolitinib - Data from terminated Phase III study (SAVOIR) - presentation at major scientific conference of data comparing savolitinib to sunitinib in MET-driven PRCC patients; Mature data from about 60 patients;

· Savolitinib - Interim analysis on SAVANNAH - interim analysis on first ~50 patients on SAVANNAH Phase II study of the savolitinib/Tagrisso® combination;

· Surufatinib - Completion of global regulatory consultations - clarity on U.S., Europe and Japan registration pathway for surufatinib in NETs. Initiation of required clinical studies in U.S. and Europe;

· Savolitinib - MET exon 14 deletion NSCLC data - presentation of full data from the savolitinib Phase II registration intent study at major scientific conference;

· Surufatinib - Phase III data (SANET-p) - presentation of full data from the SANET-p study in pancreatic-NET patients at a major scientific conference;

· Fruquintinib - Second Phase III interim analysis (FRUTIGA) - interim analysis for futility in second-line gastric cancer Phase III in China of fruquintinib / Taxol® (paclitaxel) combination;

· Fruquintinib - Global Phase III study (FRESCO2) - initiation of registration study of fruquintinib in ≥3rd line colorectal cancer in U.S., Europe and Japan; and

· HMPL-523 - Global Phase Ib expansion - in indolent NHL in U.S. and Europe.

Late 2020:

· Surufatinib - Phase II/III interim analysis - for futility in second-line BTC in China;

· Surufatinib - Potential NDA approval and launch for non-pancreatic NET in China - first un-partnered oncology drug launch for Chi-Med in China. Commercial team of 300-350 medical sales personnel in place for launch;

· HMPL-689 - Potential registration study start - in indolent NHL in China;

· Fruquintinib - Enrollment completion of FRUTIGA - to complete enrollment of China Phase III registration study in second-line gastric cancer;  

· Savolitinib - Enrollment completion of SAVANNAH - AstraZeneca to complete enrollment of global Phase II study, with registration potential, of savolitinib/Tagrisso® combination; and

· HMPL-689 - Global Phase Ib expansion - in indolent NHL in U.S. and Europe.

Financial Highlights

The items below are selected financial data for the year ended December 31, 2019. All dollars are expressed in US dollar currency unless otherwise stated. For more details, please refer to "Financial Review", "Operations Review" and "Audited Consolidated Financial Statements" below.

· Group revenue of $204.9 million (2018: $214.1m).

· Net loss attributable to Chi‑Med of $106.0 million (2018: net loss of $74.8m).

· Adjusted Group net cash flows excluding financing activities was -$82.3 million (2018: -$49.1m). Cash from our Commercial Platform, as well as cash received from our multi-national partners, continued to offset a material portion of our R&D31 expenses.

· Recent Nasdaq follow-on strengthens cash position. We held cash, cash equivalents and short-term investments of $217.2 million as of December 31, 2019 (December 31, 2018: $301.0m). In January 2020, we conducted a Nasdaq follow-on offering, raising an additional $110.1 million in net proceeds, to further strengthen our cash position; and

· Additional unutilized bank facilities of $119.3 million (December 31, 2018: $119.3m) and borrowings of $26.8 million (December 31, 2018: $26.7m).

· Consolidated revenue was $16.0 million (2018: $37.6m) mainly from service fee payments from AstraZeneca and Lilly. 2018 revenues included a one-time $13.5 million milestone payment from Lilly following fruquintinib approval; and

· Net loss from our Innovation Platform attributable to Chi-Med of $133.2 million (2018: net loss of $104.4m) resulting from expansion in the development of our eight clinical drug candidates, five of which are now in global development, and establishment of sizable international clinical and regulatory operations.

COMMERCIAL PLATFORM:

· Total consolidated sales up 7% (11% at CER32) to $188.9 million (2018: $176.5m) mainly due to continued progress on our Prescription Drugs subsidiary Hutchison Sinopharm33 as well as manufacturing sales and royalties from Elunate® during its first full year on the market;

· Total consolidated net income from our Commercial Platform attributable to Chi-Med up 9% (13% at CER) to $47.4 million (2018: $43.4m) underpinned by the growing profits of our legacy operations in China as well as Elunate®.

FINANCIAL GUIDANCE

In 2019 we performed in-line with our most recent guidance. We provide Financial Guidance for 2020 below.

In 2020, on the broader Innovation Platform, we plan to continue to increase our investment in R&D particularly on clinical development of our main assets in the U.S., Europe and Japan as well as in China (as discussed in the "Product pipeline progress" section below). On the Commercial Platform, we expect to continue to generate cash flow directly through our subsidiaries and via dividends from our joint ventures. We assume at this stage that the financial impact of the recent COVID-19 outbreak will not be material to the Group. Since we cannot predict how the situation will evolve, we will monitor and adjust if new material information emerges.

Use of Non-GAAP Financial Measures and Reconciliation - References in this announcement to adjusted Innovation Platform segment operating loss, adjusted Group net cash flows excluding financing activities and financial measures reported at CER are based on non-GAAP financial measures. Please see the "Use of Non-GAAP Financial Measures and Reconciliation" below for further information relevant to the interpretation of these financial measures and reconciliations of these financial measures to the most comparable GAAP measures, respectively.

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Conference Call and Audio Webcast Presentation Scheduled Today at 1:00 p.m. GMT / 8:00 a.m. EST / 9:00 p.m. HKT - Investors may participate in the call as follows: +44 20 3936 2999 (U.K.) / 1 845 213 3398 (U.S.) / +852 5808 4954 (Hong Kong), or access a live audio webcast of the call via Chi-Med's website at www.chi-med.com/investors/event-information/. 

Additional dial-in numbers are also available at Chi-Med's website. Please use participant access code "413486."

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FINANCIAL STATEMENTS

Chi-Med will today file with the U.S. Securities and Exchange Commission its Annual Report on Form 20-F.

ANNUAL GENERAL MEETING

The Annual General Meeting of Chi-Med will be held at 4th Floor, Hutchison House, 5 Hester Road, Battersea, London SW11 4AN on Monday, April 27, 2020 at 11:00 a.m.

About Chi-Med

Chi-Med (Nasdaq/AIM: HCM) is an innovative biopharmaceutical company committed, over the past twenty years, to the discovery and global development of targeted therapies and immunotherapies for the treatment of cancer and immunological diseases. It has a portfolio of eight cancer drug candidates currently in clinical studies around the world and extensive commercial infrastructure in its home market of China. For more information, please visit: www.chi-med.com.

CONTACTS

References

Unless the context requires otherwise, references in this announcement to the "Group," the "Company," "Chi-Med," "Chi-Med Group," "we," "us," and "our," mean Hutchison China MediTech Limited and its consolidated subsidiaries and joint ventures unless otherwise stated or indicated by context.

Past Performance and Forward-Looking Statements

The performance and results of operations of the Group contained within this announcement are historical in nature, and past performance is no guarantee of future results of the Group. This announcement contains forward-looking statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words like "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "pipeline," "could," "potential," "first-in-class," "best-in-class," "designed to," "objective," "guidance," "pursue," or similar terms, or by express or implied discussions regarding potential drug candidates, potential indications for drug candidates or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on these statements. Such forward-looking statements are based on the current beliefs and expectations of management regarding future events, and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. There can be no guarantee that any of our drug candidates will be approved for sale in any market, or that any approvals which are obtained will be obtained at any particular time, or that any such drug candidates will achieve any particular revenue or net income levels. In particular, management's expectations could be affected by, among other things: unexpected regulatory actions or delays or government regulation generally; the uncertainties inherent in research and development, including the inability to meet our key study assumptions regarding enrollment rates, timing and availability of subjects meeting a study's inclusion and exclusion criteria and funding requirements, changes to clinical protocols, unexpected adverse events or safety, quality or manufacturing issues; the inability of a drug candidate to meet the primary or secondary endpoint of a study; health crises in China or globally; the inability of a drug candidate to obtain regulatory approval in different jurisdictions or gain commercial acceptance after obtaining regulatory approval; global trends toward health care cost containment, including ongoing pricing pressures; uncertainties regarding actual or potential legal proceedings, including, among others, actual or potential product liability litigation, litigation and investigations regarding sales and marketing practices, intellectual property disputes, and government investigations generally; and general economic and industry conditions, including uncertainties regarding the effects of the persistently weak economic and financial environment in many countries and uncertainties regarding future global exchange rates. For further discussion of these and other risks, see Chi-Med's filings with the U.S. Securities and Exchange Commission and on AIM. Chi-Med is providing the information in this announcement as of this date and does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

In addition, this announcement contains statistical data and estimates that Chi-Med obtained from industry publications and reports generated by third-party market research firms. Although Chi-Med believes that the publications, reports and surveys are reliable, Chi-Med has not independently verified the data and cannot guarantee the accuracy or completeness of such data. You are cautioned not to give undue weight to this data. Such data involves risks and uncertainties and are subject to change based on various factors, including those discussed above.

Inside Information

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Ends

1 National Reimbursement Drug List ("NRDL")

2 Neuroendocrine Tumors ("NET")

3 New Drug Application ("NDA")

4 AstraZeneca AB (publ), a wholly owned subsidiary of AstraZeneca PLC

5 Epidermal growth factor receptor tyrosine kinase inhibitor ("EGFR TKI")

6 Non-small cell lung cancer ("NSCLC")

7 Epidermal growth factor receptor mutation ("EGFRm")

8 Mesenchymal epithelial transition receptor ("MET")

9 Objective response rate ("ORR")

10 Progression free survival ("PFS")

11 Chinese Society of Clinical Oncology 22nd Annual Meeting - September 2019

12 China National Medical Products Administration ("NMPA")

13 Programmed Death-Ligand 1 ("PD-L1")

14 American Society of Clinical Oncology Genitourinary Symposium - February 2020

15 Overall survival ("OS")

16 Lee J, Kim ST, Kim K, et al. Tumor Genomic Profiling Guides Patients with Metastatic Gastric Cancer to Targeted Treatment: The VIKTORY Umbrella Trial. Cancer Discov. 2019;9(10):1388-1405. doi: 10.1158/2159-8290.CD-19-0442

17 European Society for Medical Oncology congress - September 2019

18 Programmed Cell Death Protein-1 ("PD-1")

19 Shanghai Junshi Biosciences Co. Ltd ("Junshi")

20 Innovent Biologics (Suzhou) Co. Ltd ("Innovent")

21 Eli Lilly and Company ("Lilly")

22 In-market sales of Elunate® to third-parties, as provided by Lilly and unaudited

23 Independent Data Monitoring Committee ("IDMC")

24 Genor Biopharma Co. Ltd. ("Genor")

25 Spleen tyrosine kinase ("Syk")

26 Phosphoinositide 3-kinase delta ("PI3Kδ")

27 Fibroblast growth factor receptor ("FGFR")

28 Investigational New Drug application ("IND")

29 Isocitrate dehydrogenase ("IDH") 1/2

30 End of Phase 2 ("EOP2")

31 Research & development ("R&D")

32 We also report changes in performance at constant exchange rate (CER) which is a non-GAAP measure. Please refer to "Use of Non-GAAP Financial Measures and Reconciliation" below for further information relevant to the interpretation of these financial measures and reconciliations of these financial measures to the most comparable GAAP measures.

33 Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Company Limited ("Hutchison Sinopharm").

34 American Association for Cancer Research Annual Meeting - April 2019

35 European Society for Medical Oncology Asia Congress - November 2019

36 Disease control rate ("DCR")

37 Renal cell carcinoma ("RCC")

38 Vascular endothelial growth factor receptor tyrosine kinase inhibitor ("VEGFR TKI")

39 Vascular endothelial growth factor receptor ("VEGFR")

40 Vascular endothelial growth factor ("VEGF")

41 Pharmaceuticals and Medical Devices Agency of Japan ("PMDA")

42 Colony stimulating factor-1 receptor ("CSF-1R")

FINANCIAL REVIEW

Chi-Med Group revenue for the year ended December 31, 2019 was $204.9 million (2018: $214.1m). Revenue from the Commercial Platform increased to $188.9 million (2018: $176.5m) driven mainly by our Prescription Drugs business which included full-year revenue from manufacturing sales and royalties from the commercial sale of Elunate® in 2019 as well as increased sales by our Hutchison Sinopharm business. Revenue from the Innovation Platform decreased to $16.0 million in 2019 (2018: $37.6m), primarily as a result of a $13.5 million fruquintinib approval milestone in 2018.

Group revenues do not include the revenues of our two large-scale, 50/50 joint ventures in China, Shanghai Hutchison Pharmaceuticals Limited ("SHPL") and Hutchison Whampoa Guangzhou Baiyunshan Chinese Medicine Company Limited ("HBYS"), since these are accounted for using the equity method.

In 2019, our Commercial Platform, which is a material source of profit and cash flow for Chi-Med, recorded an operating profit of $51.1 million (2018: $49.0m). This reflected growth from innovative medicines sales, partially offset by the discontinuation of our distribution of Seroquel® in May 2019 and weakening of the RMB against the U.S. dollar. The Innovation Platform incurred an operating loss of $133.3 million (2018: operating loss of $104.6m) as a result of the expansion of clinical activities and related organizational growth, in particular the expansion of the savolitinib, fruquintinib, surufatinib, HMPL-523 and HMPL-689 development programs.

Net corporate unallocated expenses, primarily Chi-Med Group overhead and operating costs, increased to $17.2 million (2018: $10.7m) mainly due to organizational expansion and increased professional fees associated with equity capital market transactions.

Consequently, Chi-Med Group's operating loss was $99.4 million (2018: operating loss of $66.3m).

The aggregate of interest and income tax expenses of the Chi-Med Group, as well as net income attributable to non-controlling interests was $6.6 million (2018: $8.5m).

The resulting total Group net loss attributable to Chi-Med was $106.0 million (2018: net loss of $74.8m).

As a result, Group net loss attributable to Chi-Med in 2019 was $0.16 per ordinary share / $0.80 per American depositary share ("ADS"), compared to net loss attributable to Chi-Med of $0.11 per ordinary share / $0.56 per ADS, in 2018.

Cash and Financing

Cash inflows from commercial operations and R&D collaborations offset a material portion of our R&D expense. As a result, in 2019 total Chi-Med Adjusted (non-GAAP) Group net cash flows excluding financing activities was -$82.3 million despite Adjusted (non-GAAP) Innovation Platform segment operating loss of $149.3 million ($133.3m on GAAP basis).  

The Chi-Med Group held cash, cash equivalents and short-term investments of $217.2 million as of December 31, 2019 (December 31, 2018: $301.0m). In January 2020, we conducted a Nasdaq follow-on offering, raising an additional $110.1 million in net proceeds, to further strengthen our cash position.

Outstanding bank loans as of December 31, 2019 amounted to $26.8 million (December 31, 2018: $26.7m) and additional unutilized bank facilities available to the Group totaled $119.3 million (December 31, 2018: $119.3m).

In addition, as of December 31, 2019, our non-consolidated joint ventures (SHPL and HBYS) held $62.7 million (December 31, 2018: $41.9m) in cash and cash equivalents. As of December 31, 2019, our non-consolidated joint ventures had no outstanding bank loans.

OPERATIONS REVIEW

We are an innovative, commercial-stage biopharmaceutical company based in China aiming to become a fully integrated global leader in the discovery, development and commercialization of targeted therapies and immunotherapies for the treatment of cancer and immunological diseases.

Innovation Platform

Our Innovation Platform is a comprehensive drug discovery and development operation, with a large team of about 500 scientists and staff (December 31, 2018: ~420) in China and at our international clinical operation in New Jersey. Currently, we have eight self-discovered drug candidates in clinical trials, five of which are in global clinical development.

Our drug candidates were developed based on our core R&D philosophy in treating cancer and immunological diseases through multiple modalities and mechanisms. Our first wave of drug candidates, led by fruquintinib, surufatinib and savolitinib, are either at or approaching submission, approval and launch in major markets. Our second wave of drug candidates, including HMPL-523 and HMPL-689, which focus on B-cell malignancies, as well as combination regimens of our first wave drug candidates with PD-1/PD-L1 inhibitors, which are compiling sufficient clinical data to soon inform registration studies decisions.

Product Pipeline Progress

Savolitinib is a novel, selective, oral inhibitor of MET, an enzyme which has been shown to function abnormally in many types of solid tumors. In global partnership with AstraZeneca, savolitinib has been studied in over 1,000 patients to date, both as a monotherapy and in combinations. We have two ongoing studies, which subject to positive clinical outcome, are designed to support NDA submission in lung cancer. We are also actively evaluating the opportunity to re-start development in kidney cancer in 2020. Studies in several other oncology indications have reported, or will report in 2020, and are likely to warrant further development.

Savolitinib - Lung cancer - MET is a prime target in NSCLC: The table below shows a summary of the clinical studies for savolitinib in lung cancer patients.

MET Exon 14 deletion NSCLC (NCT02897479) - It is estimated that 2-3% of NSCLC patients have MET Exon 14 deletion, which predicts poor prognosis and is believed to play an important role in driving tumor growth. Current chemotherapies and immunotherapies provide limited efficacy in MET Exon 14 deletion NSCLC patients. We have now completed enrollment for a 70 patient Phase II registration-intent study in China of savolitinib as a monotherapy for MET Exon 14 deletion NSCLC patients who have progressed following prior systemic therapy, or unable to receive chemotherapy.

At the CSCO Annual Meeting in September 2019, interim data were presented on the first 50 treated patients. The overall data were encouraging, with efficacy in line with other selective MET inhibitors and savolitinib being generally well tolerated. Based on feedback from our regulatory interaction, we now intend to submit our first NDA for savolitinib in this indication during H1 2020. We also plan to submit the data for an upcoming scientific conference presentation in 2020.

EGFR TKI-resistance in NSCLC - MET-amplification is a major mechanism for acquired resistance to both first generation EGFR TKIs, such as Iressa® and Tarceva®, as well as third-generation EGFR TKIs like Tagrisso®. Between 10 and 30% of EGFR mutation positive NSCLC patients develop MET amplification driven resistance to EGFR TKIs. During the past three years, savolitinib has been studied extensively in these patients and meeting their needs represents a major focus for the Group.

TATTON study: Phase Ib/II expansion studies of savolitinib in combination with Tagrisso® in EGFR mutation positive TKI refractory NSCLC patients (NCT02143466) - The TATTON study is a global exploratory Phase I/Ib study in NSCLC aiming to recruit patients with MET amplification who had progressed after prior treatment with EGFR inhibitors. As of data cut-off on March 29, 2019, over 220 patients had received the savolitinib plus Tagrisso® combination treatment across six TATTON treatment arms, Parts A, B1, B2, B3, C and D. TATTON data was presented at both AACR34 and ESMO Asia35 in 2019 and published in The Lancet Oncology last month. As summarized below, the combination demonstrated an encouraging anti-tumor activity and an acceptable risk-benefit profile, regardless of dose.

First-generation EGFR TKI, such as Iressa® and Tarceva®, refractory NSCLC patients with acquired resistance driven by MET amplification.

TATTON Part B2 (no prior third-generation EGFR-TKI, T790M negative) of 51 patients who received treatment, there were 33 confirmed responses (65% ORR) with 45 patients experiencing disease control (88% DCR36). The median PFS was 9.0 months (95% CI: 5.5, 11.9).

TATTON Part B3 (no prior third-generation EGFR-TKI, T790M positive) of 18 patients who received treatment, there were 12 confirmed responses (67% ORR) with 18 patients experiencing disease control (100% DCR). The median PFS was 11.0 months (95% CI: 4.0, not reached).

Tagrisso® or another experimental third-generation EGFR TKI refractory NSCLC patients with acquired resistance driven by MET amplification

TATTON Part B1 (prior third-generation EGFR-TKI) of 69 patients who received treatment, there were 21 confirmed responses (30% ORR) with 52 patients experiencing disease control (75% DCR). The median PFS was 5.4 months (95% CI: 4.1, 8.0).

TATTON Part D, a study of an additional 42 patients was designed to compare against Part B2 in order to select the most tolerable regimen for long term use, highlighting that a lower dose did not impair clinical efficacy, while maintaining a better tolerability profile. TATTON D led to the selection of the 300 mg savolitinib plus 80 mg Tagrisso® combination dose as the final regimen for the SAVANNAH study, below.

SAVANNAH (NCT03778229) - Phase II study of savolitinib / Tagrisso® combination in EGFR mutation positive NSCLC patients who have progressed following first or second-line Tagrisso® therapy due to MET amplification - The SAVANNAH study is a single-arm, open-label study, with the potential for registrational use, enrolling in North and South America, Europe and Asia. We target to conduct an interim analysis and complete enrollment by the end of 2020.

Savolitinib - Kidney cancer - MET is a clear genetic driver in RCC37: The table below shows a summary of the clinical studies for savolitinib in kidney cancer patients.

Savolitinib and Immunotherapy Combinations - Immunotherapy combinations are changing the treatment landscape in kidney cancer. Anti-PD-L1 antibodies have been associated with clinical benefits in metastatic RCC, and MET dysregulation is considered to play an important role in the pathogenesis of RCC.

CALYPSO Phase II in RCC of savolitinib with Imfinzi® PD-L1 inhibitor combination (NCT02819596) - The CALYPSO study is an investigator initiated open-label Phase I/II study of savolitinib in combination with Imfinzi®, an anti-PD-L1 antibody owned by AstraZeneca. The study is evaluating the safety and efficacy of the savolitinib/Imfinzi® combination in patients with PRCC and clear cell RCC at sites in the U.K. and Spain.

CALYPSO PRCC cohort - Interim data for the PRCC cohort of the CALYPSO Phase II study were presented at 2020 ASCO GU reporting an ORR of 27%, median PFS of 4.9 months (95% CI: 2.5, 12.0) and median OS of 12.3 months (95% CI: 5.8, 21.3). Tolerability remained in keeping with established single agent safety profiles. AstraZeneca and Chi-Med continue to explore development in PRCC for the savolitinib and Imfinzi® combination.

SAVOIR Phase III in MET-positive PRCC (NCT03091192) - In December 2018, enrollment was terminated in SAVOIR, a global Phase III registration study of savolitinib monotherapy compared with sunitinib monotherapy in MET-positive PRCC. The early termination was driven by multiple factors including PRCC molecular epidemiology data and emerging favorable data in PRCC for immunotherapies. 

Data from the approximately 60 patients randomized in SAVOIR prior to termination has matured during 2019 and will be presented at an upcoming scientific conference in mid-2020. Based on these data, AstraZeneca and Chi-Med are actively evaluating the opportunity to restart clinical work in PRCC for monotherapy savolitinib.

Savolitinib - Gastric cancer: Multiple Phase II studies have been conducted in Asia to study savolitinib in MET-driven gastric cancer patients. The table below shows a summary of these clinical studies.

Savolitinib monotherapy in MET amplified gastric cancer patients (NCT01985555 / NCT02449551) - The VIKTORY study is an investigator initiated Phase II umbrella study in gastric cancer in which a total of 715 patients were successfully sequenced into 10 molecular-driven patient groups. Patients with MET amplification (25/715, or 3.5% of patients) were treated with savolitinib monotherapy, reporting an ORR of 50% (10/20, 95% CI: 28.0, 71.9) and meeting pre-specified 6-week PFS rates. The investigators of VIKTORY have concluded that encouraging clinical efficacy of savolitinib in MET-amplified gastric cancer warrants further study.

Savolitinib - Other exploratory studies: The table below shows a summary of the clinical study for savolitinib in prostate and colorectal cancer patients.

The prostate cancer study is an umbrella study and is sponsored by the Canadian Cancer Trials Group targeting to enroll approximately 500 patients with savolitinib being one of six arms. The exploratory colorectal cancer study is sponsored by the National Cancer Institute and targets to enroll approximately 15 patients.

Fruquintinib is a novel, selective, oral inhibitor of VEGFR39 1/2/3 kinases that was designed to improve kinase selectivity to minimize off-target toxicity and improve tolerability.

Chi-Med retains all rights to fruquintinib outside of China and is partnered with Lilly in China. The table below shows a summary of the clinical studies for fruquintinib.

Fruquintinib - Colorectal Cancer:

Fruquintinib capsules, sold under the brand name Elunate®, are approved for metastatic CRC (third-line) patients that have been previously treated with fluoropyrimidine, oxaliplatin and irinotecan, including those who have previously received anti-VEGF40 therapy and/or anti-EGFR therapy (RAS wild type).

Elunate® launch update - In late 2018, our collaboration partner Lilly commenced commercial sales of Elunate® in China. In-market sales in 2019 of Elunate®, as provided by Lilly, totaled $17.6 million (2018: $1.7m) resulting from out-of-pocket payments from patients. Sales during the last quarter of 2019 were $0.5 million, significantly lower than the $5.7 million quarterly run-rate in the first three quarters of 2019, as a result of rebates and downward price adjustments required in the distribution channel in the lead up to NRDL inclusion.

We estimate that about 3,000 patients paid for treatment with Elunate® during 2019, representing about 5% of the approximately 55,000 new third-line CRC per year in China. Penetration was limited by materially higher pricing of Elunate® relative to Stivarga® (Bayer) and certain local VEGFR TKIs that are routinely prescribed off-label in third-line CRC.

On January 1, 2020, the price of Elunate® was reduced by 63% in China, and it was added to the NRDL. This paves the way to significantly broaden access for advanced CRC patients and rapidly build Elunate® penetration in China over the coming years.

Global development of fruquintinib in metastatic CRC - We intend to initiate a Phase III registration study, known as the FRESCO2 study, in the U.S., Europe and Japan in CRC. In February 2020, we completed an EOP2 meeting with the U.S. FDA, and meetings with the European Medicines Agency and Japanese PMDA41 are planned for the second quarter of 2020. FRESCO2, is expected to start enrolling patients in mid-2020. Based on our agreement with the U.S. FDA, both FRESCO and FRESCO 2 study, if positive, will support our NDA application.

Fruquintinib - Gastric Cancer:

Phase III study of fruquintinib in combination with paclitaxel in gastric cancer (second-line) (NCT03223376) -The FRUTIGA study is a randomized, double-blind, Phase III study in China to evaluate the efficacy and safety of fruquintinib combined with paclitaxel compared with paclitaxel monotherapy for second-line treatment of advanced gastric cancer. Over 540 patients are expected to be enrolled into the FRUTIGA study at a 1:1 ratio with the primary endpoint of this study being OS.

In April 2019, we conducted the first interim analysis of the FRUTIGA study for futility. Following the analysis of safety and efficacy of the first 100 patients, the IDMC recommended to continue the study without changes. We expect to conduct a second interim analysis in mid-2020 and complete enrollment of the study in 2020.

Fruquintinib - NSCLC:

Phase II study of fruquintinib in combination with Iressa® in first-line NSCLC (NCT02976116) - We have completed a 50-patient, single-arm, multi-center, open-label, Phase II study of fruquintinib in combination with Iressa® in China in the first-line setting for NSCLC patients with EGFR activating mutations.

Final results from this Phase II study were presented at ESMO Asia 2019, reporting promising efficacy with ORR of 72% and median PFS 14.7 months (95% CI: 12.5, 21.2). Fruquintinib exhibited an overall acceptable safety profile, we believe as a result of its high kinase selectivity.

Fruquintinib - Combinations with Checkpoint Inhibitors:

In November 2018, we entered into two collaboration agreements to evaluate the safety, tolerability and efficacy of fruquintinib in combination with checkpoint inhibitors. We are now approaching completion of Phase I dose-finding study in China of Elunate® plus Tyvyt® (PD-1, Innovent) and Phase I development of Elunate® plus genolimzumab (PD-1, Genor) is also now underway.

Fruquintinib - Exploratory development:

We are conducting multiple Phase Ib expansion cohorts in the U.S., to explore fruquintinib in CRC and breast cancer. In China, Lilly is also preparing to support investigator initiated studies in multiple solid tumor settings.

Surufatinib is a novel, oral angio-immuno kinase inhibitor that selectively inhibits the tyrosine kinase activity associated with VEGFR and FGFR, which both inhibit angiogenesis, and CSF-1R42, which regulates tumor-associated macrophages, promoting the body's immune response against tumor cells.

Chi-Med currently retains all rights to surufatinib worldwide.

Surufatinib is in several late-stage and proof-of-concept trials in China and proof-of-concept clinical trials in the U.S. A summary of these clinical studies is shown in the table below.

Surufatinib - Neuroendocrine Tumors (NET):

NETs present in the body's organ system with fragmented epidemiology. About 55-75% of NETs originate in the gastrointestinal ("GI") tract and pancreas, 25-30% in the lung or bronchus, and a further 10-20% in other organs or unknown origins.

In China, there were about 67,600 newly diagnosed NET patients in 2018 and, while no China prevalence data exists, we believe that there could be over 400,000 patients living with the disease.

NETs can be functional, releasing hormones and peptides that cause symptoms like diarrhea and flushing, or non-functional with no such symptoms. Early-stage NETs which are often functional, about 8-35% of patients, can be treated with somatostatin analogue ("SSA") subcutaneous injections, which alleviate symptoms and slow NET growth, but have limited tumor reduction efficacy. SSAs are approved and reimbursed in China.

Advanced-NETs grow more quickly and in China, Sutent® is approved in pancreatic NET while Afinitor®, an m-TOR inhibitor, is approved in non-functional NETs in the pancreas, lung and GI tract. These approvals however, cover only about half of advanced-NET patients.

Phase III study of surufatinib monotherapy in non-pancreatic NET (SANET-ep) (NCT02588170) - In late 2019, an NDA for surufatinib for the treatment of patients with advanced non-pancreatic NET was accepted for review by the China NMPA. The NDA is supported by data from the SANET-ep study, a Phase III study in China in patients with grade 1 and 2 advanced non-pancreatic NET.

A 198-patient interim analysis was conducted on SANET-ep in mid-2019, leading the IDMC to determine that it had met the pre-defined primary endpoint of PFS and should be stopped early. The positive results of this trial were highlighted in an oral presentation at the 2019 ESMO Congress. Median PFS per investigator assessment was 9.2 months for patients treated with surufatinib, as compared to 3.8 months for patients in the placebo group (HR 0.334; 95% CI: 0.223, 0.499; p

In late 2019, the China NMPA granted Priority Review status to the NDA for surufatinib in non-pancreatic NET.

Phase III study of surufatinib monotherapy in pancreatic NET (SANET-p) (NCT02589821) - In early 2020, an interim analysis was conducted on SANET-p, also leading the IDMC to recommend that the study stop early as the pre-defined primary endpoint of PFS had already been met. Following the success of SANET-p, we now plan to arrange a pre-NDA meeting with the China NMPA and will prepare for NDA submission in this indication. The results of this study will be submitted for presentation at a scientific conference in mid-2020.

The positive SANET-ep and SANET-p Phase III studies now position surufatinib to potentially be approved in the full-spectrum of advanced-NET disease in China. We believe that no other approved targeted therapy can address and treat all subtypes of NETs.

Global development of surufatinib in NET - In addition to our China studies, we have been conducting a Phase Ib study in the U.S. to assess safety and tolerability for surufatinib in western patients. This Phase Ib study, which is guiding our planning for a registration study in the U.S., Europe and Japan, has confirmed 300 mg as the recommended dose for further development, the same as for China. Preliminary data presented at ESMO 2019 showed promising anti-tumor activity with an ORR of 13.3% and disease control in 73.3% of the 15 heavily treated pancreatic NET patients. Surufatinib was well-tolerated with a safety profile consistent with our China studies.

The U.S. FDA granted orphan drug designation to surufatinib for the treatment of pancreatic NET in late 2019, and we are now in regulatory consultations in the U.S., Europe and Japan to explore potential registration pathway on the basis of the two positive China Phase III studies (SANET-ep and SANET-p). These consultations will complete in mid-2020 resulting in clarification of our global registration pathway for surufatinib in NETs. We target to initiate the global clinical studies required to support NDA submission during 2020.

Surufatinib - Biliary Tract Cancer (BTC):

Phase IIb/III study of surufatinib monotherapy in second line BTC (NCT03873532) - In early 2019, based on preliminary Phase Ib/IIa data, we initiated a registration-intent Phase IIb/III study comparing surufatinib with capecitabine in patients with unresectable or metastatic BTC whose disease progressed on first-line chemotherapy. The primary endpoint is OS and we expect to conduct an interim analysis for futility in 2020.

Surufatinib - Combinations with Checkpoint Inhibitors:

Surufatinib's ability to inhibit angiogenesis, block the accumulation of tumor associated macrophages and promote infiltration of effector T cells into tumors, could help improve the anti-tumor activity of PD-1 antibodies.

In late 2018, we entered into a global collaboration with Junshi to evaluate the combination of surufatinib with Tuoyi® (PD-1). We have completed a Phase I dose-finding study and will submit results for presentation at an upcoming scientific conference in early 2020. A Phase II study is already enrolling patients in a number of solid tumor indications in China and a Phase Ib/II study is in planning and expected to be initiated in the U.S. in 2020.

In late 2019, we expanded our global collaboration agreement with Innovent to evaluate the safety and efficacy of Tyvyt® (PD-1) in combination with surufatinib.

Surufatinib - Exploratory development:

We are now conducting multiple Phase Ib expansion cohorts in the U.S. to explore surufatinib use in BTC and soft tissue sarcoma. In China, we intend to support investigator initiated studies in multiple solid tumor settings.

HMPL-523 is a novel, selective, oral inhibitor targeting Syk, for the treatment of hematological cancers and immune diseases. Syk is a component in B-cell receptor signaling pathway. We currently retain all rights to HMPL-523 worldwide. The table below shows a summary of the clinical studies for HMPL-523.

Phase Ib studies of HMPL-523 in indolent non-Hodgkin's lymphoma and multiple subtypes of B-cell malignancies (NCT02503033/NCT02857998) - Our Phase I/Ib dose escalation and expansion studies in Australia and China have now enrolled over 190 patients in a broad range of hematological cancers. We expect these Phase I/Ib data to inform registration study decisions in China in 2020.

Phase I study of HMPL-523 in indolent non-Hodgkin's lymphoma (NCT03779113) - Based on extensive proof-of-concept clinical data in China and Australia, we have now initiated a Phase I/Ib study in the U.S. and Europe. Patient enrollment is underway.

Phase I/Ib study of HMPL-523 in patients with immune thrombocytopenia purpura (ITP) - In mid-2019, we started a Phase I study of HMPL-523 for the treatment of immune thrombocytopenia, an autoimmune disorder characterized by low platelet count and an increased bleeding risk.

HMPL-689 is a novel, selective oral inhibitor targeting the isoform PI3Kδ, a component in the B-cell receptor signaling pathway. HMPL-689's pharmacokinetic ("PK") properties are favorable with good oral absorption, moderate tissue distribution and low clearance in preclinical PK studies, we therefore anticipate low risk of drug accumulation and drug-to-drug interaction. We currently retain all rights to HMPL-689 worldwide. The table below shows a summary of the clinical studies for HMPL-689.

Our Phase I/Ib study of HMPL-689 in China has successfully established a Phase II dose and has now expanded into multiple sub-categories of indolent non-Hodgkin's lymphoma. We expect these Phase I/Ib data to inform registration study decisions in China in 2020. Furthermore, we have initiated a Phase I/Ib study in the U.S. and Europe, with patient enrollment underway.

HMPL-453 is a novel, selective, oral inhibitor targeting FGFR 1/2/3. Aberrant FGFR signaling is associated with tumor growth, promotion of angiogenesis, as well as resistance to anti-tumor therapies. We currently retain all rights to HMPL-453 worldwide. The table below shows a summary of the clinical studies for HMPL-453.

Our Phase I study of HMPL-453 in China has successfully established a Phase II dose and is now expanding into a Phase II study. This is a single-arm, multi-center, open-label study, evaluating the efficacy, safety and PK of HMPL-453 in patients with advanced malignant mesothelioma that failed at least one line of systemic therapy.

HMPL-306 is a novel small molecule dual-inhibitor of IDH1 and 2 enzymes. IDH1 and IDH2 mutations have been implicated as drivers of certain hematological malignancies, gliomas and solid tumors, particularly among acute myeloid leukemia patients. The IND application in China has been cleared and we expect to begin Phase I development in mid-2020. 

We have completed Phase I/Ib studies of both epitinib, an EGFR inhibitor with demonstrated ability to penetrate the blood-brain barrier, and theliatinib, a novel small molecule EGFR inhibitor. We are reviewing further development strategies for both assets.

We strive to create differentiated novel oncology and immunology treatments with global potential. These include furthering both small molecule and monoclonal antibody therapies which address aberrant genetic drivers, inactivated T-cell response and insufficient T-cell response. We design drug candidates with profiles that enable them to be used in innovative combinations with other therapy, such as chemotherapy, immunotherapy and other targeted therapy in order to attack disease simultaneously through multiple modalities and pathways. We believe that this approach can significantly improve treatment outcomes for patients.

The aim of our in-house discovery is to submit a novel drug candidate for clinical development each year or so.

COMMERCIAL PLATFORM

Our Commercial Platform is a large-scale, high-performance drug marketing and distribution platform covering over 330 cities and towns in China with approximately 3,500 sales personnel. Built over the past 19 years, it has been focused on two main business areas.

First, our Prescription Drugs business which includes our launched novel oncology drug (Elunate®) and our joint ventures Hutchison Sinopharm and SHPL, for which we manage directly and run all day-to-day operations. Second, is our Consumer Health business which mainly sells market-leading, household-name over-the-counter ("OTC") drug products through our non-consolidated joint venture HBYS.

During 2019, the Commercial Platform delivered continued solid growth in sales and net income growth on a CER basis. Consolidated sales of our Commercial Platform's subsidiaries grew by 7% (11% at CER) to $188.9 million (2018: $176.5m). The sales of our Commercial Platform's non-consolidated joint ventures, SHPL and HBYS, fell 1% (up 3% at CER) to $487.5 million (2018: $491.5m). This resulted in consolidated net income attributable to Chi-Med from our Commercial Platform up 9% (13% at CER) to $47.4 million (2018: $43.4m).

PRESCRIPTION DRUGS BUSINESS:

In 2019, consolidated sales of our Prescription Drugs subsidiaries increased by 13% (18% at CER) to $154.5 million (2018: $136.4m), despite the discontinuation of our Seroquel® distribution business. The consolidated net income attributable to Chi-Med from our Prescription Drugs business grew 10% (14% at CER) to $37.5 million (2018: $34.1m).

Oncology Business Department ("OBD"): During 2019 we began building our in-house, wholly-owned, commercial organization in oncology, the OBD, which has now grown to approximately 140 commercial staff. We plan to expand the OBD to 300-350 commercial staff to support the potential launch of surufatinib in non-pancreatic NET in China in late 2020.

During 2019, in-market sales of Elunate® to third-parties, based on data provided by Lilly, were $17.6 million. Under the terms of our licensing agreement with Lilly, Chi-Med reported $10.8 million in revenues (2018: $3.6m) from manufacturing product sales and royalties from Elunate®. Lilly is responsible for all commercialization activity for Elunate® and, as a result of the recent NRDL inclusion, intends to ramp-up sales coverage in 2020.

We believe that Elunate® and surufatinib, if approved, have the potential to be important products in the China market for VEGFR/VEGF inhibitors which, according to Frost & Sullivan, has grown from $500 million in 2015 to over $1.5 billion in 2019 and is expected to reach $5 billion by 2026.

SHPL: Our own-brand Prescription Drugs business, operated through our non-consolidated joint venture SHPL, is a well-established large-scale business. In 2019, SHPL sales fell 1% (up 3% at CER) to $272.1 million (2018: $275.7m).

The SHPL operation is large-scale, with a commercial team of about 2,300 medical sales representatives allowing for the promotion and scientific detailing of our products not just in hospitals in provincial capitals and medium-sized cities, but also in the majority of county-level hospitals in China. SHPL's GMP-certified factory holds 74 drug product manufacturing licenses and is operated by about 540 manufacturing staff.

She Xiang Bao Xin ("SXBX") pill: SHPL's main product is SXBX pill, an oral vasodilator prescription therapy for coronary artery disease. There are over one million deaths due to coronary artery disease per year in China. SXBX pill is the third largest botanical prescription drug in this indication in China, with market share in January to October 2019 of 18.0% (2018: 17.0%) nationally and 51.0% (2018: 48.0%) in Shanghai. 

Sales of SXBX pill have grown more than twenty-fold since 2001 due to continued geographical expansion of sales coverage, including 3% (7% at CER) to $239.5 million in 2019 (2018: $233.1m).

SXBX pill is protected by a formulation patent that expires in 2029 and is one of less than two dozen proprietary prescription drugs represented on China's National Essential Medicines List, which means that all Chinese state-owned health care institutions are required to carry it. SXBX pill is fully reimbursed in all China.

In early 2019, SHPL was awarded the 2018 State Scientific and Technological Progress Award ("SSTPA") - Second Prize, which was presented by President Xi Jinping, Premier Li Keqiang and other state leaders of China at the National Science and Technology Awards Ceremony. This SHPL award was one of only two such SSTPA awards given this year to studies in the botanical drug industry.

Concor®: Concor® (Bisoprolol tablets) is a cardiac beta1-receptor blocker, relieving hypertension and reducing high blood pressure. Concor® holds the number two national market share position in China's beta-blocker drug market. SHPL markets Concor® in nine provinces in China (2018: six), containing about 600 million people.

Hutchison Sinopharm: Our Prescription Drugs commercial services business, which in addition to commercializing our own products, provides distribution and marketing services to third-party companies in China. In 2019, Hutchison Sinopharm sales grew by 8% (13% at CER) to $143.7 million (2018: $132.8m).

Hutchison Sinopharm has a dedicated team of over 200 commercial staff focused on two key areas of operation. Firstly, a commercial team that markets over 700 third-party prescription drug products directly to over 360 public and private hospitals in the Shanghai region and through a network of 50 distributors to cover all other provinces in China. Second, a commercial team that markets Chi-Med's own science-based infant nutrition products in over 8,000 outlets and through a network over 23,000 promoters and over 200,000 members.

CONSUMER HEALTH BUSINESS:

In 2019, sales of our Consumer Health subsidiaries fell 14% (-13% at CER) to $34.4 million (2018: $40.1m) due to rationalization of certain low margin products; but the consolidated net income attributable to Chi-Med from our Consumer Health business was up 7% (12% at CER) to $9.9 million in 2019 (2018: $9.3m). 

HBYS: Our non-consolidated joint venture, HBYS, focuses on the manufacture, marketing and distribution of primarily OTC and limited prescription pharmaceutical products. In 2019, HBYS sales were flat (up 4% at CER) at $215.4 million (2018: $215.8m), as a result of an increase in sales of our second wave products being offset by a decrease in mature product sales.

Its Bai Yun Shan brand is a market-leading, household name, known by the majority of Chinese consumers. In addition to about 1,000 manufacturing staff in Guangdong and Anhui and 185 drug product licenses, HBYS has a commercial team of about 900 sales staff that covers the national retail pharmacy channel in China.

Fu Fang Dan Shen ("FFDS") tablets and Banlangen granules: FFDS tablets (angina) and Banlangen granules (anti-viral cold/flu), the two main products of HBYS, are generic OTC drugs with leading national market share. FFDS sales were down 17% (-13% at CER) to $47.0 million (2018: $56.3m) due to heightened competition. Banlangen sales were up 3% (8% at CER) to $64.3 million (2018: $62.6m), due to the moderate 2019 flu season that preceded the recent Covid-19 outbreak in China.

Given the maturity of FFDS and Banlangen, HBYS has focused in recent years on building a second wave of products. These products, including Nao Xin Qing tablets (cerebrovascular diseases) and Kou Yan Qing granules (periodontitis), made progress in 2019 growing 14% (18% at CER) to $64.3 million (2018: $56.6m).

HBYS property update: HBYS's vacant Plot 2 (26,700 sqm.) in Guangzhou has been listed for sale as part of the Guangzhou municipal government's urban redevelopment scheme plan for several years. Last month, the Guangzhou Mayor's Office cleared the Plot 2 sale process to proceed, which we expect to be completed in steps over the next twelve months.

Commercial Platform dividends:

The profits of the Commercial Platform continue to pass on to the Chi-Med Group through dividend payments primarily from our non-consolidated joint ventures, SHPL and HBYS. Dividends of $28.1 million (2018: $35.2m) were paid from these joint ventures to the Chi-Med Group level during 2019. Aggregate dividends received by Chi-Med Group level from SHPL and HBYS have been over $220 million.

Christian HoggChief Executive OfficerMarch 3, 2020

USE OF NON-GAAP FINANCIAL MEASURES AND RECONCILIATION

In addition to financial information prepared in accordance with U.S. GAAP, this announcement also contains certain non-GAAP financial measures based on management's view of performance including:

· Adjusted Innovation Platform segment operating loss;

· Adjusted Group net cash flows excluding financing activities; and

· CER.

Management uses such measures internally for planning and forecasting purposes and to measure the Chi-Med Group's overall performance. We believe these adjusted financial measures provide useful and meaningful information to us and investors because they enhance investors' understanding of the continuing operating performance of our business and facilitate the comparison of performance between past and future periods. These adjusted financial measures are non-GAAP measures and should be considered in addition to, but not as a substitute for, the information prepared in accordance with U.S. GAAP. Other companies may define these measures in different ways.

Adjusted Innovation Platform segment operating loss: We exclude the impact of the revenue received from external customers of our Innovation Platform, which is reinvested into our clinical trials, to derive our adjusted Innovation Platform segment operating loss. Revenue received from external customers of our Innovation Platform consists of milestone and other payments from our collaboration partners. The variability of such payments makes the identification of aggregate investment made in R&D activities and the associated trends more difficult. We believe the presentation of adjusted Innovation Platform segment operating loss provides useful and meaningful information about our ongoing R&D activities by enhancing investors' understanding of the scope of our normal, recurring operating R&D investment.

Adjusted Group net cash flows excluding financing activities: We include the change in short-term investments for the year to the change in cash and cash equivalents for the year, and exclude the net cash (used in)/generated from financing activities for the year to derive our adjusted Group net cash flows excluding financing activities. We believe the presentation of adjusted Group net cash flows excluding financing activities provides useful and meaningful information about the change in our cash resources excluding those from financing activities which may present significant year-to-year differences.

CER: We remove the effects of currency movements from year-to-year comparisons by retranslating the current year's performance at previous year's foreign currency exchange rates. Because we have significant operations in China, the RMB to U.S. dollar exchange rates used for translation may have a significant effect on our reported results. We believe the presentation at CER provides useful and meaningful information because it facilitates year-to-year comparisons of our results and increases the transparency of our underlying performance.

Reconciliation of GAAP to Adjusted Innovation Platform segment operating loss:

Reconciliation of GAAP change in cash and cash equivalents and short-term investments to Adjusted Group net cash flows excluding financing activities:

* For this guidance, rounded numbers are provided which are considered to serve better illustration purpose.

Reconciliation of GAAP sales and net income attributable to Chi-Med-Commercial Platform to CER:

Hutchison China MediTech Limited

Consolidated Balance Sheets

(in US$'000, except share data)

The accompanying notes are an integral part of these consolidated financial statements.

Hutchison China MediTech Limited

Consolidated Statements of Operations

(in US$'000, except share and per share data)

The accompanying notes are an integral part of these consolidated financial statements.

Hutchison China MediTech Limited

Consolidated Statements of Comprehensive Loss

(in US$'000)

The accompanying notes are an integral part of these consolidated financial statements.

Hutchison China MediTech Limited

Consolidated Statements of Changes in Shareholders' Equity

(in US$'000, except share data in '000)

The accompanying notes are an integral part of these consolidated financial statements.

Hutchison China MediTech Limited

Consolidated Statements of Cash Flows

(in US$'000)