TIDMHCM
RNS Number : 6292U
Hutchison China Meditech Limited
30 July 2020
Chi-Med Reports 2020 Interim Results and Provides Updates on Key
Clinical Programs
- Strong global pipeline progress - three U.S. FDA(1) Fast Track
Designations; surufatinib U.S. NDA(2) preparations underway; and
initiation of global Phase III for fruquintinib -
- Two further NDAs submitted in China - savolitinib in MET(3)
Exon 14 skipping mutation NSCLC(4) , and surufatinib in pancreatic
NET(5) -
- Expansion of commercial activities in oncology - Chi-Med to be
responsible for medical detailing and marketing for Elunate(R)
throughout Mainland China starting October 2020 -
- Company to Host Results Call & Webcast Today at 1 p.m. BST
/ 8 a.m. EDT / 8 p.m. HKT -
Hong Kong, Shanghai & Florham Park, NJ: Thursday, July 30,
2020: Hutchison China MediTech Limited ("Chi-Med") (Nasdaq/AIM:
HCM), an innovation-driven, commercial-stage biopharmaceutical
company, today announces its unaudited financial results for the
six months ended June 30, 2020 and provides updates on key clinical
and commercial developments.
"During the first half of 2020, we continued to build our fully
integrated business in China, from research and development to
manufacturing and commercialization and sales, with a focus on
oncology," said Mr. Simon To, Chairman of Chi-Med. "NDAs for
surufatinib and savolitinib are currently under review by the China
NMPA(6) and we are now preparing for multiple potential launches
employing our newly-established commercial organization in
oncology, covering all provinces in Mainland China."
"We are also one of a few China-based biotech companies working
to realize the global potential of our home-grown innovative drug
candidates," he added. "We currently have nine novel drug
candidates in clinical trials, many with global potential, and an
additional five drug candidates at the IND(7) -enabling stage."
"Over the past three years, we have significantly expanded our
international development footprint and, in the first half of 2020,
locked in global registration strategies for surufatinib and
fruquintinib, while our global partnership with AstraZeneca(8) is
approaching the same for savolitinib. A deep pipeline of
unpartnered earlier-stage oncology assets follows, with most
notably, global development of our Syk(9) and PI3K (10) assets
progressing well and our IDH 1/2(11) inhibitor expected to start
Phase I in the United States this year."
"We believe that the anticipated launches of multiple innovative
oncology drugs over the next twelve to eighteen months will address
a broad range of unmet medical needs and benefit a large number of
patients globally, propelling Chi-Med into a new phase of
growth."
FIRST HALF 2020 OPERATING HIGHLIGHTS
Set out below are some of Chi-Med's operating highlights so far
this year. For more details, please refer to "Operations Review"
below.
I. PREPARING TO LAUNCH MULTIPLE ONCOLOGY DRUGS IN CHINA
Savolitinib - NDA submitted for potential first-in-class
selective MET TKI(12) in China:
-- NDA accepted by NMPA in MET Exon 14 skipping mutation NSCLC:
presented positive results at ASCO(13) from a registration study in
MET Exon 14 skipping mutation NSCLC demonstrating 49.2% ORR(14) ,
93.4% DCR(15) and 9.6 months DoR(16) in efficacy evaluable
patients, underpinning the NDA acceptance in May 2020 and
subsequent grant of Priority Review status in July 2020.
Surufatinib - Two NDAs with first China launch in NET planned
for late 2020:
-- Progressed non-pancreatic NET NDA: Supported by the positive
SANET-ep Phase III and submitted in late 2019, the NMPA NDA review
process is on-track, and we continue to plan for launch in late
2020;
-- Submitted Pancreatic NET NDA: Following positive interim
analysis and early termination of SANET-p Phase III, an NDA for
pancreatic NET has been submitted in China, which we anticipate may
be accepted in the near term;
-- Progressed to Phase II for Tuoyi (R) combination: Initiated a
Phase II in early 2020 in eight solid tumor indications for
surufatinib plus Tuoyi (R) , a China-approved PD-1(17) antibody
from Junshi(18) . Data presented at AACR(19) , shows the
combination is well tolerated with encouraging activity, ORR 64%
and DCR 100% in efficacy evaluable patients at the RP2D(20) ;
and
-- Initiated Tyvyt(R) PD-1 combination: In July 2020,
Innovent(21) initiated a Phase I combining surufatinib with their
China-approved PD-1 monoclonal antibody, Tyvyt(R) .
Fruquintinib - Commercial progress on Elunate(R) (fruquintinib
capsules):
-- 174% overall increase in Elunate (R) prescriptions(22) during
the first half of 2020: Inclusion in the 2020 National
Reimbursement Drug List ("NRDL") has led to a major increase in
access. In-market sales, as provided by Lilly(23) , were $14.0
million(24) (H1-19: $11.4m) during the first half of 2020;
-- Chi-Med to commercialize Elunate(R) in China beginning in
October 2020: In July 2020, an agreement was reached with Lilly
that Chi-Med will commence medical detailing and marketing
activities for Elunate (R) across all of China effective October 1,
2020;
-- Phase III interim analysis in second-line gastric cancer: In
June 2020, following the second and final interim analysis for
futility of the FRUTIGA study in China the IDMC(25) recommended to
continue the study. FRUTIGA is expected to complete enrollment in
late 2020 or early 2021; and
-- Expanded Tyvyt(R) PD-1 combination: Phase I dose escalation
for the fruquintinib and Tyvyt(R) combination completed in July
2020. A Phase Ib expansion study at the RP2D is underway in China
targeting five solid tumor indications.
Established in-house oncology commercial organization - Team now
in place for imminent launches:
-- An in-house oncology commercial organization has now been
established with over 320 staff, versus about 90 at the start of
2020, in order to support the potential launch of surufatinib in
China and commercialization of Elunate (R) .
II. REALIZING THE GLOBAL POTENTIAL OF OUR LATE STAGE ONCOLOGY ASSETS
Surufatinib - U.S. NDA under preparation:
-- Secured FDA Fast Track Designations: FDA granted Fast Track
Designations for both pancreatic NET and non-pancreatic NET in
April 2020;
-- Positive U.S. NET bridging study: Presented results at ASCO
from the U.S. Phase Ib NET study in June 2020, reporting 100% DCR
in heavily pre-treated pancreatic-NET and non-pancreatic NET
patients;
-- Agreed U.S. NDA submission pathway: In May 2020, agreed with
FDA that the two pivotal NET studies in China, along with existing
data from the U.S. bridging study, could support an NDA submission.
Now planning a U.S. NDA rolling submission from late 2020 into
early 2021;
-- U.S. commercial launch strategy: Work underway to establish
U.S. launch readiness for late 2021;
-- Progressed European regulatory discussions: Engaging
extensively with European regulatory authorities, targeting MAA(26)
submission for NET during 2021; and
-- BeiGene(27) global PD-1 collaboration: Entered into a
clinical collaboration in May 2020 to explore the combination of
surufatinib with BeiGene's PD-1 antibody, tislelizumab, in the
U.S..
Fruquintinib - global Phase III registration study in CRC(28)
underway:
-- Secured FDA Fast Track Designation: Granted in June 2020 for
patients with metastatic CRC;
-- Initiated FRESCO-2 global Phase III registration study in
CRC: Following study design endorsement by the FDA, EMA(29) and
PMDA(30) , we initiated the global Phase III registration study in
metastatic CRC. Enrollment of over 500 patients in 130 sites in 10
countries targeted to complete in late 2021; and
-- BeiGene and Innovent global PD-1 collaborations: Entered into
a clinical collaboration with BeiGene in the U.S., Europe, China
and Australia in May 2020 to explore the combination of
fruquintinib and tislelizumab. Our work with Innovent has now
established the RP2D for the fruquintinib and Tyvyt(R) combination
and a U.S. IND is planned for late 2020.
Savolitinib - AstraZeneca collaboration making progress in lung
and kidney cancer:
-- SAVANNAH interim analysis - In late July 2020, AstraZeneca
and Chi-Med conducted a first internal interim analysis for the
SAVANNAH global Phase II study of the savolitinib plus Tagrisso
combination in EGFR mutation positive TKI refractory NSCLC
patients. Early interim efficacy and safety data is now under
review. The enrollment of the SAVANNAH study continues apace in 13
countries;
-- Encouraging efficacy in MET-driven PRCC(31) : In June 2020,
we presented data at ASCO for SAVOIR, a Phase III study of
savolitinib versus sunitinib. Savolitinib demonstrated encouraging
efficacy compared to sunitinib with a 27% versus 7% ORR, a trend
toward benefit in PFS(32) and an improvement in OS(33) with
tolerability advantages; and
-- Preliminary signal for savolitinib/Imfinzi(R) (PD-L1(34) )
combination in all PRCC: In February 2020, we presented data from
the CALYPSO Phase II study at ASCO GU(35) showing the combination
was tolerable and associated with durable efficacy, with a 12.3
month median OS.
III. INVESTING IN THE FUTURE - EARLY PIPELINE
-- Non-Hodgkin's lymphoma ("NHL"): Advanced Phase Ib expansion
of both of our NHL assets, HMPL-523 (Syk) and HMPL-689 (PI3K ) in
China. We expect these studies to inform our China registration
study decisions in 2020. In the U.S. and Europe, we continued to
expand development of HMPL-523 and HMPL-689, with over twenty Phase
I sites now enrolling;
-- HMPL-453 - selective FGFR(36) 1/2/3 inhibitor: We initiated a
Phase II study in advanced malignant mesothelioma in China in March
2020, with a second Phase II, in Cholangiocarcinoma, in
planning;
-- HMPL-306 - IDH 1/2 dual inhibitor: In late July 2020, we
dosed our first patient in a Phase I study in China with our ninth
in-house discovered asset, HMPL-306; and
-- Five additional novel drug candidates in oncology are
currently progressing through IND-enabling studies and are
anticipated to reach the clinic over the next twelve to eighteen
months.
IV. UPDATE ON THE IMPACT OF COVID-19
-- Working to effectively manage COVID-19 challenges: The
COVID-19 outbreak initially posed some challenges to our operations
resulting from restrictions in travel. Our teams adapted quickly
and have been able to minimize the effect across our businesses
thus far. We will continue to closely monitor the evolving
situation . At this stage, we are unable to assess the long-term effect of the outbreak, if any.
KEY EVENTS PLANNED FOR BALANCE 2020 & EARLY 2021
CHINA EVENTS: A FULLY INTEGRATED ONCOLOGY BUSINESS IN CHINA
-----------------------------------------------------------------------------
Fruquintinib
* Elunate(R) China commercialization - Chi-Med to
assume medical detailing and marketing activities for
Elunate (R) in all China on October 1, 2020; and
* Enrollment completion of FRUTIGA Phase III - complete
enrollment of China registration study in second-line
gastric cancer.
------------- --------------------------------------------------------------
Surufatinib
* Presentation of SANET-p Phase III data - pancreatic
NET patients study at ESMO(37) 2020 conference;
* Acceptance of NDA in pancreatic NET - following
recent NDA submission based on positive SANET-p Phase
III interim analysis;
* Phase II/III interim analysis - for futility in
second-line BTC(38) in China; and
* Potential NDA approval and launch for non-pancreatic
NET - first un-partnered oncology drug launch for
Chi-Med in China.
------------- --------------------------------------------------------------
Savolitinib
* Potential NDA approval and launch for NSCLC -
monotherapy in MET Exon 14 skipping mutation NSCLC.
If approved, this will be the first approval
worldwide and the first selective c-MET TKI approval
in China. Material milestone triggering event.
------------- --------------------------------------------------------------
Early-stage
Assets * HMPL-689 (PI3K ) Phase I/Ib NHL data - potential
presentation of China data at major scientific
conference;
* HMPL-689 (PI3K ) - Potential registration study start
- in indolent NHL in China;
* HMPL-523 (Syk) - Potential registration study start -
in indolent NHL in China; and
* HMPL-523 (Syk) - completion of dose escalation in
ITP(39) .
GLOBAL EVENTS: REALIZING THE GLOBAL POTENTIAL OF OUR ONCOLOGY ASSETS
-----------------------------------------------------------------------------
Fruquintinib
* Global Phase III study (FRESCO-2) - expansion of
registration study in CRC in 10 countries including
the U.S., Europe and Japan; and
* Presentation of U.S. Phase Ib data - preliminary data
from study of third and later line CRC patients at
ESMO 2020 conference.
------------- --------------------------------------------------------------
Surufatinib
* U.S. NDA submission for pancreatic- and
non-pancreatic NET - U.S. NDA rolling submission
beginning in late 2020 through early 2021.
------------- --------------------------------------------------------------
Savolitinib
* Internal interim analyses on SAVANNAH - Complete the
review of the first internal interim analysis and
conduct further interim analysis to inform regulatory
strategy;
* Potential endorsement of global Phase III in kidney
cancer - savolitinib monotherapy in MET-driven PRCC;
* Potential endorsement of global Phase III in NSCLC -
Tagrisso (R) combination in EGFRm(40) positive, MET
positive, NSCLC. Material milestone triggering event;
* Potential endorsement of global registration study in
NSCLC - savolitinib in MET Exon 14 skipping mutation
NSCLC; and
* Enrollment completion of SAVANNAH - AstraZeneca to
complete enrollment of Phase II study, with
registration potential, of savolitinib/Tagrisso (R)
combination.
------------- --------------------------------------------------------------
Early-stage
Assets * HMPL-523 (Syk) - Global Phase Ib expansion - in
indolent NHL in the U.S. and Europe;
* HMPL-306 (IDH 1/2) - U.S. IND submission and
initiation of Phase I ; and
* HMPL-689 (PI3K ) - Global Phase Ib expansion - in
indolent NHL in the U.S. and Europe.
FINANCIAL HIGHLIGHTS
The items below are selected financial data for the six months
ended June 30, 2020. All dollars are expressed in U.S. dollar
currency unless otherwise stated. For more details, please refer to
"Financial Review", "Operations Review" and "Interim Unaudited
Condensed Consolidated Financial Statements" below.
OVERALL GROUP:
-- Group r evenue of $106.8 million (H1-19: $102.2m);
-- N et loss attributable to Chi--Med of $49.7 million (H1-19: net loss of $45.4m);
-- Adjusted Group (non-GAAP) net cash flows excluding financing
activities was -$32.5 million (H1-19: -$34.2m). C ash from our
Commercial Platform, as well as cash received from our
multi-national partners, continued to offset a substantial portion
of our R&D(41) expenses;
-- Recent financing activity strengthens cash position. We held
cash, cash equivalents and short-term investments of $281.0 million
as of June 30, 2020 (December 31, 2019: $217.2m). In early July
2020, we completed a private placement to General Atlantic(42) ,
raising an additional $100.0 million in gross proceeds, to further
strengthen our cash position; and
-- Additional unutilized bank facilities of $119.3 million
(December 31, 2019: $119.3m) and bank borrowings of $26.8 million
(December 31, 2019: $26.8m) .
I NNOVATION PLATFORM (our R&D operations):
-- Consolidated revenue was $ 7.8 million (H1-19 : $7.3m) mainly
from service fee payments from AstraZeneca and Lilly ; and
-- Net loss from our Innovation Platform attributable to Chi-Med
of $ 73.6 million (H1-19: net loss of $67.1m) resulting from
expansion in the development of our nine novel drug candidates ,
with five now in global development, and establishment of scaled
international clinical and regulatory operations.
COMMERCIAL PLATFORM (our commercial operations):
-- Total consolidated sales up 4% (9% at CER(43) ) to $99.0
million (H1-19: $94.9m) mainly due to continued progress on our
Prescription Drugs subsidiary Hutchison Sinopharm(44) as well as
manufacturing revenues and royalties from Elunate (R) ;
-- Total consolidated net income from our Commercial Platform
attributable to Chi-Med up 14% (19% at CER) to $35.5 million
(H1-19: $31.0m), strong performance despite the limitations posed
by COVID-19 underpinned by the growing profits of our Prescription
Drugs operations in China; and
-- Guangzhou land compensation: In June 2020, our 50/50 joint
venture, HBYS(45) , entered into an agreement with the Guangzhou
government for the return of an unused piece of land in return for
cash compensation of up to $95 million. HBYS will receive
compensation in stages over a period of approximately one year. The
first $24.1 million payment was received by HBYS in late June 2020
and the return will be recorded in Chi-Med's statement of
operations in H2 2020.
FINANCIAL GUIDANCE
During the first half of 2020, we performed in-line with
published guidance, with dividends from our Commercial Platform
offsetting a material portion of our R&D expenses as
expected.
Over the balance of 2020, cash investments will rise in a number
of areas including: several major global clinical and regulatory
activities such as the global FRESCO-2 Phase III for fruquintinib
and the submission of the U.S. NDA for surufatinib; the first phase
of construction of our new large-scale oncology manufacturing
facility in Shanghai; and expansion of our commercial activities in
oncology in China, specifically our new commercial role on
Elunate(R) and preparation for the surufatinib launch.
We assume at this stage that the financial impact of the
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 needed, as new material information emerges. We therefore
provide unchanged Financial Guidance for 2020 below.
H1 2020 2020 Current Adjustments vs. Previous Guidance
Actual Guidance
------------------------------------------ --------------- ---------------------- ---------------------------------
Adjusted (non-GAAP) Innovation Platform $(81.2) million $(180) - (210) million nil
segment operating loss
Adjusted (non-GAAP) Group net cash flows $(32.5) million $(140) - (160) million nil
excluding financing activities
------------------------------------------ --------------- ---------------------- ---------------------------------
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 measure s. 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, r espectively.
-----
Conference Call and Audio Webcast Presentation Scheduled Today
at 1 p.m. BST / 8 a.m. EDT / 8 p.m. HKT - Investors may participate
in the call as follows: +44 20 3194 0569 (U.K.) / +1 646 722 4977
(U.S.) / +852 3027 6500 (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 " 54962123# ."
-----
About Chi-Med
Chi-Med (Nasdaq/AIM: HCM) is an innovative, commercial-stage,
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 nine 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
Investor Enquiries
Mark Lee, Senior Vice President +852 2121 8200
Annie Cheng, Vice President +1 (973) 567 3786
Media Enquiries
Americas - Brad Miles, Solebury Trout +1 (917) 570 7340 (Mobile)
bmiles@troutgroup.com
Europe - Ben Atwell / Alex Shaw, FTI Consulting +44 20 3727 1030 / +44 7771 913 902 (Mobile) / +44 7779
545 055 (Mobile)
Chi-Med@fticonsulting.com
Asia - Joseph Chi Lo / Zhou Yi, Brunswick +852 9850 5033 (Mobile), jlo@brunswickgroup.com / +852 97
83 6894 (Mobile), yzhou@brunswickgroup.com
Nominated Advisor
Freddy Crossley / Atholl Tweedie, Panmure Gordon (UK)
Limited +44 (20) 7886 2500
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," "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 me e t 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; the impact of the COVID-19 pandemic or other 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
FINANCIAL REVIEW
Chi-Med Group revenue for the six months ended June 30, 2020 was
$106.8 million (H1-19: $102.2m). Revenue from the Commercial
Platform increased to $99.0 million (H1-19: $94.9m) driven mainly
by our Prescription Drugs business which included manufacturing
revenue and royalties from the commercial sale of Elunate(R) as
well as increased sales by our Hutchison Sinopharm business.
Revenue from the Innovation Platform was $7.8 million in the first
half of 2020 (H1-19: $7.3m).
Group revenues do not include the revenues of our two
large-scale, 50/50 joint ventures in China, SHPL(46) (Prescription
Drugs) and HBYS (Consumer Health), since these are accounted for
using the equity method.
In the first half of 2020, our Commercial Platform, which is a
material source of profit and cash flow for Chi-Med, recorded a
segment operating profit of $37.3 million (H1-19: $34.1m). Profit
growth was primarily driven by the strong performance of SHPL,
which effectively navigated challenges from COVID-19 and the
discontinuation of distribution rights for Seroquel(R) in May 2019.
Increased manufacturing revenue and royalties from Elunate(R) also
contributed, while the weakening of the RMB against the U.S. dollar
in the first half of 2020 reduced the operating profit of our
Commercial Platform in U.S. dollar terms by about 5%.
The Innovation Platform incurred a segment operating loss of
$73.4 million(47) (H1-19: operating loss of $67.2m) as a result of
the expansion of discovery activities, clinical pipeline
development and related organizational growth.
Net corporate unallocated operating loss, primarily Chi-Med
Group overhead and operating costs, increased to $9.7 million
(H1-19: $7.3m) mainly due to expanded administrative expenses and a
lower level of interest income as a result of the decline in market
interest rates.
Consequently, Chi-Med Group's operating loss was $45.7 million
(H1-19: operating loss of $40.3m).
The aggregate of interest and income tax expenses of the Chi-Med
Group, as well as net income attributable to non-controlling
interests was $4.0 million (H1-19: $5.0m).
The resulting total Group net loss attributable to Chi-Med was
$49.7 million (H1-19: net loss of $45.4m).
As a result, Group net loss attributable to Chi-Med in the first
half of 2020 was $0.07 per ordinary share / $0.36 per American
depositary share, which was unchanged from the first half of
2019.
Cash and Financing
Cash inflows from our Commercial Platform, as well as our
R&D collaborations with AstraZeneca and Lilly, offset a
material portion of our R&D expense. As a result, total Chi-Med
Adjusted (non-GAAP) Group net cash flows excluding financing
activities was -$32.5 million (H1-19: -$34.2m) despite the
aforementioned $73.4 million Innovation Platform segment operating
loss.
The Chi-Med Group held cash, cash equivalents and short-term
investments of $281.0 million as of June 30, 2020 (December 31,
2019: $217.2m). Subsequently, i n early July 2020, we completed a
private placement with General Atlantic raising an additional
$100.0 million in gross proceeds, to further strengthen our cash
position.
Outstanding Chi-Med Group level bank loans as of June 30, 2020
amounted to $26.8 million (December 31, 2019: $26.8m) and
additional unutilized bank facilities available to the Group
totaled $119.3 million (December 31, 2019: $119.3m).
The primary source of cash to the Chi-Med Group from our
Commercial Platform are dividends from our two non-consolidated
Commercial Platform joint ventures, SHPL and HBYS. During the first
half of 2020, the Chi-Med Group received dividends of $35.3 million
(H1-19: $18.2m) from SHPL and HBYS. As of June 30, 2020, SHPL and
HBYS held $103.3 million (December 31, 2019: $62.7m) in cash and
cash equivalents with 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 550 scientists
and staff (December 31, 2019: 500) in China and at our
international operation in New Jersey. Currently, we have nine
self-discovered drug candidates in clinical trials, with five in
global clinical development.
PRODUCT PIPELINE PROGRESS
Savolitinib
Savolitinib is an oral, potent, and highly selective small
molecule inhibitor of MET, a receptor tyrosine kinase which has
been shown to function abnormally in many types of solid tumors
promoting tumor growth, angiogenesis, and metastasis. In global
partnership with AstraZeneca, savolitinib has been studied in over
1,000 patients to date, both as a monotherapy and in combinations.
In clinical studies it has shown promising clinical efficacy in
patients with MET gene alterations in multiple tumor types with an
acceptable safety profile.
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.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
============= ======================== ====== =============== ============ ===========
Savolitinib MET Exon 14 skipping China II Registration NDA accepted NCT02897479
============= ======================== ====== =============== ============ ===========
Savolitinib MET Exon 14 skipping Global Registration In planning N/A
============= ======================== ====== =============== ============ ===========
Savolitinib + SAVANNAH: 2L/3L Global II Registration Enrolling NCT03778229
Tagrisso(R) EGFRm+; Tagrisso(R) potential
refractory; MET+
============= ======================== ====== =============== ============ ===========
Savolitinib + 2L/3L EGFRm+; Global III In planning N/A
Tagrisso(R) Tagrisso(R) refractory;
MET+
============= ======================== ====== =============== ============ ===========
NDA accepted in MET Exon 14 skipping mutation NSCLC
(NCT02897479) - It is estimated that 2-3% of NSCLC patients have
MET Exon 14 skipping mutation, which leads to poor prognosis. In
late 2019, we completed a 70 patient Phase II registration study
that formed the basis for NDA which was accepted by the China NMPA
in May 2020.
Results of the Phase II study were presented at ASCO in June
2020 and showed that as of the March 31, 2020 data cut off, ORR was
49.2% and DCR was 93.4% in 61 efficacy evaluable patients. Median
DoR was 9.6 months (95% confidence interval ["CI"] 5.5-not reached
["NR"]) with maturity of 40%. Median PFS was 6.9 months (95% CI
4.2-19.3) with maturity of 50%. Median OS was 14.0 months (95% CI:
9.7-NR) with maturity of 46%. A total of 36% of patients in the
Phase II study harbored pulmonary sarcomatoid carcinoma with Exon
14 skipping mutation, a particularly aggressive sub-type of NSCLC.
Treatment naïve patients accounted for 40% of the treated patients
(mostly those unfit to receive first line chemotherapy) while the
remainder had received prior treatments. Clinical data demonstrated
an acceptable safety profile with a low adverse event ("AE")
related discontinuations rate of 14.3%.
AstraZeneca and Chi-Med continue to explore the global
development pathway for savolitinib in MET Exon 14 skipping
mutation NSCLC.
EGFR(48) TKI-resistance in NSCLC - MET-amplification is a major
mechanism for acquired resistance to both first generation EGFR
TKIs, such as Iressa(R) and Tarceva(R) , as well as
third-generation EGFR TKIs like Tagrisso(R) , an EGFR TKI owned by
AstraZeneca. As many as 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 in the TATTON and SAVANNAH studies,
and meeting their needs represents our major focus.
SAVANNAH Phase II study of combination with Tagrisso (R) in
patients who have progressed following Tagrisso(R) due to MET
amplification or overexpression (NCT03778229) - The SAVANNAH study
is a single-arm, open-label study, with the potential for
registration, enrolling in North and South America, Europe and
Asia. SAVANNAH followed the successful TATTON study, a Phase Ib/II
expansion study of savolitinib in combination with Tagrisso(R) in
over 220 EGFR mutation positive TKI refractory NSCLC patients, with
data presented at both AACR and ESMO Asia in 2019 and published in
The Lancet Oncology this year.
In late July 2020, AstraZeneca and Chi-Med conducted a first
internal interim analysis for SAVANNAH, and review of early safety
and efficacy data is ongoing.
Savolitinib - Kidney cancer:
MET is a clear genetic driver in RCC(49) . The table below shows
a summary of the clinical studies for savolitinib in kidney cancer
patients.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
======================= =================== ======== ===== ============= ===========
Savolitinib monotherapy MET-driven PRCC Global III In planning N/A
======================= =================== ======== ===== ============= ===========
Savolitinib + CALYPSO: PRCC UK/Spain II Interim data NCT02819596
Imfinzi(R) ASCO GU 2020
======================= =================== ======== ===== ============= ===========
Savolitinib + CALYPSO: Clear cell UK/Spain II Enrolling NCT02819596
Imfinzi(R) RCC; VEGFR TKI(50) - Data in
refractory 2020
======================= =================== ======== ===== ============= ===========
MET+ Papillary Renal Cell Carcinoma ("PRCC") - PRCC is the most
common of the non-clear cell renal cell carcinomas, representing
approximately 14% of kidney cancer. Approximately 400,000 new cases
of kidney cancer were diagnosed globally in 2018, equating to about
56,500 cases of PRCC, with approximately half harboring MET driven
disease. No targeted therapies have been approved specifically for
PRCC.
SAVOIR Phase III in MET-positive PRCC (NCT03091192) - In late
2018, the SAVOIR study, a global Phase III study of savolitinib
monotherapy compared with sunitinib in patients with MET-driven
PRCC, was stopped due to confounding results from a separate,
external, retrospective observational study.
Results from 60 randomized patients (33 savolitinib, 27
sunitinib) were followed through August 19, 2019 with data
presented at ASCO in May 2020. Although patient numbers and
follow-up were limited, trends in efficacy were promising. In terms
of OS, savolitinib patients had not reached median OS at data
cut-off, compared to 13.2 months for sunitinib patients (HR(51)
0.51; 95% CI: 0.21-1.17; p=0.110). Median PFS was 7.0 months for
savolitinib patients, compared to 5.6 for sunitinib patients (HR
0.71; 95% CI 0.37-1.36; p=0.313). Responses were observed in 27%
and 7% of savolitinib and sunitinib patients, respectively. This
difference did not reach statistical significance due to the small
sample size. None of the 9 responders on savolitinib treatment
experienced disease progression as of data cut-off, compared to 1
of 2 responders on sunitinib treatment. Sunitinib response rate was
in range with previous studies. In terms of safety, Grade >=3
AEs were reported in 42% of savolitinib patients versus 81% of
sunitinib patients, with AEs leading to dose modification in 30%
and 74% of savolitinib and sunitinib patients, respectively.
Based on these data, Chi-Med and AstraZeneca are actively
evaluating the opportunity to restart clinical work in PRCC for
monotherapy savolitinib.
Savolitinib and Immunotherapy Combinations - Major evidence is
emerging demonstrating that MET plays an important role in the
tumor microenvironment, leading to reduced anti-tumor activity of
immune cells in many solid tumors. Therefore, combining
immunotherapies with a MET inhibitor is hypothesized to enhance
anti-tumor activity. Chi-Med and AstraZeneca, as well as others,
are currently conducting several clinical studies of
anti-PD-1/PD-L1 antibodies in combination with MET inhibitors aimed
at validating this hypothesis.
CALYPSO Phase II in combination with Imfinzi(R) PD-L1 inhibitor
in RCC (NCT02819596) - The CALYPSO study is an investigator
initiated open-label Phase I/II study of savolitinib in combination
with Imfinzi(R) , an anti-PD-L1 antibody owned by AstraZeneca. The
study is evaluating the safety and efficacy of the
savolitinib/Imfinzi(R) 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 ASCO GU 2020 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 was in line
with established single agent safety profiles. Chi-Med and
AstraZeneca continue to accumulate clinical data and explore
development in PRCC, and possibly other tumor types, for the
savolitinib and Imfinzi(R) combination.
Savolitinib - Gastric cancer:
MET-driven gastric cancer has a very poor prognosis. Multiple
Phase II studies have been conducted in Asia to study savolitinib
in MET-driven gastric cancer patients. The VIKTORY study is an
investigator initiated Phase II umbrella study in gastric cancer in
South Korea 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.
Surufatinib
Surufatinib is a novel, oral angio-immuno kinase inhibitor that
selectively inhibits the tyrosine kinase activity associated with
VEGFR(52) and FGFR, both shown to be involved in tumor
angiogenesis, and CSF-1R(53) , which plays a key role in regulating
tumor-associated macrophages, promoting the body's immune response
against tumor cells. Surufatinib has been studied in over 800
patients to date, both as a monotherapy and in combinations.
Chi-Med currently retains all rights to surufatinib worldwide. A
summary of the clinical studies of surufatinib is shown in the
table below.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
========================== ======================== ======== ======= ===================== ===========
Surufatinib monotherapy SANET-ep: Non-pancreatic China III Met primary endpoint; NCT02588170
NET NDA accepted
========================== ======================== ======== ======= ===================== ===========
Surufatinib monotherapy SANET-p: Pancreatic China III Met primary endpoint; NCT02589821
NET NDA submitted;
acceptance imminent
========================== ======================== ======== ======= ===================== ===========
Surufatinib monotherapy NETs US/EU/JP Ib To file US rolling NCT02549937
NDA starting Q4
2020
========================== ======================== ======== ======= ===================== ===========
Surufatinib monotherapy BTC and soft tissue US Ib Enrolling NCT02549937
sarcoma
========================== ======================== ======== ======= ===================== ===========
Surufatinib monotherapy Chemotherapy refractory China IIb/III Enrolling NCT03873532
BTC
========================== ======================== ======== ======= ===================== ===========
Surufatinib + Tuoyi(R) Solid tumors (eight China II Enrolling NCT04169672
(PD-1) indications)
========================== ======================== ======== ======= ===================== ===========
Surufatinib + Tyvyt(R) Solid tumors China I Enrolling NCT04427774
(PD-1)
========================== ======================== ======== ======= ===================== ===========
Surufatinib + tislelizumab Solid tumors Global I In planning N/A
(PD-1)
========================== ======================== ======== ======= ===================== ===========
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.
Global development of surufatinib in NET - In June 2020, we held
a pre-NDA meeting with the U.S. FDA for the treatment of patients
with advanced NET and have reached an agreement that the completed
SANET-ep (non-pancreatic NET) and SANET-p (pancreatic NET) studies,
along with existing data from surufatinib in U.S. non-pancreatic
and pancreatic NET patients, could form the basis to support a U.S.
NDA submission.
The FDA granted Fast Track Designations for our pancreatic and
non-pancreatic NET development programs in April 2020, following
Orphan Drug Designation for pancreatic NET in November 2019. We
have initiated preparatory work for the U.S. NDA and intend to
utilize a rolling submission under Fast Track Designation status.
The rolling NDA allows completed portions of an NDA to be submitted
and reviewed by the FDA on an ongoing basis. The planned initial
NDA submission is late 2020.
Regulatory interactions in Europe are also underway to confirm
the clinical development strategy and potential path to
registration with MAA submission targeted for 2021.
U.S. Phase Ib NET cohorts (NCT02549937) - At ASCO 2020,
preliminary data presented from the two NET cohorts in the ongoing
U.S. Phase Ib trial for surufatinib demonstrated efficacy
comparable to China data in heavily pretreated patients with
pancreatic or non-pancreatic NETs. The safety profile is also
consistent with the larger pool of surufatinib safety data. As of
April 21, 2020, 16 patients with pancreatic NET were treated for a
median of 7.1 months (range 2.0-17.5) and 16 patients with
non-pancreatic NET were treated for a median of 4.9 months (range
of 1.0-10.2). All 32 patients have pretreated progressive NETs
(median prior lines of treatment: 3; range 1-8). Confirmed response
was observed in 18.8% of pancreatic NET patients; all remaining
patients had stable disease (including 1 unconfirmed response), for
a DCR of 100%. In the non-pancreatic NET cohort all patients had
stable disease (including 1 unconfirmed response). The study is
ongoing.
Pharmacokinetic and safety data from these cohorts was presented
at AACR 2020, demonstrating similar profiles of surufatinib between
Chinese and U.S. patients, meaning that race had minimal effect on
exposure.
Phase III study of surufatinib 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 the trial 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<0.0001). Efficacy was also supported by
Blinded Independent Image Review Committee assessment. Surufatinib
was well-tolerated in this study and the safety profile is
consistent with observations in prior clinical studies.
In late 2019, the China NMPA granted Priority Review status to
the NDA for surufatinib in non-pancreatic NET.
Phase III study of surufatinib 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 been met.
Following the success of SANET-p, we submitted our NDA to the China
NMPA and are now awaiting formal acceptance. The results of this
study will be presented at ESMO 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.
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. If the interim
analysis is positive, we will consider moving the study into Phase
III.
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(R) (PD-1). We
have completed a Phase I dose-finding study and presented the data
at the AACR in April 2020. The data showed that surufatinib plus
Tuoyi(R) were well tolerated with no unexpected safety signals
observed. At the RP2D, a DCR of 100% and ORR of 63.6% were reported
for 11 efficacy evaluable patients, with 2 unconfirmed PRs(54) .
Surufatinib plus Tuoyi(R) showed encouraging antitumor activity in
patients with advanced solid tumors, especially in neuroendocrine
neoplasms (NENs) patients. A Phase II study is already enrolling
patients in eight solid tumor indications in China.
In addition, we have expanded our global collaboration with
Innovent and, in July 2020, started a Phase I study to evaluate the
safety and efficacy of Tyvyt(R) (PD-1) in combination with
surufatinib. In May 2020, we further entered into a global clinical
collaboration agreement to evaluate combining surufatinib with
BeiGene's anti-PD-1 antibody, tislelizumab, for the treatment of
various solid tumor cancers in the United States.
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 initiate multiple exploratory studies, both as
a single agent, and in combinations, to evaluate efficacy of
surufatinib. We also intend to support investigator-initiated
studies in multiple tumor settings.
Fruquintinib (Elunate(R) )
Fruquintinib is a novel, selective, oral inhibitor of VEGFR
1/2/3 kinases that was designed to improve kinase selectivity to
minimize off-target toxicity and thereby improve tolerability.
Fruquintinib has been studied in over 1,700 patients to date, both
as a monotherapy and in combinations.
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.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
=========================== ======================== ======== ===== ===================== ===========
Fruquintinib monotherapy FRESCO: >=3L CRC; China III Approved and NCT02314819
chemotherapy refractory launched
=========================== ======================== ======== ===== ===================== ===========
Fruquintinib monotherapy FRESCO-2: mCRC US/EU/JP III Sites open; screening NCT04322539
=========================== ======================== ======== ===== ===================== ===========
Fruquintinib monotherapy TN & HR+/Her2- US Ib Enrolling NCT03251378
breast cancer
=========================== ======================== ======== ===== ===================== ===========
Fruquintinib + paclitaxel FRUTIGA: 2L gastric China III Enrolling; Completed NCT03223376
cancer 2(nd) interim
analysis
=========================== ======================== ======== ===== ===================== ===========
Fruquintinib + Tyvyt(R) CRC China II Enrolling NCT04179084
(PD-1)
=========================== ======================== ======== ===== ===================== ===========
Fruquintinib + Tyvyt(R) Advanced solid China Ib/II Enrolling NCT03903705
(PD-1) tumors
=========================== ======================== ======== ===== ===================== ===========
Fruquintinib + tislelizumab Solid tumors Global I In planning N/A
(PD-1)
=========================== ======================== ======== ===== ===================== ===========
Fruquintinib + geptanolimab CRC China Ib Enrolling NCT03977090
(PD-1)
=========================== ======================== ======== ===== ===================== ===========
Fruquintinib + geptanolimab NSCLC China Ib Enrolling NCT03976856
(PD-1)
=========================== ======================== ======== ===== ===================== ===========
Fruquintinib - Colorectal Cancer:
Fruquintinib capsules, sold under the brand name Elunate(R) ,
are approved in China for metastatic CRC (third-line) patients that
have been previously treated with fluoropyrimidine, oxaliplatin and
irinotecan, including those who have previously received anti-VEGF
therapy and/or anti-EGFR therapy (RAS wild type). For details of
first half 2020 sales performance please refer to "COMMERCIAL
PLATFORM" below.
Global development of fruquintinib in metastatic CRC - The U.S.
FDA has granted Fast Track Designation for the development of
fruquintinib, for the treatment of patients with metastatic CRC who
have been previously treated with fluoropyrimidine-, oxaliplatin-,
and irinotecan-based chemotherapy, an VEGF biological therapy, and,
if RAS wild-type, an anti-EGFR therapy.
In July 2020, we initiated a Phase III registration study, known
as the FRESCO-2 study, in refractory metastatic CRC in the U.S.,
Europe and Japan. FRESCO-2 is expected to enroll over 500 patients
from approximately 130 sites in 10 countries. Multiple sites are
now open and patient screening is underway. Enrollment is targeted
to complete late 2021.
The U.S. FDA, EMA and Japanese PMDA have all acknowledged the
totality of the fruquintinib clinical data, including the FRESCO-2
study (if positive), the prior positive Phase III FRESCO study
demonstrating improvement in overall survival that led to
fruquintinib approval for metastatic CRC in China in 2018, and
additional completed and ongoing supporting studies in metastatic
CRC, could potentially support an NDA for the treatment of patients
with metastatic CRC in the third-line setting.
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, at a 1:1 ratio, for
second-line treatment of advanced gastric cancer. The FRUTIGA study
primary endpoint is OS.
In June 2020, the IDMC of the FRUTIGA study completed a second
planned interim data review and, based on the preset criteria,
recommended that the trial continue. We expect to complete
enrollment of FRUTIGA in late 2020 or early 2021.
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. Phase I dose-finding
study in China of Elunate(R) plus Tyvyt(R) (PD-1, Innovent) is
close to completion, with the Phase Ib/II dose-expansion study
already underway in five solid tumor indications in China. Phase Ib
studies of Elunate(R) plus geptanolimab (PD-1, Genor(55) ) in
second-line CRC and NSCLC are also underway.
In addition, in May 2020, we entered into a global clinical
collaboration agreement to evaluate the safety, tolerability and
efficacy of combining fruquintinib with BeiGene's anti-PD-1
antibody, tislelizumab, for the treatment of various solid tumor
cancers in the U.S., Europe, China and Australia.
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,
we are also preparing to support investigator-initiated studies in
multiple solid tumor settings.
HMPL-523
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.
Treatment Name, Line, Patient Focus Sites Phase Status/Plan NCT #
==================== =============================== ========= ===== =========== ===========
HMPL-523 monotherapy Indolent non-Hodgkin's lymphoma Australia Ib Enrolling NCT02503033
==================== =============================== ========= ===== =========== ===========
HMPL-523 monotherapy Indolent non-Hodgkin's lymphoma US/EU I/Ib Enrolling NCT03779113
==================== =============================== ========= ===== =========== ===========
HMPL-523 monotherapy Multiple sub-types of B-cell China I/Ib Enrolling NCT02857998
malignancies
==================== =============================== ========= ===== =========== ===========
HMPL-523 monotherapy Immune thrombocytopenia China I/Ib Enrolling NCT03951623
(ITP)
==================== =============================== ========= ===== =========== ===========
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 200
patients in a broad range of hematological cancers. We expect these
Phase I/Ib data to inform registration study decisions in China in
late 2020 or early 2021.
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 dose escalation study of HMPL-523 in patients with
immune thrombocytopenia purpura (ITP) (NCT03951623) - In mid-2019,
we started a Phase I study of HMPL-523 for the treatment of ITP, an
autoimmune disorder characterized by low platelet count and an
increased bleeding risk. We target to complete dose escalation by
the end of 2020.
HMPL-689
HMPL-689 is a novel, selective oral inhibitor targeting the
isoform PI3K , 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.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
==================== ====================== ========= ===== =========== ===========
HMPL-689 monotherapy Healthy volunteers Australia I Completed NCT02631642
==================== ====================== ========= ===== =========== ===========
HMPL-689 monotherapy Indolent non-Hodgkin's US/EU I/Ib Enrolling NCT03786926
lymphoma
==================== ====================== ========= ===== =========== ===========
HMPL-689 monotherapy Indolent non-Hodgkin's China Ib Enrolling NCT03128164
lymphoma
==================== ====================== ========= ===== =========== ===========
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
late 2020. Furthermore, we have initiated a Phase I/Ib study in the
U.S. and Europe, with patient enrollment underway.
HMPL-453
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.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
==================== =================== ===== ===== =========== ===========
HMPL-453 monotherapy Advanced malignant China II Enrolling NCT04290325
mesothelioma
==================== =================== ===== ===== =========== ===========
HMPL-453 monotherapy Cholangiocarcinoma China II In planning N/A
==================== =================== ===== ===== =========== ===========
Phase II study of HMPL-453 in China is ongoing. 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. A second Phase II study of HMPL-453 in Cholangiocarcinoma
is in planning and targeted to start in late 2020.
HMPL-306
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. In July 2020,
we initiated our Phase I development in China and, in the second
half of 2020, we plan to submit an IND application and initiate
Phase I development in the United States.
DISCOVERY RESEARCH & PRECLINICAL DEVELOPMENT
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; cancer cell metabolism; modulate tumor
immune microenvironment; and target immune cell checkpoints. 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.
COMMERCIAL PLATFORM
Our Commercial Platform is a large-scale, high-performance drug
marketing and distribution platform covering about 320 cities and
towns in China with approximately 3,600(56) commercial personnel.
Built over the past 19 years, it focuses on two main business
areas.
First, our Prescription Drugs business which includes our joint
ventures Hutchison Sinopharm and SHPL, for which we manage directly
and run all day-to-day operations. It also includes our
newly-established oncology commercial organization which will
support our innovative oncology drugs when, if approved, they are
launched in China. Second, is our Consumer Health business which
mainly sells market-leading, household-name over-the-counter
("OTC") drug products through our joint venture HBYS. We do not
consolidate the sales of SHPL and HBYS joint ventures which, in the
first half of 2020, were $274.8 million (H1-19: $276.9m) in the
aggregate.
During the first half of 2020, the Commercial Platform delivered
continued highly encouraging growth in sales and net income growth
on a CER basis considering the challenges caused by COVID-19.
Consolidated sales of our Commercial Platform's subsidiaries grew
by 4% (9% at CER) to $99.0 million (H1-19: $94.9m) and consolidated
net income attributable to Chi-Med grew 14% (19% at CER) to $35.5
million (H1-19: $31.0m).
PRESCRIPTION DRUGS BUSINESS:
In the first half of 2020, consolidated sales of our
Prescription Drugs subsidiaries increased by 7% (13% at CER) to
$83.0 million (H1-19: $77.3m), despite the discontinuation of our
Seroquel(R) distribution business in May 2019. The consolidated net
income attributable to Chi-Med from our Prescription Drugs business
grew 15% (20% at CER) to $28.9 million (H1-19: $25.1m).
Oncology Business Department ("OBD") in China: In 2020, we have
continued to build our in-house, commercial organization in
oncology, the OBD, which has grown rapidly from about 90 staff at
the start of 2020 to the current level of over 320 staff. The OBD
provides Chi-Med the capability to market oncology drugs to the top
1,300 hospitals and cancer centers in China, a network that we
estimate represents over 95% of oncology drug sales in China.
During the first half of 2020, in-market sales of Elunate(R) to
third parties, based on data provided by Lilly, were $14.0 million
(H1-19: $11.4m). NRDL inclusion on January 1, 2020 has led to a
174% overall increase in Elunate(R) prescriptions to 18,800
monthly-cycles (H1-19: 6,850) during the first half of 2020.
Representing, to our best estimate, approximately 14%
penetration(57) (H1-19: 5%) in the third-line CRC population in
China. Under the terms of our licensing agreement with Lilly,
Chi-Med reported $8.6 million in revenues (H1-19: $4.7m) for
Elunate(R) mainly from manufacturing product sales to Lilly and
royalties.
In July 2020, we reached agreement with Lilly that Chi-Med will
commence medical detailing and marketing activities for Elunate(R)
across all China effective October 1, 2020. This agreement, in
which Lilly and Chi-Med share gross profits linked to commercial
performance, represents a win-win model that fully leverages the
resources of both companies to capitalize on the recent NRDL
inclusion and accelerate Elunate(R) sales growth. Subject to
meeting pre-agreed sales targets, Lilly will pay Chi-Med an
estimated total of 70% to 80% of Elunate(R) sales in the form of
royalties, manufacturing costs and service payments. There is no
upfront payment by Lilly or Chi-Med relating to this agreement.
Preliminary preparation for potential U.S. launch of
surufatinib: Following agreement with the U.S. FDA regarding NDA
submission path for surufatinib, which we expect to commence in
late 2020, we have now started planning to build capability to
support the potential commercial launch of surufatinib in U.S. in
late 2021.
SHPL: Our own-brand Prescription Drugs business, operated
through our non-consolidated joint venture SHPL, is a
well-established large-scale business. In the first half of 2020,
COVID-19 constrained commercial activities in SHPL, resulting in a
5% decrease in sales (-1% at CER) to $150.7 million (H1-19:
$158.9m) however lower commercial costs led to an increase of 14%
(19% at CER) in net income attributable to Chi-Med to $24.0 million
(H1-19: $21.0m).
The SHPL operation is large-scale, with a commercial team of
about 2,3 00 staff managing the medical detailing and marketing 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 520
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 April 2020 of 18.9% (2019: 18.0%) national ly and 49.9%
(2019: 51.0%) in Shanghai.
Sales of SXBX pill ha ve grown more than twenty-fold since 2001
due to continued geographical expansion of sales coverage and have
remained relatively stable despite COVID-19, with sales down -3%
(+2% at CER) to $137.0 million during the first half of 2020
(H1-19: $141.0m).
SXBX pill is protected by a formulation patent that expires in
202 9 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 .
Concor(R) : Concor(R) (Bisoprolol tablets) is a cardiac
beta1-receptor blocker, relieving hypertension and reducing high
blood pressure. SHPL markets Concor(R) in nine provinces in China
containing about 600 million people.
Hutchison Sinopharm: Our Prescription Drugs commercial services
business, which in addition to commercializing our own products,
provides services to third-party companies in China . In the first
half of 2020, Hutchison Sinopharm sales grew by 2% (7% at CER) to
$74.4 million (H1-19: $72.6m).
Hutchison Sinopharm has a dedicated team of over 120 commercial
staff focused on two key areas of operation. Firstly, a commercial
team that markets over 800 third-party prescription drug products
directly to over 400 public and private hospitals in the Shanghai
region and through a network of around 40 distributors to cover all
other provinces in China. Second, a commercial team that markets
Chi-Med's science-based infant nutrition products in over 8,000
outlets and through a network over 28,000 promoters and over
280,000 members.
CONSUMER HEALTH BUSINESS:
In the first half of 2020, sales of our Consumer Health
subsidiaries fell 9% (-8% at CER) to $16.0 million (H1-19: $17.6m)
due to rationalization of certain low margin products. However, the
consolidated net income attributable to Chi-Med from our Consumer
Health business increased by 11% (16% at CER) to $6.6 million in
the first half of 2020 (H1-19: $5.9m).
HBYS: Our non-consolidated joint venture, HBYS, focuses on the
manufacture, marketing and distribution of primarily OTC and
limited prescription pharmaceutical products . In the first half of
2020, HBYS sales rose 5% (10% at CER) to $124.1 million (H1-19:
$118.0m), mainly as a result of an increase in sales of Banlangen,
an anti-viral product that grew 27% in the first half of 2020 due
to COVID-19.
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 co mmercial team of about 900
commercial staff that cove r the national retail pharmacy channel
in China .
HBYS property update: In June 2020, we entered into an agreement
with the Guangzhou government for the return of HBYS's remaining 34
years' land-use rights on its approximately 30,000 square meters
unused site in Guangzhou. HBYS will receive cash compensation of up
to $95 million which will be received in several stages over a
period of approximately one year as all return procedures are
completed. The return of the unused site has no impact on HBYS
manufacturing operations which continue to be conducted at a larger
site in Guangzhou and HBYS' new factory in Bozhou, Anhui
province.
Christian Hogg
Chief Executive Officer
July 30 , 2020
REFERENCES AND ABBREVIATIONS
1 United States Food and Drug Administration ("FDA")
2 New Drug Application ("NDA")
3 Mesenchymal epithelial transition receptor ("MET")
4 Non-small cell lung cancer ("NSCLC")
5 Neuroendocrine tumors ("NET")
6 China National Medical Products Administration ("NMPA")
7 Investigational new drug application ("IND")
8 AstraZeneca AB (publ) ("AstraZeneca")
9 Spleen tyrosine kinase ("Syk")
10 Phosphoinositide 3-kinase delta ("PI3K ")
11 Isocitrate dehydrogenase ("IDH") 1/2
12 Tyrosine kinase inhibitor ("TKI")
13 American Society of Clinical Oncology Annual Meeting
("ASCO")
14 Objective response rate ("ORR")
15 Disease Control Rate ("DCR")
16 Duration of response ("DoR")
17 Programmed Cell Death Protein-1 ("PD-1")
18 Shanghai Junshi Biosciences Co. Ltd. ("Junshi")
19 American Association of Cancer Research Annual Meeting
("AACR")
20 Recommended Phase II Dose ("RP2D")
21 Innovent Biologics, Inc. ("Innovent")
22 Total cycles, calculated based on data provided by Lilly.
23 Eli Lilly and Company ("Lilly")
24 Sales of Elunate(R) to third parties invoiced by Lilly were
$13.7 million (H1-19: $11.4m) & invoiced by Chi-Med were $0.3
million (H1-19: nil).
25 Independent data monitoring committee ("IDMC")
26 Marketing Authorization Application ("MAA")
27 BeiGene Ltd ("BeiGene")
28 Colorectal cancer ("CRC")
29 European Medicines Agency ("EMA")
30 Japanese Pharmaceuticals and Medical Devices Agency
("PMDA")
31 Papillary renal cell carcinoma ("PRCC")
32 Progression Free Survival ("PFS")
33 Overall survival ("OS")
34 Programmed death-ligand 1 ("PD-L1")
35 American Society of Clinical Oncology Genitourinary Symposium
- February 2020 ("ASCO GU")
36 Fibroblast growth factor receptor ("FGFR")
37 European Society for Medical Oncology Annual Congress
("ESMO")
38 Biliary tract cancer ("BTC")
39 Immune thrombocytopenia purpura ("ITP")
40 Epidermal growth factor receptor mutation ("EGFRm")
41 Research and development ("R&D")
42 General Atlantic Singapore HCM Pte. Ltd ("General
Atlantic")
43 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.
44 Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai)
Company Limited ("Hutchison Sinopharm")
45 Hutchison Whampoa Guangzhou Baiyunshan Chinese Medicine
Company Limited ("HBYS")
46 Shanghai Hutchison Pharmaceuticals Limited ("SHPL")
47 Adjusted (non-GAAP) Innovation Platform segment operating
loss was $81.2 million in H1-20 (H1-19: $74.5m)
48 Epidermal growth factor receptor ("EGFR")
49 Renal cell cancer ("RCC")
50 Vascular endothelial growth factor receptor tyrosine kinase
inhibitor ("VEGFR TKI")
51 Hazard ratio ("HR")
52 Vascular endothelial growth factor receptor ("VEGFR")
53 Colony stimulating factor-1 receptor ("CSF-1R")
54 Positive Response ("PR")
55 Genor Biopharma Co. Ltd. ("Genor")
56 Total commercial personnel: >320 OBD; 2,300 SHPL; 900
HBYS; >120 Hutchison Sinopharm
57 Best estimate based on total unit sales, estimated average
usage per patient, and the estimated incidence of third-line CRC in
China
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 period to
the change in cash and cash equivalents for the period, and exclude
the net cash generated from/used in financing activities for the
period 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 period-to-period differences.
CER: We remove the effects of currency movements from
period-to-period comparisons by retranslating the current period's
performance at previous period'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
period-to-period comparisons of our results and increases the
transparency of our underlying performance.
Reconciliation of GAAP to Adjusted Innovation Platform segment
operating loss:
$'millions Six Months Six Months
Ended June Ended June
30, 2020 30, 2019
-------------------------------------------------- ----------- -----------
Innovation Platform segment operating loss (73.4) (67.2)
Less: Segment revenue from external customers
- Innovation Platform (7.8) (7.3)
Adjusted Innovation Platform segment operating
loss (81.2) (74.5)
-------------------------------------------------- ----------- -----------
Reconciliation of GAAP change in cash and cash equivalents and
short-term investments to Adjusted Group net cash flows excluding
financing activities:
$'millions H1 2020 H1 2019
--------------------------------------------------------------------- ------- -------
Cash and cash equivalents and short-term investments
at end of period 281.0 237.3
Exclude: Cash and cash equivalents and short-term
investments at
beginning of period (217.2) (301.0)
Exclude: Net cash (generated from)/used in financing
activities for the period (96.3) 29.5
---------------------------------------------------------------------- ------- -------
Adjusted Group net cash flows excluding financing
activities (32.5) (34.2)
---------------------------------------------------------------------- ------- -------
Reconciliation of GAAP revenue and net income attributable to
Chi-Med-Commercial Platform to CER:
$'millions (except Six Months
%) Ended Change Amount Change %
----------------------- ------------ ----------------------- ---------------------
June June
30, 30, Exchange Exchange
2020 2019 Actual CER effect Actual CER effect
----------------------- ----- ----- ------ ----- -------- ------ --- --------
Consolidated revenue
Commercial Platform 99.0 94.9 4.1 8.3 (4.2) 4% 9% -5%
- Prescription
Drugs^ 83.0 77.3 5.7 9.7 (4.0) 7% 13% -6%
- Consumer Health 16.0 17.6 (1.6) (1.4) (0.2) -9% -8% -1%
^ Includes:
- Hutchison Sinopharm 74.4 72.6 1.8 5.3 (3.5) 2% 7% -5%
Non-consolidated
joint venture revenue 274.8 276.9 (2.1) 10.7 (12.8) -1% 4% -5%
- SHPL 150.7 158.9 (8.2) (1.1) (7.1) -5% -1% -4%
- HBYS 124.1 118.0 6.1 11.8 (5.7) 5% 10% -5%
Consolidated net
income attributable
to Chi-Med
Commercial Platform 35.5 31.0 4.5 6.1 (1.6) 14% 19% -5%
- Prescription
Drugs* 28.9 25.1 3.8 5.1 (1.3) 15% 20% -5%
- Consumer Health 6.6 5.9 0.7 1.0 (0.3) 11% 16% -5%
* Includes:
- SHPL 24.0 21.0 3.0 4.1 (1.1) 14% 19% -5%
Revenue of Key
Product
- SXBX pill 137.0 141.0 (4.0) 2.5 (6.5) -3% 2% -5%
INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Hutchison China MediTech Limited
Condensed Consolidated Balance Sheets
(in US$'000, except share data)
June 30, December 31,
Note 2020 2019
------- ------------ -------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents 3 49,940 121,157
Short--term investments 4 231,074 96,011
Accounts receivable-third parties 5 44,623 41,410
Accounts receivable-related parties 16(ii) 1,084 1,844
Other receivables, prepayments and deposits 17,499 15,769
Amounts due from related parties 16(ii) 15,245 24,623
Inventories 6 15,262 16,208
-------------
Total current assets 374,727 317,022
Property, plant and equipment 20,841 20,855
Right--of--use assets 5,283 5,516
Investments in equity investees 7 106,966 98,944
Amount due from a related party 16(ii) 11,108 16,190
Other assets 6,637 6,595
------------ -------------
Total assets 525,562 465,122
============ =============
Liabilities and shareholders' equity
Current liabilities
Accounts payable 8 25,871 23,961
Other payables, accruals and advance receipts 9 86,989 81,624
Lease liabilities 2,594 3,216
Other current liabilities 3,933 4,300
------------ -------------
Total current liabilities 119,387 113,101
Lease liabilities 3,278 3,049
Long--term bank borrowings 10 26,839 26,818
Other liabilities 9,010 9,251
------------ -------------
Total liabilities 158,514 152,219
Commitments and contingencies 11
Company's shareholders' equity
Ordinary shares; $0.10 par value; 1,500,000,000 shares authorized;
690,574,765 and 666,906,450
shares issued at June 30, 2020 and December 31, 2019 respectively 12 69,057 66,691
Additional paid--in capital 618,125 514,904
Accumulated losses (339,528) (289,734)
Accumulated other comprehensive loss (5,534) (3,849)
------------ -------------
Total Company's shareholders' equity 342,120 288,012
Non--controlling interests 24,928 24,891
------------ -------------
Total shareholders' equity 367,048 312,903
------------ -------------
Total liabilities and shareholders' equity 525,562 465,122
============ =============
The accompanying notes are an integral part of these interim
unaudited condensed consolidated financial statements.
Hutchison China MediTech Limited
Condensed Consolidated Statements of Operations
(Unaudited, in US$'000, except share and per share data)
Six Months Ended June 30,
----------------------------
Note 2020 2019
------ ------------- -------------
Revenues
Goods-third parties 94,889 86,858
-related parties 16(i) 2,084 3,732
Services-commercialization-third parties - 2,584
* collaboration research and development-third parties 7,507 7,056
* research and development-related parties 16(i) 240 252
Other collaboration revenue-royalties-third parties 2,045 1,715
------------- -------------
Total revenues 14 106,765 102,197
------------- -------------
Operating expenses
Costs of goods-third parties (82,186) (74,051)
Costs of goods-related parties (1,386) (2,610)
Costs of services-commercialization-third parties - (1,929)
Research and development expenses 15 (73,974) (69,287)
Selling expenses (5,673) (7,501)
Administrative expenses (21,711) (18,830)
------------- -------------
Total operating expenses (184,930) (174,208)
------------- -------------
(78,165) (72,011)
Other income, net of other expenses 1,585 3,710
------------- -------------
Loss before income taxes and equity in earnings of equity investees (76,580) (68,301)
Income tax expense 17 (2,032) (2,462)
Equity in earnings of equity investees, net of tax 7 30,366 27,308
------------- -------------
Net loss (48,246) (43,455)
Less: Net income attributable to non--controlling interests (1,448) (1,914)
------------- -------------
Net loss attributable to the Company (49,694) (45,369)
============= =============
Losses per share attributable to the Company-basic and diluted (US$ per
share) 18 (0.07) (0.07)
Number of shares used in per share calculation-basic and diluted 18 685,285,841 665,553,637
The accompanying notes are an integral part of these interim
unaudited condensed consolidated financial statements.
Hutchison China MediTech Limited
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited, in US$'000)
Six Months Ended June 30,
----------------------------
2020 2019
------------- -------------
Net loss (48,246) (43,455)
Other comprehensive loss
Foreign currency translation loss (1,827) (179)
------------- -------------
Total comprehensive loss (50,073) (43,634)
Less: Comprehensive income attributable to non--controlling interests (1,302) (1,892)
------------- -------------
Total comprehensive loss attributable to the Company (51,375) (45,526)
============= =============
The accompanying notes are an integral part of these interim
unaudited condensed consolidated financial statements.
Hutchison China MediTech Limited
Condensed Consolidated Statements of Changes in Shareholders'
Equity
(Unaudited, in US$'000, except share data in '000)
Accumulated Total
Ordinary Ordinary Additional Other Company's Non-- Total
Shares Shares Paid--in Accumulated Comprehensive Shareholders' controlling Shareholders'
Number Value Capital Losses Loss Equity Interests Equity
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
As at January
1, 2019 666,577 66,658 505,585 (183,659) (243) 388,341 23,243 411,584
Net
(loss)/income - - - (45,369) - (45,369) 1,914 (43,455)
Share--based
compensation
Share options - - 4,118 - - 4,118 9 4,127
Long-term
incentive
plan ("LTIP") - - 1,303 - - 1,303 3 1,306
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
- - 5,421 - - 5,421 12 5,433
LTIP-treasury
shares acquired
and held by
Trustee - - (346) - - (346) - (346)
Transfer between
reserves - - 39 (39) - - - -
Foreign currency
translation
adjustments - - - - (157) (157) (22) (179)
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
As at J une
30, 2019 666,577 66,658 510,699 (229,067) (400) 347,890 25,147 373,037
========= ========= =========== ============ ============== ============== ============ ==============
As at January
1, 2020 666,906 66,691 514,904 (289,734) (3,849) 288,012 24,891 312,903
Net
(loss)/income - - - (49,694) - (49,694) 1,448 (48,246)
Issuance in
relation to
public offering 23,669 2,366 115,975 - - 118,341 - 118,341
(8,0 (8,0 (8,0
Issuance costs - - 33 ) - - 33 ) - 33 )
Share--based
compensation
Share options - - 3,001 - - 3,001 5 3,006
LTIP - - 5,217 - - 5,217 (4) 5,213
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
- - 8,218 - - 8,218 1 8,219
LTIP-treasury
shares acquired
and held by
Trustee - - (12,904) - - (12,904) - (12,904)
Dividend
declared
to a
non-controlling
shareholder
of a subsidiary - - - - - - (1,231) (1,231)
Purchase of
additional
interests in
a subsidiary
of an equity
investee (Note
7) - - (52) (83) (4) (139) (35) (174)
Transfer between
reserves - - 17 (17) - - - -
Foreign currency
translation
adjustments - - - - (1,681) (1,681) (146) (1,827)
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
As at June
30, 2020 690,575 69,057 618,125 (339,528) (5,534) 342,120 24,928 367,048
========= ========= =========== ============ ============== ============== ============ ==============
The accompanying notes are an integral part of these interim
unaudited condensed consolidated financial statements.
Hutchison China MediTech Limited
Condensed Consolidated Statements of Cash Flows
(Unaudited, in US$'000)
Six Months Ended June 30,
Note 2020 2019
-------- ------------- -------------
Net cash used in operating activities 20 (28,376) (30,045)
------------- -------------
Investing activities
Purchases of property, plant and equipment (4,058) (3,848)
Deposits in short--term investments (422,838) (329,102)
Proceeds from short--term investments 287,775 390,089
Net cash (used in)/generated from investing activities (139,121) 57,139
------------- -------------
Financing activities
Proceeds from issuance of ordinary shares 118,341 -
Purchases of treasury shares 13(ii) (12,904) (346)
Dividends paid to a non-controlling shareholder of a subsidiary 16(iii) (1,231) (1,282)
Repayment of bank borrowings 10 - (26,923)
Payment of issuance costs (7,863) (964)
------------- -------------
Net cash generated from/(used in) financing activities 96,343 (29,515)
------------- -------------
Net decrease in cash and cash equivalents (71,154) (2,421)
Effect of exchange rate changes on cash and cash equivalents (63) (255)
------------- -------------
(71,217) (2,676)
Cash and cash equivalents
Cash and cash equivalents at beginning of period 121,157 86,036
------------- -------------
Cash and cash equivalents at end of period 49,940 83,360
============= =============
The accompanying notes are an integral part of these interim
unaudited condensed consolidated financial statements.
Hutchison China MediTech Limited
Notes to the Interim Unaudited Condensed Consolidated Financial
Statements
1. Organization and Nature of Business
Hutchison China MediTech Limited (the "Company") and its
subsidiaries (together the "Group") are principally engaged in
researching, developing, manufacturing and marketing pharmaceutical
products. The Group and its equity investees have research and
development facilities and manufacturing plants in the People's
Republic of China (the "PRC") and sell their products mainly in the
PRC and Hong Kong.
Liquidity
As at June 30, 2020, the Group had accumulated losses of
US$339,528,000 primarily due to its spending in drug research and
development ("Drug R&D") activities. The Group regularly
monitors current and expected liquidity requirements to ensure that
it maintains sufficient cash balances and adequate credit
facilities to meet its liquidity requirements in the short and long
term. As at June 30, 2020, the Group had cash and cash equivalents
of US$49,940,000, short--term investments of US$231,074,000 and
unutilized bank borrowing facilities of US$119,359,000. Short--term
investments comprised of bank deposits maturing over three months.
The Group's operating plan includes the continued receipt of
dividends from certain of its equity investees. Dividends received
from equity investees for the six months ended June 30, 2020 and
2019 were US$35,321,000 and US$18,173,000 respectively.
Based on the Group's operating plan, the existing cash and cash
equivalents, short--term investments and unutilized bank borrowing
facilities are considered to be sufficient to meet the cash
requirements to fund planned operations and other commitments for
at least the next twelve months (the look--forward period used),
and it is appropriate for the Group to prepare the condensed
consolidated financial statements on a going concern basis.
2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The interim unaudited condensed consolidated financial
statements have been prepared in conformity with generally accepted
accounting principles in the United States of America ("U.S. GAAP")
for interim financial information. Accordingly, they do not include
all of the information and footnotes required by U.S. GAAP for
complete financial statements. The interim unaudited condensed
consolidated financial statements have been prepared on the same
basis as the annual audited consolidated financial statements
except for the adoption of Accounting Standards Codification
("ASC") 326 Financial Instruments - Credit Losses as described
below . In the opinion of management, all adjustments, consisting
of normal recurring adjustments necessary for the fair statement of
results for the periods presented, have been included. The results
of operations of any interim period are not necessarily indicative
of the results of operations for the full year or any other interim
period.
The comparative year--end condensed balance sheet data was
derived from the annual audited consolidated financial statements,
but is condensed to the same degree as the interim condensed
balance sheet data.
The interim unaudited condensed consolidated financial
statements and related disclosures have been prepared with the
presumption that users have read or have access to the annual
audited consolidated financial statements for the preceding fiscal
year.
The preparation of interim unaudited condensed consolidated
financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the interim
unaudited condensed consolidated financial statements and the
reported amounts of revenues and expenses during the reporting
period. Estimates are used in determining items such as useful
lives of property, plant and equipment, write--down of inventories,
allowance for doubtful accounts, share--based compensation,
impairments of long--lived assets, impairment of other intangible
asset and goodwill, income tax expenses, tax valuation allowances,
revenues and cost accruals from research and development projects.
Actual results could differ from those estimates.
Recent Accounting Pronouncements
The Group has adopted ASU 2016-13 Financial Instruments - Credit
Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments ("ASU 2016-13") on January 1, 2020, which replaced the
incurred loss methodology with an expected loss methodology that
was referred to as the current expected credit loss ("CECL")
methodology. The measurement of expected credit losses under the
CECL methodology was applicable to financial assets measured at
amortized cost, including accounts receivable and other
receivables. ASU 2016-13 did not have a material impact to the
Group's condensed consolidated financial statements.
3. Cash and Cash Equivalents
December
June 30, 31,
2020 2019
--------- ---------
(in US$'000)
Cash at bank and on hand 36,579 85,990
Bank deposits maturing in three months or
less (note (a)) 13,361 35,167
--------- ---------
49,940 121,157
========= =========
Denominated in:
U.S. dollar ("US$") (note (b)) 12,925 84,911
Renminbi ("RMB") (note (b)) 32,393 27,768
UK Pound Sterling ("GBP") (note (b)) 205 335
Hong Kong dollar ("HK$") 4,417 8,143
--------- ---------
49,940 121,157
========= =========
Notes:
(a) The weighted average effective interest rate on bank
deposits for the six months ended June 30, 2020 and the year ended
December 31, 2019 was 1.44% per annum and 2.15% per annum
respectively (with maturity ranging from 5 to 77 days and 5 to 64
days respectively).
(b) Certain cash and bank balances denominated in RMB, US$ and
GBP were deposited with banks in the PRC. The conversion of these
balances into foreign currencies is subject to the rules and
regulations of foreign exchange control promulgated by the PRC
government.
4. Short--term Investments
June 30, December 31,
2020 2019
--------- -------------
(in US$'000)
Bank deposits maturing over three months
(note)
Denominated in:
US$ 198,240 73,986
RMB 13,440 -
HK$ 19,394 22,025
--------- -------------
231,074 96,011
========= =============
Note: The weighted average effective interest rate on bank
deposits for the six months ended June 30, 2020 and the year ended
December 31, 2019 was 1.63% per annum and 2.65% per annum
respectively (with maturity ranging from 91 to 129 days).
5. Accounts Receivable-Third Parties
Accounts receivable from contracts with customers, net of
allowance for doubtful accounts, consisted of the following:
June 30, December 31,
2020 2019
--------- -------------
(in US$'000)
Accounts receivable, gross 44,631 41,426
Allowance for doubtful accounts (8) (16)
--------- -------------
Accounts receivable, net 44,623 41,410
========= =============
Substantially all accounts receivable are denominated in RMB,
US$ and HK$ and are due within one year from the end of the
reporting periods. The carrying values of accounts receivable
approximate their fair values due to their short--term
maturities.
Movements on the allowance for doubtful accounts:
2020 2019
------- ------
(in US$'000)
As at January 1 16 41
Increase in allowance for doubtful accounts 8 14
Decrease in allowance due to subsequent
collection (16) (34)
------- ------
As at June 30 8 21
======= ======
6. Inventories
Inventories, net of provision for excess and obsolete
inventories, consisted of the following:
June 30, December 31,
2020 2019
--------- -------------
(in US$'000)
Raw materials 1,366 2,274
Finished goods 13,896 13,934
--------- -------------
15,262 16,208
========= =============
7. Investments in Equity Investees
Investments in equity investees consisted of the following:
June 30, December 31,
2020 2019
--------- -------------
(in US$'000)
Hutchison Whampoa Guangzhou Baiyunshan
Chinese Medicine Company Limited ("HBYS") 28,165 22,271
Shanghai Hutchison Pharmaceuticals Limited
("SHPL") 78,289 76,226
Other Innovation Platform entity 512 447
--------- -------------
106,966 98,944
========= =============
The equity investees are private companies and there are no
quoted market prices available for their shares.
Summarized financial information for the significant equity
investees HBYS and SHPL is as follows:
(i) Summarized balance sheets
Commercial Platform
-----------------------------------------------
Consumer Health Prescription Drugs
HBYS (note (a)) SHPL
----------------------- ----------------------
June 30, December 31, June 30, December 31,
2020 2019 2020 2019
--------- ------------ -------- ------------
(in US$'000)
Current assets 156,675 124,704 154,711 141,268
Non-current assets 91,427 95,096 87,722 91,098
Current liabilities (153,414) (124,051) (85,533) (79,533)
Non-current liabilities (37,621) (48,690) (5,963) (6,074)
--------- ------------ -------- ------------
Net assets 57,067 47,059 150,937 146,759
Non-controlling interests (737) (2,518) - -
--------- ------------ -------- ------------
56,330 44,541 150,937 146,759
========= ============ ======== ============
(ii) Summarized statements of operations
Commercial Platform
---------------------------------------
Consumer Health Prescription Drugs
HBYS SHPL
----------------- --------------------
Six Months Ended June 30,
---------------------------------------
2020 2019 2020 2019
-------- ------- --------- ---------
(in US$'000)
Revenue 124,098 118,047 150,703 158,874
======== ======= ========= =========
Gross profit 60,794 64,527 112,363 114,687
======== ======= ========= =========
Interest income 81 81 396 289
======== ======= ========= =========
Finance cost (5) (9) - -
======== ======= ========= =========
Profit before taxation 14,792 14,272 55,470 49,534
Income tax expense (note (b)) (2,386) (2,286) (7,485) (7,479)
-------- ------- --------- ---------
Net income 12,406 11,986 47,985 42,055
Non--controlling interests 207 223 - -
-------- ------- --------- ---------
Net income attributable to the
shareholders of equity investee 12,613 12,209 47,985 42,055
======== ======= ========= =========
Notes:
(a) In June 2020, HBYS has entered into an agreement with the
Guangzhou government for the planned return of land-use rights with
carrying value of US$1.1 million. These non-current assets have
been reclassified as held for sale and included in current
assets.
(b) The main entity within each of the HBYS and SHPL groups have
been granted the High and New Technology Enterprise ("HNTE") status
(the latest renewal of this status covers the years from 2017 to
2019). These entities were eligible to use a preferential income
tax rate of 15% for the year ended December 31, 2019 on this basis.
Both entities are in the process of applying to renew the HNTE
status for another three years. Management considers that the
renewal of HNTE status will be granted and the preferential income
tax rate of 15% continues to be applicable for the six months ended
June 30, 2020.
For the six months ended June 30, 2020 and 2019, other
immaterial equity investees had net income of approximately
US$135,000 and US$352,000 respectively.
(iii) Reconciliation of summarized financial information
Reconciliation of the summarized financial information presented
to the carrying amount of investments in equity investees is as
follows:
Commercial Platform
---------------------------------------
Consumer Health Prescription Drugs
HBYS SHPL
----------------- --------------------
2020 2019 2020 2019
------- -------- --------- ---------
(in US$'000)
Opening net assets after non--controlling
interests as at January 1 44,541 121,984 146,759 131,778
Impact of change in accounting
policy (ASC 842-Leases) - (19) - (2)
Net income attributable to the
shareholders of equity investee 12,613 12,209 47,985 42,055
Purchase of additional interests
in a subsidiary of an equity
investee (note) (347) - - -
Dividend declared - (14,615) (42,308) (21,731)
Other comprehensive loss (477) (168) (1,499) (760)
------- -------- --------- ---------
Closing net assets after non--controlling
interests as at June 30 56,330 119,391 150,937 151,340
======= ======== ========= =========
Group's share of net assets 28,165 59,695 75,468 75,670
Goodwill - - 2,821 2,923
------- -------- --------- ---------
Carrying amount of investments
as at June 30 28,165 59,695 78,289 78,593
======= ======== ========= =========
Note: During the period, HBYS acquired an additional 30%
interest in a subsidiary and after the acquisition, it became a
wholly owned subsidiary of HBYS.
The equity investees had the following capital commitments:
June 30, 2020
--------------
(in US$'000)
Property, plant and equipment
Contracted but not provided for 2,902
==============
8. Accounts Payable
June 30, December 31,
2020 2019
-------- ------------
(in US$'000)
Accounts payable-third parties 21,026 19,598
Accounts payable-non-controlling shareholder s of subsidiar ies (Note 16(iv)) 4,845 4,363
-------- ------------
25,871 23,961
======== ============
Substantially all accounts payable are denominated in RMB and
US$ and due within one year from the end of the reporting period.
The carrying values of accounts payable approximate their fair
values due to their short--term maturities.
9. Other Payables, Accruals and Advance Receipts
Other payables, accruals and advance receipts consisted of the
following:
June 30, December 31,
2020 2019
--------- -------------
(in US$'000)
Accrued salaries and benefits 12,128 12,970
Accrued research and development expenses 56,485 48,531
Accrued selling and marketing expenses 3,220 3,337
Accrued administrative and other general expenses 8,560 8,699
Deferred government incentives 353 445
Deposits 1,401 1,778
Others 4,842 5,864
--------- -------------
86,989 81,624
========= =============
10. Bank Borrowings
Bank borrowings consisted of the following:
June 30, December 31,
2020 2019
--------- -------------
(in US$'000)
Non--current 26,839 26,818
========= =============
The weighted average interest rate for outstanding bank
borrowings for the six months ended June 30, 2020 and the year
ended December 31, 2019 was 2.59% per annum and 3.30% per annum
respectively. The carrying amounts of the Group's bank borrowings
were denominated in HK$.
(i) 2--year revolving loan facilities
In August 2018, the Group through its subsidiary, entered into
two separate facility agreements with banks for the provision of
unsecured credit facilities in the aggregate amount of
HK$507,000,000 (US$65,000,000). The first credit facility is a
HK$351,000,000 (US$45,000,000) revolving loan facility, with a term
of 2 years and an interest rate at HIBOR plus 1.35% per annum. The
second credit facility is a HK$156,000,000 (US$20,000,000)
revolving loan facility, with a term of 2 years and an interest
rate at HIBOR plus 1.35% per annum. These credit facilities are
guaranteed by the Company. As at June 30, 2020 and December 31,
2019, no amount has been drawn from either of the revolving loan
facilities.
(ii) 3--year revolving loan facility and 3--year term loan and revolving loan facilities
In November 2018, the Group through its subsidiary, renewed a
3-year revolving loan facility with a bank in the amount of
HK$234,000,000 (US$30,000,000) with an interest rate at HIBOR plus
0.85% per annum. This credit facility is guaranteed by the Company.
As at June 30, 2020 and December 31, 2019, no amount has been drawn
from the revolving loan facility.
In May 2019, the Group through its subsidiary, entered into a
separate facility agreement with the bank for the provision of
additional unsecured credit facilities in the aggregate amount of
HK$400,000,000 (US$51,282,000). The 3-year credit facilities
include (i) a HK$210,000,000 (US$26,923,000) term loan facility and
(ii) a HK$190,000,000 (US$24,359,000) revolving loan facility, both
with an interest rate at HIBOR plus 0.85% per annum, and an upfront
fee of HK$819,000 (US$105,000) on the term loan. These credit
facilities are guaranteed by the Company. The term loan was drawn
in October 2019 and is due in May 2022. As at June 30, 2020 and
December 31, 2019, no amount has been drawn from the revolving loan
facility.
The Group's bank borrowings are repayable as from the dates
indicated as follows:
December
June 30, 31,
2020 2019
--------- ---------
(in US$'000)
Not later than 1 year - -
Between 1 to 2 years 26,923 -
Between 2 to 3 years - 26,923
--------- ---------
26,923 26,923
========= =========
As at June 30, 2020 and December 31, 2019, the Group had
unutilized bank borrowing facilities of HK$931,000,000
(US$119,359,000).
11. Commitments and Contingencies
The Group had the following capital commitments:
June 30, 2020
--------------
(in US$'000)
Property, plant and equipment
Contracted but not provided for 3,421
==============
The Group does not have any other significant commitments or
contingencies.
12 . Ordinary Shares
As at June 30, 2020, the Company is authorized to issue
1,500,000,000 ordinary shares.
On January 27, 2020, the Company issued 22,000,000 ordinary
shares in the form of 4,400,000 American Depositary Share ("ADS")
for gross proceeds of US$110.0 million. On February 10, 2020, the
Company issued an additional 1,668,315 ordinary shares in the form
of 333,663 ADS for gross proceeds of US$8.3 million. Issuance costs
totaled US$8.0 million.
A summary of ordinary share transactions (in thousands) is as
follows:
2020 2019
-------- --------
As at January 1 666,906 666,577
Public offering 23,669 -
-------- --------
As at June 30 690,575 666,577
======== ========
Each ordinary share is entitled to one vote. The holders of
ordinary shares are also entitled to receive dividends whenever
funds are legally available and when declared by the Board of
Directors of the Company.
13. Share--based Compensation
(i) Share--based Compensation of the Company
The Company conditionally adopted a share option scheme on June
4, 2005 (as amended on March 21, 2007) and such scheme has a term
of 10 years. It expired in 2016 and no further share options can be
granted. Another share option scheme was conditionally adopted on
April 24, 2015 (the "HCML Share Option Scheme"). Pursuant to the
HCML Share Option Scheme, the Board of Directors of the Company
may, at its discretion, offer any employees and directors
(including Executive and Non-executive Directors but excluding
Independent Non-executive Directors) of the Company, holding
companies of the Company and any of their subsidiaries or
affiliates, and subsidiaries or affiliates of the Company share
options to subscribe for shares of the Company.
Pursuant to a resolution passed in the Annual General Meeting on
April 27, 2020, the scheme limit of HCML Share Option Scheme was
refreshed to 34,528,738 ordinary shares, representing 5% of the
total issued shares on such date.
As at June 30, 2020, the aggregate number of shares issuable
under the HCML Share Option Scheme is 53,584,988 ordinary shares
and the aggregate number of shares issuable under the prior share
option scheme which expired in 2016 is 1,516,180 ordinary shares.
The Company will issue new shares to satisfy share option
exercises. Additionally, the number of shares authorized but
unissued was 809,425,235 ordinary shares.
Share options granted are generally subject to a four--year
vesting schedule, depending on the nature and the purpose of the
grant. Share options subject to the four--year vesting schedule, in
general, vest 25% upon the first anniversary of the vesting
commencement date as defined in the grant letter, and 25% every
subsequent year. However, certain share option grants may have a
different vesting schedule as approved by the Board of Directors of
the Company. No outstanding share options will be exercisable or
subject to vesting after the expiry of a maximum of eight to ten
years from the date of grant.
A summary of the Company's share option activity and related
information is as follows:
Weighted average
Weighted average remaining Aggregate intrinsic
Number of share exercise price in contractual life value
options GBP per share (years) (in GBP'000)
--------------------- -------------------- --------------------- ---------------------
Outstanding at
January 1, 2019 18,554,850 3.31 7.35 15,158
Granted 2,315,000 3.18
Exercised (329,000) 0.61
Cancelled (1,012,110) 4.61
Expired (96,180) 4.65
---------------------
Outstanding at
December 31, 2019 19,432,560 3.27 6.67 18,668
=====================
Granted 12,746,500 3.51
Cancelled (1,200,040) 4.55
Expired (574,090) 4.61
---------------------
Outstanding at June
30, 2020 30,404,930 3.28 7.60 35,790
=====================
Vested and
exercisable at
December 31, 2019 10,139,170 2.39 4.89 16,654
Vested and
exercisable at June
30, 2020 11,508,890 2.64 4.78 21,302
In estimating the fair value of share options granted, the
following assumptions were used in the Polynomial model for awards
granted in the periods indicated:
Year Ended December 31, 2019 Six Months Ended June 30, 2020
----------------------------- -------------------------------
Weighted average grant date fair value of share
options (in GBP per share) 1.07 1.32
Significant inputs into the valuation model
(weighted average):
Exercise price (in GBP per share) 3.18 3.51
Share price at effective date of grant (in GBP
per share) 3.07 3.51
Expected volatility (note (a)) 38.4% 42.6%
Risk--free interest rate (note (b)) 0.56% 0.55%
Contractual life of share options (in years) 10 10
Expected dividend yield (note (c)) 0% 0%
Notes:
(a) The Company calculated its expected volatility with
reference to the historical volatility prior to the issuances of
share options.
(b) The risk--free interest rates used in the Polynomial model
are with reference to the sovereign yield of the United Kingdom
because the Company's ordinary shares are currently listed on AIM
and denominated in GBP.
(c) The Company has not declared or paid any dividends and does
not currently expect to do so in the foreseeable future, and
therefore uses an expected dividend yield of zero in the Polynomial
model.
The Group recognizes compensation expense on a graded vesting
approach over the requisite service period. The following table
presents share--based compensation expense included in the Group's
condensed consolidated statements of operations:
Six Months Ended
June 30,
-------------------
2020 2019
--------- --------
(in US$'000)
Research and development expenses 1,697 3,756
Administrative expenses 1,237 371
Cost of goods 72 -
--------- --------
3,006 4,127
========= ========
As at June 30, 2020, the total unrecognized compensation cost
was US$24,300,000, and will be recognized on a graded vesting
approach over the weighted average remaining service period of 3.51
years.
(ii) LTIP
The Company grants awards under the LTIP to participating
directors and employees, giving them a conditional right to receive
ordinary shares of the Company or the equivalent ADS (collectively
the "Awarded Shares") to be purchased by the Trustee up to a cash
amount. Vesting will depend upon continued employment of the award
holder with the Group and will otherwise be at the discretion of
the Board of Directors of the Company. Additionally, some awards
are subject to change based on annual performance targets prior to
their determination date .
LTIP awards prior to the determination date
Performance targets vary by award, and may include targets for
shareholder returns, free cash flows, revenues, net profit after
taxes and the achievement of clinical and regulatory milestones. As
the extent of achievement of the performance targets is uncertain
prior to the determination date, a probability based on
management's assessment on the achievement of the performance
target has been assigned to calculate the amount to be recognized
as an expense over the requisite period with a corresponding entry
to liability .
LTIP awards after the determination date
Upon the determination date, the Company will pay a determined
monetary amount, up to the maximum cash amount based on the actual
achievement of the performance target specified in the award, to
the Trustee to purchase the Awarded Shares. Any cumulative
compensation expense previously recognized as a liability will be
transferred to additional paid--in capital, as an equity--settled
award. If the performance target is not achieved, no Awarded Shares
of the Company will be purchased and the amount previously recorded
in the liability will be reversed through share-based compensation
expense .
Granted awards under the LTIP are as follows:
Maximum cash amount per annum Covered Performance target
Grant date (in US$ millions) financial years determination date
----------------- ----------------------------- --------------- ------------------
August 5, 2019 0.7 2019 note (a)
October 10, 2019 0.1 note (b) note (b)
April 20, 2020 37.4 2020 note (a)
April 20, 2020 1.9 note (b) note (b)
April 20, 2020 0.2 note (c) note (c)
Notes:
(a) The annual performance target determination date is the date
of the announcement of the Group's annual results for the covered
financial year and vesting occurs two business days after the
announcement of the Group's annual results for the financial year
falling two years after the covered financial year to which the
LTIP award relates.
(b) This award does not stipulate performance targets and is
subject to a vesting schedule of 25% on each of the first, second,
third and fourth anniversaries of the date of grant.
(c) This award does not stipulate performance targets and will
be vested on the first anniversary of the date of grant.
The Trustee has been set up solely for the purpose of purchasing
and holding the Awarded Shares during the vesting period on behalf
of the Group using funds provided by the Group. On the
determination date, if any, the Company will determine the cash
amount, based on the actual achievement of each annual performance
target, for the Trustee to purchase the Awarded Shares. The Awarded
Shares will then be held by the Trustee until they are vested .
The Trustee's assets include treasury shares and funds for
additional treasury shares, trustee fees and expenses. The number
of treasury shares (in the form of ordinary shares or ADS of the
Company) held by the Trustee were as follows:
Number of Cost
treasury shares (in US$'000)
----------------- --------------
As at January 1, 2019 1,121,030 6,677
Purchased 60,430 346
Vested (240,150) (944)
----------------- --------------
As at December 31, 2019 941,310 6,079
Purchased 3,281,920 12,904
Vested (705,605) (4,800)
----------------- --------------
As at June 30, 2020 3,517,625 14,183
================= ==============
For the six months ended June 30, 2020 and 2019, US$430,000 and
US$254,000 of the LTIP awards were forfeited respectively.
The following table presents the share--based compensation
expenses recognized under the LTIP awards:
Six Months Ended June
30,
------------------------
2020 2019
----------- -----------
(in US$'000)
Research and development expenses 3,145 543
Selling and administrative expenses 756 827
Cost of goods 60 -
----------- -----------
3,961 1,370
=========== ===========
Recorded with a corresponding credit to:
Liability 2,840 590
Additional paid--in capital 1,121 780
----------- -----------
3,961 1,370
=========== ===========
For the six months ended June 30, 2020 and 2019, US$4,092,000
and US$526,000 were reclassified from liability to additional
paid--in capital respectively upon LTIP awards reaching the
determination date. As at June 30, 2020 and December 31, 2019,
US$2,151,000 and US$3,403,000 were recorded as liabilities
respectively for LTIP awards prior to the determination date.
As at June 30, 2020, the total unrecognized compensation cost
was approximately US$38,764,000, which considers expected
performance targets and the amount expected to vest, and will be
recognized over the requisite periods.
14. Revenues
The following table presents disaggregated revenue:
Six Months Ended June 30, 2020
-----------------------------------
Innovation Commercial
Platform Platform Total
------------ ----------- --------
(in US$'000)
Goods-Innovative Medicines - 6,600 6,600
Goods-Distribution - 90,373 90,373
Services 7,747 - 7,747
Royalties - 2,045 2,045
------------ ----------- --------
7,747 99,018 106,765
============ =========== ========
Third parties 7,507 96,934 104,441
Related parties (Note 16(i)) 240 2,084 2,324
------------ ----------- --------
7,747 99,018 106,765
============ =========== ========
Six Months Ended June 30, 2019
-----------------------------------
Innovation Commercial
Platform Platform Total
------------ ----------- --------
(in US$'000)
Goods-Innovative Medicines - 2,994 2,994
Goods-Distribution - 87,596 87,596
Services 7,308 2,584 9,892
Royalties - 1,715 1,715
------------ ----------- --------
7,308 94,889 102,197
============ =========== ========
Third parties 7,056 91,157 98,213
Related parties (Note 16(i)) 252 3,732 3,984
------------ ----------- --------
7,308 94,889 102,197
============ =========== ========
15. Research and Development Expenses
Research and development expenses are summarized as follows:
Six Months Ended June
30,
------------------------
2020 2019
----------- -----------
(in US$'000)
Clinical trial related costs 40,986 43,707
Personnel compensation and related costs 29,356 21,917
Other research and development expenses 3,632 3,663
----------- -----------
73,974 69,287
=========== ===========
16. Significant Transactions with Related Parties and
Non--Controlling Shareholders of Subsidiaries
The Group has the following significant transactions with
related parties and non--controlling shareholders of subsidiaries,
which were carried out in the normal course of business at terms
determined and agreed by the relevant parties:
(i) Transactions with related parties:
Six Months Ended June 30,
---------------------------
2020 2019
------------- ------------
(in US$'000)
Sales to:
Indirect subsidiaries of CK Hutchison 2,084 3,732
============= ============
Revenue from research and development services from:
An equity investee 240 252
============= ============
Purchases from:
Equity investees 1,887 1,222
============= ============
Rendering of marketing services from:
Indirect subsidiaries of CK Hutchison 152 198
An equity investee - 2,682
------------- ------------
152 2,880
------------- ------------
Rendering of management service s from:
An indirect subsidiary of CK Hutchison 478 465
============= ============
(ii) Balances with related parties included in:
June 30, December 31,
2020 2019
-------- ------------
(in US$'000)
Accounts receivable-related parties
Indirect subsidiaries of CK Hutchison (note (a)) 844 1,844
An equity investee (note (a)) 240 -
1,084 1,844
======== ============
Amounts due from related parties
Equity investees (note (a) and (b)) 15,245 24,623
======== ============
Amount due from a related party
An equity investee (note (b)) 11,108 16,190
======== ============
Amounts due to a related party
An indirect subsidiary of CK Hutchison (note (c)) 378 366
======== ============
Other deferred income
An equity investee (note (d)) 986 1,103
======== ============
Notes:
(a) Balances with related parties are unsecured, repayable on
demand and interest--free. The carrying values of balances with
related parties approximate their fair values due to their
short--term maturities.
(b) As at June 30, 2020 and December 31, 2019, dividend
receivables from an equity investee of approximately US$14,103,000
and US$23,481,000 were included in amounts due from related parties
in current assets. Additionally, amount due from a related party is
for dividend receivables included in non-current assets as the
Group and investee have agreed that payment will be deferred until
2021.
(c) Amounts due to an indirect subsidiary of CK Hutchison are
unsecured, repayable on demand and interest--bearing if not settled
within one month.
(d) Other deferred income represents amounts recognized from
granting of promotion and marketing rights.
(iii) Transactions with non--controlling shareholders of subsidiaries:
Six Months Ended June 30,
---------------------------
2020 2019
------------- ------------
(in US$'000)
Sales 16,784 12,146
============= ============
Purchases 6,625 6,397
============= ============
Dividend paid 1,231 1,282
============= ============
(iv) Balances with non--controlling shareholders of subsidiaries included in:
June 30, December 31,
2020 2019
-------- ------------
(in US$'000)
Accounts receivable 7,814 5,228
Accounts payable 4,845 4,363
======== ============
Other non-current liabilities
Loan 579 579
======== ============
17. Income Taxes
Six Months Ended June
30,
------------------------
2020 2019
----------- -----------
(in US$'000)
Current tax
HK (note (a)) 232 220
PRC (note (b)) 48 822
U.S. and others (note (c)) 530 347
Deferred income tax 1,222 1,073
----------- -----------
Income tax expense 2,032 2,462
=========== ===========
Notes:
(a) The Company, three subsidiaries incorporated in the British
Virgin Islands and its Hong Kong subsidiaries are subject to Hong
Kong profits tax. In March 2018, the Hong Kong two-tiered profits
tax rates regime was signed into law under which the first HK$2.0
million (US$0.3 million) of assessable profits of qualifying
corporations will be taxed at 8.25%, with the remaining assessable
profits taxed at 16.5%. Hong Kong profits tax has been provided for
at the relevant rates on the estimated assessable profits less
estimated available tax losses, if any, of these entities as
applicable.
(b) Taxation in the PRC has been provided for at the applicable
rate on the estimated assessable profits less estimated available
tax losses, if any, in each entity. Under the PRC Enterprise Income
Tax Law (the "EIT Law"), the standard enterprise income tax rate is
25%. In addition, the EIT Law provides for a preferential tax rate
of 15% for companies which qualify as HNTE. Hutchison MediPharma
Limited and its wholly--owned subsidiary Hutchison MediPharma
(Suzhou) Limited qualify as a HNTE up to December 31, 2019 and 2020
respectively. Hutchison MediPharma Limited is in the process of
applying to renew its HNTE status.
Pursuant to the EIT law, a 10% withholding tax is levied on
dividends paid by PRC companies to their foreign investors. A lower
withholding tax rate of 5% is applicable under the China--HK Tax
Arrangement if direct foreign investors with at least 25% equity
interest in the PRC companies are Hong Kong tax residents, and meet
the conditions or requirements pursuant to the relevant PRC tax
regulations regarding beneficial ownership. Since the equity
holders of the equity investees of the Company are Hong Kong
incorporated companies and Hong Kong tax residents, and meet the
aforesaid conditions or requirements, the Company has used 5% to
provide for deferred tax liabilities on retained earnings which are
anticipated to be distributed. As at J une 30 , 2020 and December
31, 2019, the amounts accrued in deferred tax liabilities relating
to withholding tax on dividends were determined on the basis that
100% of the distributable reserves of the equity investees
operating in the PRC will be distributed as dividends.
(c) The Company's subsidiary in the U.S. with operations in New
Jersey and New York states is subject to U.S. taxes, primarily
federal and state taxes, which have been provided for at
approximately 21% (federal) and 9% and 16.55% (New Jersey and New
York state respectively) on the estimated assessable profit
respectively. Certain income receivable by the Company is subject
to U.S. withholding tax of 30%. One of the Group's subsidiaries is
subject to Finland corporate tax at 20% on the estimated assessable
profits in relation to its permanent establishment in Finland.
The reconciliation of the Group's reported income tax expense to
the theoretical tax amount that would arise using the tax rates of
the Company against the Group's loss before income taxes and equity
in earnings of equity investees is as follows:
Six Months Ended June
30,
------------------------
2020 2019
----------- -----------
(in US$'000)
Loss before income taxes and equity in earnings
of equity investees (76,580) (68,301)
=========== ===========
Tax calculated at the statutory tax rate of
the Company (12,636) (11,270)
Tax effects of:
Different tax rates available in different
jurisdictions 1,431 1,351
Tax valuation allowance 16,178 13,309
Preferential tax rate difference (119) -
Preferential tax deduction (4,678) (2,908)
Expenses not deductible for tax purposes 1,618 1,094
Utilization of previously unrecognized tax
losses (152) (49)
Withholding tax on undistributed earnings
of PRC entities 1,513 1,386
Income not subject to tax (552) (577)
Others (571) 126
----------- -----------
Income tax expense 2,032 2,462
=========== ===========
18. Losses per Share
(i) Basic losses per share
Basic losses per share is calculated by dividing the net loss
attributable to the Company by the weighted average number of
outstanding ordinary shares in issue during the period. Treasury
shares held by the Trustee are excluded from the weighted average
number of outstanding ordinary shares in issue for purposes of
calculating basic losses per share.
Six Months Ended June
30,
--------------------------
2020 2019
------------ ------------
Weighted average number of outstanding ordinary
shares in issue 685,285,841 665,553,637
============ ============
Net loss attributable to the Company (US$'000) (49,694) (45,369)
------------ ------------
Losses per share attributable to the Company
(US$ per share) (0.07) (0.07)
------------ ------------
(ii) Diluted losses per share
Diluted losses per share is calculated by dividing net loss
attributable to the Company by the weighted average number of
outstanding ordinary shares in issue and dilutive ordinary share
equivalents outstanding during the period. Dilutive ordinary share
equivalents include shares issuable upon the exercise or settlement
of share option and LTIP awards issued by the Company using the
treasury stock method.
For the six months ended June 30, 2020 and 2019, the share
options and LTIP awards issued by the Company were not included in
the calculation of diluted losses per share because of their
anti--dilutive effect. Therefore, diluted losses per share were
equal to basic losses per share for the six months ended June 30,
2020 and 2019.
19. Segment Reporting
The Group determines its operating segments from both business
and geographic perspectives as follows:
(i) Innovation Platform (Drug R&D): focuses on discovering
and developing for commercialization targeted therapies and
immunotherapies for the treatment of cancer and immunological
diseases; and
(ii) Commercial Platform: comprises of the manufacture,
marketing and distribution of prescription drugs and
over--the--counter pharmaceuticals in the PRC as well as consumer
health products through Hong Kong. The Commercial Platform is
further segregated into two core business areas:
(a) Prescription Drugs: comprises the development, manufacture,
distribution, marketing and sale of prescription drugs; and
(b) Consumer Health: comprises the development, manufacture,
distribution, marketing and sale of over--the--counter
pharmaceuticals and consumer health products.
Innovation Platform and Prescription Drugs businesses under the
Commercial Platform are primarily located in the PRC. The locations
for Consumer Health business under the Commercial Platform are
further segregated into the PRC and Hong Kong.
The performance of the reportable segments is assessed based on
segment operating (loss)/profit.
Since the second half of 2019, the Group began including the
results from manufacturing and commercializing a prescription drug
developed by the Innovation Platform and launched into the market
under Prescription Drugs in the Commercial Platform. It has been
included in the Commercial Platform due to its transition to the
commercial stage and because commercial resources for innovative
medicines are built under the Commercial Platform. The segment
information below for the six months ended June 30, 2019 has been
revised so that all segment disclosures are comparable.
The segment information is as follows:
Six Months Ended June 30, 2020
-------------------------------------------------------------------------------
Innovation
Platform Commercial Platform
---------- ------------------------------------------
Drug Prescription Consumer
R&D Drugs Health
---------- ------------ ------------------
Hong
PRC PRC PRC Kong Subtotal Unallocated Total
---------- ------------ ------- -------- -------- ----------- ----------
(in US$'000)
Revenue from external
customers 7,747 83,056 5,205 10,757 99,018 - 106,765
---------- ------------ ------- -------- -------- ----------- ----------
Interest income 114 34 11 26 71 1,732 1,917
Equity in earnings of
equity investees,
net of tax 68 23,992 6,306 - 30,298 - 30,366
Segment operating
(loss)/profit (73, 377 ) 28,612 7,183 1,553 37,348 (9,674) (45,703)
Interest expense - - - - - 511 511
Income tax expense 312 (137) 66 227 156 1,564 2,032
Net (loss)/income
attributable
to the Company (73,608) 28,879 5,903 691 35,473 (11,559) (49, 694 )
Depreciation/amortization 2,687 87 10 44 141 95 2,923
Additions to non-current
assets
(other than financial
instruments
and deferred tax assets) 4,262 79 59 2 140 13 4,415
========== ============ ======= ======== ======== =========== ==========
June 30, 2020
------------------------------------------------------------------------
Innovation
Platform Commercial Platform
---------- --------------------------------------
Drug Prescription Consumer
R&D Drugs Health
---------- ------------ --------------
Hong
PRC PRC PRC Kong Subtotal Unallocated Total
---------- ------------ ------ ------ -------- ----------- -------
(in US$'000)
Total assets 77,662 138,805 35,067 13,269 187,141 260,759 525,562
Property, plant and equipment 19,568 394 60 257 711 562 20,841
Right-of-use assets 2,697 1,901 50 234 2,185 401 5,283
Leasehold land 1,084 - - - - - 1,084
Goodwill - 2,681 407 - 3,088 - 3,088
Other intangible asset - 241 - - 241 - 241
Investments in equity
investees 512 78,289 28,165 - 106,454 - 106,966
Six Months Ended June 30, 2019
Innovation
Platform Commercial Platform
Drug Prescription Consumer
R&D Drugs Health
Hong
PRC PRC PRC Kong Subtotal Unallocated Total
----------
(in US$'000)
Revenue from external
customers 7,308 77,327 6,192 11,370 94,889 - 102,197
---------- ------- --------
Interest income 205 30 16 2 48 2,808 3,061
Equity in earnings of
equity investees,
net of tax 176 21,027 6,105 - 27,132 - 27,308
Segment operating
(loss)/profit (67,179) 26,577 6,585 973 34,135 (7,261) (40,305)
Interest expense - - - - - 688 688
Income tax expense 120 624 138 142 904 1,438 2,462
Net (loss)/income
attributable
to the Company (67,133) 25,135 5,542 385 31,062 (9,298) (45,369)
Depreciation/amortization 2,191 80 11 45 136 78 2,405
Additions to non-current
assets
(other than financial
instruments
and deferred tax assets) 3,300 2,624 9 3 2,636 7 5,943
========== ======= ========
December 31, 2019
------------------------------------------------------------------------
Innovation
Platform Commercial Platform
---------- --------------------------------------
Drug Prescription Consumer
R&D Drugs Health
---------- ------------ --------------
Hong
PRC PRC PRC Kong Subtotal Unallocated Total
---------- ------------ ------ ------ -------- ----------- -------
(in US$'000)
Total assets 97,784 131,881 27,354 12,469 171,704 195,634 465,122
Property, plant and equipment 19,422 424 65 300 789 644 20,855
Right-of-use assets 2,445 2,102 15 349 2,466 605 5,516
Leasehold land 1,110 - - - - - 1,110
Goodwill - 2,705 407 - 3,112 - 3,112
Other intangible asset - 275 - - 275 - 275
Investments in equity
investees 447 76,226 22,271 - 98,497 - 98,944
Revenue from external customers is after elimination of
inter--segment sales. Sales between segments are carried out at
mutually agreed terms. The amount eliminated attributable to sales
within Consumer Health business from Hong Kong to the PRC was
US$157,000 and US$1,857,000 for the six months ended June 30, 2020
and 2019.
There were two customers which accounted for over 10% of the
Group's revenue for the six months ended June 30, 2020. There was
one customer which accounted for over 10% of the Group's revenue
for the six months ended June 30, 2019.
Unallocated expenses mainly represent corporate expenses which
include corporate employee benefit expenses and the relevant
share-based compensation expenses. Unallocated assets mainly
comprise cash and cash equivalents and short--term investments.
A reconciliation of segment operating loss to net loss is as
follows:
Six Months Ended
June 30,
2020 2019
(in US$'000)
Segment operating loss (45,703) (40,305)
Interest expense (511) (688)
Income tax expense (2,032) (2,462)
Net loss (48,246) (43,455)
20. Note to Condensed Consolidated Statements of Cash Flows
Reconciliation of net loss for the period to net cash used in
operating activities:
Six Months Ended
June 30,
2020 2019
(in US$'000)
Net loss (48,246) (43,455)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 2,923 2,405
Share--based compensation expense-share options 3,006 4,127
Share--based compensation expense-LTIP 3,961 1,370
Equity in earnings of equity investees, net
of tax (30,366) (27,308)
Dividends received from equity investees 35,321 18,173
Changes in right-of-use assets 205 (929)
Other adjustments (740) 1,107
Changes in working capital
Accounts receivable-third parties (3,205) (2,562)
Inventories 1,171 (2,113)
Accounts payable 1,910 520
Other payables, accruals and advance receipts 7,313 14,606
Lease liabilities (334) 764
Other changes in working capital (1,295 ) 3,250
Total changes in working capital 5,560 14,465
(28,376
Net cash used in operating activities ) (30,045)
21. Litigation
From time to time, the Group may become involved in litigation
relating to claims arising from the ordinary course of business.
The Group believes that there are currently no claims or actions
pending against the Group, the ultimate disposition of which could
have a material adverse effect on the Group's results of
operations, financial position or cash flows. However, litigation
is subject to inherent uncertainties and the Group's view of these
matters may change in the future. When an unfavorable outcome
occurs, there exists the possibility of a material adverse impact
on the Group's financial position and results of operations for the
periods in which the unfavorable outcome occurs, and potentially in
future periods.
On May 17, 2019, Luye Pharma Hong Kong Ltd. ("Luye") issued a
notice to the Group purporting to terminate a distribution
agreement that granted the Group exclusive commercial rights to
Seroquel in the PRC for failure to meet a pre-specified target. The
Group disagrees with this assertion and believes that Luye have no
basis for termination. As a result, the Group commenced legal
proceedings in 2019 in order to compel Luye to comply with its
obligations under the distribution agreement, or alternatively
compensate the Group's damages. The legal proceedings are still in
progress. Accordingly, no adjustment has been made to
Seroquel-related balances as at June 30, 2020, including accounts
receivable, long-term prepayment, accounts payable and other
payables of US$1.1 million, US$1.0 million, US$0.9 million and
US$1.1 million respectively.
22. Subsequent Events
The Group evaluated subsequent events through July 30, 2020,
which is the date when the interim unaudited condensed consolidated
financial statements were issued.
In July 2020, the Company issued (1) 20,000,000 ordinary shares
and (2) warrants to a third party for gross proceeds of US$100
million. The warrants allow the third party to purchase up to
16,666,670 ordinary shares within 18 months of the issuance date
for an exercise price of US$6.00 per ordinary share, or an
additional US$100 million if fully exercised.
In July 2020, the Group entered into an amendment to the 2013
licensing, co-development and commercialization agreement with Eli
Lilly and Company ("Lilly") relating to the expansion of the
Group's role in the commercialization of fruquintinib (Elunate)
across all of China, and Lilly will pay the Group in the form of
royalties, manufacturing costs and service payments.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BBLFXBDLFBBL
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July 30, 2020 07:00 ET (11:00 GMT)
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