TIDMHCM
RNS Number : 4613U
Hutchmed (China) Limited
01 August 2022
HUTCHMED Reports 2022 Interim Results and Provides Business
Updates
Oncology/Immunology revenues up 113% to $91.1 million, due to
ELUNATE(R) , SULANDA(R) and ORPATHYS(R) growth
First presentation of SAVANNAH data showing 52% response rate
and 9.6 month duration of response in 2L+ post-TAGRISSO(R) NSCLC(1)
patients with high MET(2) levels and no prior chemotherapy
Initiated six new trials thus far in 2022 with a further six
starting, including with five new drug candidates
FRESCO-2 Phase III, our first global multi-regional clinical
trial, on track to read out in August 2022
Company to Host Interim Results Call & Webcast Today at 8
p.m. HKT / 1 p.m. BST / 8 a.m. EDT
Hong Kong, Shanghai & Florham Park, NJ - Monday, August 1,
2022: HUTCHMED (China) Limited ("HUTCHMED", the "Company" or "we")
(Nasdaq/AIM:HCM; HKEX:13), the innovative, commercial-stage
biopharmaceutical company, today reports its unaudited financial
results and provides updates on key clinical and commercial
developments for the six months ended June 30, 2022.
All amounts are expressed in U.S. dollars unless otherwise
stated.
2022 INTERIM Results & Business Updates
"HUTCHMED has continued to make good progress in the last six
months," said Mr Simon To , Chairman of HUTCHMED.
"We have driven revenue growth in our innovative portfolio of
marketed drugs. With ELUNATE(R) for CRC3 and following last year's
successful launches of ORPATHYS(R) for MET-driven NSCLC and
SULANDA(R) for epNETs4 and pNETs5, this will be the first full year
of product sales from three novel, in-house discovered oncology
products in China, with strong sales momentum. We have also
significantly expanded our in-house commercial team to drive
growth. On top of this, in June we announced that TAZVERIK(R) was
approved for use in the Hainan Pilot Zone, bringing the clinical
benefits of a fourth product to patients in China."
"Our experienced clinical team has also made progress in the
first half of this year. We have initiated a number of key
early-stage trials and our later-stage pipeline of on-going studies
are also moving at a steady pace, with promising new data from the
SAVANNAH study of savolitinib combined with osimertinib being
presented in more detail in August. We believe that the achievement
of these milestones demonstrates the depth and potential of our
R&D6 pipeline, which is the core of our business and the
foundation for our growth in the years ahead."
"HUTCHMED continues to be well-financed, which positions us well
to continue delivering on our strategic objectives. We are a global
biopharmaceutical company developing high quality, novel oncology
and immunology drug candidates for patients across the world and
under the leadership of Dr Weiguo Su, our new Chief Executive
Officer, I have great hope for the future."
Dr Weiguo Su said , "In HUTCHMED, I see a company with exciting
science and a first-in-class or differentiated, best-in-class
pipeline of clinical-stage candidates, each with substantial
prospects for additional indications and combinations, which is
exceptional, particularly in the China biopharma industry."
"After driving our innovation as Head of Research and Chief
Scientific Officer for the last 16 years, I was delighted to become
the Chief Executive Officer earlier this year and am very excited
about the next chapter of our growth."
"There are several reasons which underline the opportunity in
our future. These include our expected ongoing growth of
ORPATHYS(R), SULANDA(R) and ELUNATE(R) revenues in China, and
FRESCO-2, our first global, multi-regional clinical trial, which is
due to read out later this month. While receiving a Complete
Response Letter for surufatinib from the U.S. FDA7 earlier this
year and our decision today to withdraw the EMA8 MAA9 are a
adisappointment, it has no impact on our global development
strategy. We will continue to leverage our solid balance sheet,
strong commercial capability with extensive China coverage that
generates cash, pipeline of innovative products and world-class
people, as we work towards our goal of being a leading global
biopharmaceutical company."
I. COMMERCIAL OPERATIONS
-- Total revenues increased 28% to $202.0 million in the first
half of 2022 (H1-21: $157.4m), driven by commercial progress on our
three in-house developed oncology drugs ELUNATE(R) , SULANDA(R) and
ORPATHYS(R) ;
-- Oncology/Immunology consolidated revenues were up 113% to $91.1 million (H1-21: $42.9m);
-- Continuing expansion of in-house oncology commercial
organization in China, which in the first half of 2022 numbered
about 820 personnel (end 2021: 630) covering around 3,000 oncology
hospitals and around 30,000 oncology physicians;
-- ELUNATE(R) (fruquintinib) in-market sales(10) in the first
half of 2022 increased 26% to $50.4 million (H1-21: $40.1m),
reflecting its expanding lead in market share, particularly in tier
2 and 3 cities;
-- SULANDA(R) (surufatinib) in-market sales in the first half of
2022 of $13.6 million (H1-21: $8.0m), reflecting its first time
NRDL(11) inclusion which started in January 2022;
-- ORPATHYS(R) (savolitinib) in-market sales in the first half
of 2022 of $23.3 million (H1-21: nil) following its launch in the
second half of 2021 through AstraZeneca's extensive oncology
commercial organization. Rapid initial self-pay uptake due to being
the first-in-class selective MET inhibitor in China;
-- TAZVERIK(R) (tazemetostat) successfully launched in Hainan
province in China in June 2022; and
-- Successful management of commercial operations despite
challenges of pandemic-related lockdowns, particularly in Shanghai
in April and May 2022.
$'millions In-market Sales* Consolidated Revenues**
-------------------- --------------------------------
H1 2022 H1 2021 % Change H1 2022 H1 2021 % Change
-------------------- --------- --------- ---------- -------- ---------- ----------
Unaudited Unaudited
-------------------- -------------------- ---------- -------------------- ----------
ELUNATE(R) $50.4 $40.1 26% $36.0 $29.8 21%
SULANDA(R) $13.6 $8.0 69% $13.6 $8.0 69%
ORPATHYS(R) $23.3 - - $13.8 - -
TAZVERIK(R) $0.1 - - $0.1 - -
-------------------- --------- --------- ---------- -------- ---------- ----------
Product Sales $87.4 $48.1 82% $63.5 $37.8 68%
Other R&D services income $12.6 $5.1 149%
Milestone payment $15.0 - -
------------------------------------------------------ -------- ---------- ----------
Total Oncology/Immunology $91.1 $42.9 113%
------------------------------------------------------ -------- ---------- ----------
* = For ELUNATE (R) and ORPATHYS (R) , represents total sales to
third parties as provided by Lilly(12) and AstraZeneca, respectively;
** = For ELUNATE (R) and ORPATHYS (R) , represents manufacturing
fees, commercial service fees and royalties paid by Lilly and AstraZeneca,
respectively, to HUTCHMED, and sales to other third parties invoiced
by HUTCHMED; for SULANDA (R) and TAZVERIK(R) , represents the Company's
sales of the products to third parties.
----------------------------------------------------------------------------------------
II. REGULATORY UPDATES
China
-- Received Breakthrough Therapy Designation in China for
sovleplenib (HMPL-523) in January 2022 for the treatment of ITP(13)
;
-- Received approval for TAZVERIK(R) in the Hainan Boao Lecheng
International Medical Tourism Pilot Zone in May 2022 for the
treatment of certain patients with epithelioid sarcoma or
follicular lymphoma; and
-- Received Macau approvals for ELUNATE(R) and SULANDA(R) , the
first drugs approved in the territory based on China NMPA(14)
approval, following regulatory updates in Macau.
U.S. and Europe
-- Surufatinib U.S. FDA Complete Response Letter was received in
April 2022, after the NDA(15) filing was accepted in June 2021,
following Fast Track and Orphan Drug designations in 2020 and 2019,
respectively;
o The letter indicates that a multi-regional clinical trial that
includes subjects more representative of the U.S. population and
aligned with current U.S. medical practice is required; and
o Pandemic-related issues concerning inspection access also contributed to the FDA action.
-- HUTCHMED has decided to withdraw the surufatinib MAA filed
with the EMA, following interactions with EMA reviewers which
suggested that there is a low probability of a positive opinion on
the MAA;
o EMA indicated that the SANET studies were not representative
of patients and medical practice in the EU(16) ; and
o The requisite pre-approval on-site inspections are currently
subject to restrictions in China.
-- Discussions on the path forward are ongoing with U.S. and EU regulators.
III. CLINICAL DEVELOPMENT ACTIVITIES
Savolitinib (ORPATHYS(R) in China) , a highly selective oral
inhibitor of MET being developed broadly across MET-driven patient
populations in lung, gastric and papillary renal cell
carcinomas
Major milestones and data presentations for savolitinib in
2022:
-- Presentation of the SAVANNAH global Phase II study
(NCT03778229) for the savolitinib plus TAGRISSO(R) combination in
NSCLC patients harboring EGFR(17) mutation and MET amplification or
overexpression at WCLC(18) 2022;
o Results showed improved response rates with increasing levels
of MET aberration. Overall results are consistent with TATTON and
ORCHARD global studies, but demonstrate higher response, DoR(19)
and PFS(20) among patients with higher MET levels, particularly
among those with no prior chemotherapy;
-- Opened enrollment for SAFFRON, a global, pivotal Phase III
study for the savolitinib plus TAGRISSO(R) combination
(NCT05261399). Enrolled patients will have MET levels consistent
with the higher MET level patient groups in SAVANNAH and have had
no prior chemotherapy; and
-- Presented final Phase II OS(21) in patients with MET exon 14
skipping alteration NSCLC at ELCC(22) 2022 (NCT02897479).
Potential upcoming clinical and regulatory milestones for
savolitinib:
-- Initiate SOUND, a China Phase II study for the savolitinib
plus IMFINZI(R) combination in EGFR wild-type NSCLC patients with
MET alterations (NCT05374603).
Fruquintinib (ELUNATE(R) in China) , a highly selective oral
inhibitor of VEGFR(23) 1/2/3 designed to improve kinase selectivity
to minimize off-target toxicity and thereby improve tolerability;
approved and launched in China
Major milestones and data presentations for fruquintinib in
2022:
-- Presented preliminary data from the U.S. Phase Ib monotherapy
study of fruquintinib in patients with refractory metastatic CRC
(NCT03251378) at the 2022 ASCO GI(24) Gastrointestinal Cancers
Symposium; and
-- Completed enrollment of the FRUTIGA China Phase III
registration study (NCT03223376) in about 700 advanced gastric
cancer patients.
Potential upcoming clinical and regulatory milestones for
fruquintinib:
-- Report top-line results of the global Phase III FRESCO-2
registration trial (NCT04322539) in 691 refractory metastatic CRC
patients, recruited from 14 countries including U.S., EU, Japan and
Australia, in August 2022 as the pre-specified number of OS events
that triggers the primary analysis has occurred;
-- If FRESCO-2 is positive, HUTCHMED plans to initiate
discussions with regulatory authorities to apply for fruquintinib
marketing authorization with the U.S. FDA, the EMA and the Japanese
PMDA(25) in the second half of 2022, with submissions targeted for
completion in 2023; and
-- Plan to initiate Phase III studies of fruquintinib plus PD-1
inhibitor TYVYT(R) combination in multiple indications in
China.
Surufatinib (SULANDA(R) in China) , an oral inhibitor of VEGFR,
FGFR(26) and CSF-1R(27) designed to inhibit tumor angiogenesis and
promote the body's immune response against tumor cells via tumor
associated macrophage regulation; approved and launched in
China
Major data presentation for surufatinib in 2022:
-- Presented a pooled analysis of safety data from the SANET-p
and SANET-ep studies at the 2022 ASCO(28) annual meetings.
Potential upcoming clinical and regulatory milestones for
surufatinib:
-- Submit for presentation data from the Phase Ib/II global
combination study with tislelizumab at a scientific conference in
2023;
-- Submit for presentation further Phase II data for the PD-1
inhibitor TUOYI(R) combination study in China for thyroid cancer,
non-small cell lung cancer and endometrial cancer cohorts at a
scientific conference in 2023; and
-- Complete bridging study in NET patients in Japan
(NCT05077384) in the first half of 2023 and discuss results with
the Japanese PMDA.
Amdizalisib (HMPL-689) , an investigative and highly selective
oral inhibitor of PI3K (29) designed to address the
gastrointestinal and hepatotoxicity associated with currently
approved and clinical-stage PI3K inhibitors
Potential upcoming clinical and regulatory milestones for
amdizalisib:
-- Plan for additional Phase II studies with potential for
registration intent in China in additional relapsed/refractory
lymphoma indications;
-- Initiate studies in combination with tazemetostat and other
anti-cancer therapies in China; and
-- Complete recruitment of patients for two Phase II studies
with potential for registration in China for the treatment of
follicular lymphoma (with Breakthrough Therapy Designation) around
the end of 2022 and marginal zone lymphoma in the first half of
2023 (NCT04849351).
Sovleplenib (HMPL-523) , an investigative and highly selective
oral inhibitor of Syk(30) , an important component of the Fc
receptor and B-cell receptor signaling pathway, for the treatment
of hematological malignancies and immune diseases
Potential upcoming clinical milestones for sovleplenib:
-- Complete enrollment of the ESLIM-01 Phase III pivotal study
in primary ITP (NCT03951623) in China around year end, with readout
in 2023;
-- Initiate Phase I study in the U.S. in patients with ITP in 2023;
-- Initiate Phase II Proof-of-Concept study in warm AIHA(31) in China; and
-- Initiate exploratory Phase II trial in patients with severe or critical COVID-19 requiring hospitalization and supplemental oxygen, subject to COVID-19 outbreak.
Tazemetostat (TAZVERIK(R) in the U.S., Japan and the Hainan
Pilot Zone) , a first-in-class, oral inhibitor of EZH2 licensed
from Epizyme(32) for which HUTCHMED is collaborating to research,
develop, manufacture and commercialize in Greater China
Major milestones and data presentations for tazemetostat in
2022:
-- Initiated a bridging study in follicular lymphoma patients in
China for conditional registration based on U.S. approvals; and
-- Epizyme presented updated data from the Phase Ib portion of
the global SYMPHONY-1 Phase III trial at ASCO (NCT04224493) of
tazemetostat combined with lenalidomide and rituximab (R(2)) in
patients with relapsed or refractory follicular lymphoma after at
least one prior line of therapy.
Potential upcoming clinical and regulatory milestones for
tazemetostat:
-- Initiate the China portion of the global SYMPHONY-1 Phase III trial (NCT04224493); and
-- Initiate Phase II combination studies with amdizalisib and other HUTCHMED assets.
HMPL-306 , an investigative and highly selective oral inhibitor
of IDH1/2(33) designed to address resistance to the currently
marketed IDH inhibitors
Potential upcoming clinical and regulatory milestones for
HMPL-306:
-- Initiate dose expansion portion of the Phase I study in
hematological malignancies in China in early 2023; and
-- Initiate indication specific dose expansion cohorts of a
Phase I study in the U.S. and Europe in patients with an IDH1
and/or IDH2 mutation in mid-2023 (NCT04762602).
HMPL-760 , an investigative, highly selective, third-generation
oral inhibitor of BTK(34) with improved potency versus first
generation BTK inhibitors against both wild type & C481S mutant
enzymes
-- Initiated China Phase I trial (NCT05190068) in patients with
advanced hematological malignancies in January 2022; and
-- Initiating U.S. Phase I trial (NCT05176691) in patients with
advanced hematological malignancies in mid-2022.
HMPL-453 , an investigative and highly selective oral inhibitor
of FGFR 1/2/3
-- Initiated combination studies with other anti-cancer
therapies, including chemotherapies or PD-1 antibodies, in China in
January 2022 (NCT05173142).
HMPL-295 , an investigative and highly selective oral inhibitor
of ERK in the MAPK pathway (35) with the potential to address
intrinsic or acquired resistance from upstream mechanisms such as
RAS-RAF-MEK
-- Continuing to enroll Phase I trial (NCT04908046) in patients
with advanced solid tumors in China.
HMPL-653 , an investigative, oral, highly selective, and potent
CSF-1R inhibitor designed to target CSF-1R driven tumors as a
monotherapy or in combinations
-- Initiated Phase I trial in China (NCT05190068) in patients
with advanced malignant solid tumors and tenosynovial giant cell
tumors in January 2022.
HMPL-A83 , an investigative, differentiated, red blood cell
sparing CD47 monoclonal antibody
-- Initiated Phase I trial in China (NCT05429008) in patients
with advanced malignant neoplasms in July 2022.
Inmagene collaboration update
-- Phase I trial initiated in Australia for IMG-007, an
investigative, OX40 antagonistic monoclonal antibody designed to
selectively shut down OX40+ T cell function, thereby providing a
treatment option for pathological OX40+ T cell-mediated immune
diseases such as atopic dermatitis, in healthy volunteers and
patients with severe atopic dermatitis in July 2022 (NCT05353972);
and
-- Phase I trial initiation imminent in healthy volunteers
following IND(36) clearance in the US for IMG-004, a reversible,
non-covalent, highly selective oral BTK inhibitor designed to
target immunological diseases (NCT05349097).
IV. MANUFACTURING
-- Increased production of commercial supplies of ELUNATE(R) ,
SULANDA(R) and ORPATHYS(R) to meet demand;
-- Initiated NDA enabling studies including registration
stability studies and process validation for amdizalisib and
sovleplenib; and
-- Continued construction of our new flagship Shanghai
manufacturing facility on schedule - this facility is designed to
increase our novel drug product manufacturing capacity by over
five-fold. Equipment installation is planned for late 2022, with
Good Manufacturing Practice (GMP) compliance targeted for late
2023.
V. OTHER VENTURES
Other Ventures include our profitable prescription drug
marketing and distribution platforms
-- Other Ventures consolidated revenues fell 3% (-4% at CER(37)
) to $110.9 million (H1-21: $114.5m);
-- SHPL(38) non-consolidated joint venture revenues grew by 18%
(16% at CER) to $212.4 million (H1-21: $180.4m); and
-- Consolidated net income attributable to HUTCHMED from our
Other Ventures increased by 19% (16% at CER) to $35.4 million
(H1-21: $29.8m, excluding net income attributable to HUTCHMED of
$11.5 million contributed from HBYS(39) which was disposed in
September 2021), which primarily included net income contributed
from SHPL of $33.6 million (H1-21: $28.6m).
VI. IMPACT OF COVID-19
COVID-19 had some impact on our research, clinical studies and
our commercial activities in the first half of 2022, particularly
with respect to hospital lockdowns, travel restrictions, and
shipping difficulties. Sites in Shanghai were particularly impacted
during April and May. Measures were put in place to minimize the
impact of such restrictions to the extent possible, including
online patient follow-up and the retention of core research teams
on-site to maintain critical activities, with business returning to
normal in June. We will continue to closely monitor the evolving
situation.
VII. SUSTAINABILITY
The Group is committed to the long-term sustainability of its
businesses and the communities in which we conduct business. In the
first half of 2022, we published 2021 Sustainability Report of
HUTCHMED, detailing our environmental, social and governance
performance of HUTCHMED during 2021, including our sustainability
governance, stakeholder engagement and materiality analysis,
business ethics, environmental performance, research and
development, responsible commercialization, and human capital
management.
Five new sustainability-related policies and statements -
Sustainability Policy, Environmental Policy, Health and Safety
Policy, Human Rights Policy and Modern Slavery and Human
Trafficking Statement - were published along with the 2021
Sustainability Report, serving to demonstrate our commitment in
sustainability, enriched and more transparent disclosures, as well
as acting as an important gateway to communicate with our
stakeholders in all sustainability matters.
In the second half of 2022, we will continue our efforts in
facilitating discussions regarding relevant sustainability issues
and opportunities, including climate-related issues, and actively
looking to set our own sustainability targets and goals.
VIII. U.S. LISTING
The Holding Foreign Companies Accountable Act, or the Act, was
signed into law in December 2020. It provides that if the U.S.
Securities and Exchange Commission (SEC) determines that a
U.S.-listed company has filed audit reports issued by a registered
public accounting firm that has not been subject to inspection by
the Public Company Accounting Oversight Board (PCAOB) for three
consecutive years beginning in 2021, the SEC shall prohibit such
company's shares or ADSs40 from being traded on a national
securities exchange or in the over-the-counter trading market in
the U.S.
As had been expected, following its adoption of implementing
rules pursuant to the Act, the SEC named over 150 companies,
including HUTCHMED, to its conclusive list of issuers identified
under these rules. Under the current terms of the Act, the
Company's ADSs will be delisted from the Nasdaq Stock Market in
early 2024, unless the Act is amended to exclude the Company or the
PCAOB is able to conduct a full inspection of the Company's auditor
during the required timeframe. In addition, legislation is being
considered in the U.S. to shorten the number of non-inspection
years from three years to two. In the case that such legislation
becomes law, it will reduce the time period before our ADSs could
be delisted from the Nasdaq Stock Market and prohibited from
over-the-counter trading in the U.S. from 2024 to 2023.
This has had no impact on the Company's business operations. We
continue to monitor market developments and evaluate all strategic
options, with the appropriate counsel and guidance.
The Company's ADSs, each of which represents five ordinary
shares, continue to trade uninterrupted on the Nasdaq Global Select
Market. Its ordinary shares are also admitted for trading in London
on the AIM market, and are primary listed on HKEX41. The shares
listed on HKEX and AIM are fully fungible with the shares
represented by the Company's ADSs.
INTERIM 2022 Financial Results
Cash, Cash Equivalents and Short-Term Investments were $826.2
million as of June 30, 2022 compared to $1,011.7 million as of
December 31, 2021.
-- Adjusted Group (non-GAAP(42) ) net cash flows excluding
financing activities in the first half of 2022 were -$110.9 million
(H1-21: -$63.1m) mainly due to increased spending on
Oncology/Immunology R&D and China commercial operations;
and
-- Net cash used in financing activities in the first half of
2022 totaled $74.6 million (H1-21: net cash generated from
financing activities of $578.3m) mainly due to the repayments of
bank borrowings and purchases of ADSs by a trustee for the
settlement of equity awards.
Revenues for the six months ended June 30, 2022 were $202.0
million compared to $157.4 million in the six months ended June 30,
2021.
-- Oncology/Immunology consolidated revenues increased 113%
(111% at CER) to $91.1 million (H1-21: $42.9m) resulting from:
ELUNATE(R) revenues increased 21% to $36.0 million (H1-21:
$29.8m) in manufacturing revenues, promotion and marketing service
revenues and royalties, as our in-house sales team increased
in-market sales 26% to $50.4 million (H1-21: $40.1m), as provided
by Lilly;
SULANDA(R) revenues increased 69% to $13.6 million (H1-21:
$8.0m), after inclusion on the NRDL starting in January 2022;
ORPATHYS(R) revenues of $13.8 million (H1-21: nil), in
manufacturing revenues and royalties. AstraZeneca reported $23.3
million in-market sales (H1-21: nil) of ORPATHYS(R) in first half
of 2022;
TAZVERIK(R) revenues of $0.1 million following its successful
launch in Hainan in June 2022;
Milestone payment of $15.0 million (H1-21: nil), to us by
AstraZeneca, was triggered in February 2022 upon initiation of
start-up activities for SAFFRON; and
Other R&D services income of $12.6 million (H1-21: $5.1m),
which were primarily fees from AstraZeneca and Lilly for the
management of development activities in China.
-- Other Ventures consolidated revenues decreased 3% (-4% at
CER) to $110.9 million (H1-21: $114.5m), mainly due to lower sales
of consumer products. This excludes the strong 18% (16% at CER)
growth in non-consolidated revenues at SHPL of $212.4 million
(H1-21: $180.4m).
Net Expenses for the six months ended June 30, 2022 were $364.9
million compared to $259.8 million in the six months ended June 30,
2021.
-- Cost of Revenues were $137.3 million (H1-21: $123.2m), the
majority of which were the cost of third-party prescription drug
products marketed through our profitable Other Ventures, as well as
costs associated with ELUNATE(R) , including the provision of
promotion and marketing services to Lilly, and the costs for
SULANDA(R) and ORPATHYS(R) which commenced commercial sales in July
2021;
-- R&D Expenses were $181.7 million (H1-21: $123.1m), which
increased mainly as a result of an expansion in the active
development of our novel oncology drug candidates. Our
international clinical and regulatory operations in the U.S. and
Europe incurred expenses of $83.6 million (H1-21: $59.3m), while
R&D expenses in China were $98.1 million (H1-21: $63.8m);
-- SG&A Expenses(43) were $79.8 million (H1-21: $54.8m),
which increased primarily due to higher staff costs and selling
expenses to support rapidly expanding operations. This included the
scaling of a national oncology commercial infrastructure in China
and in the U.S.; and
-- Other Items generated net income of $33.9 million (H1-21:
$41.3m), which decreased primarily due to a reduction in equity in
earnings of equity investees of $9.4 million after the divestiture
of our interest in HBYS in September 2021.
Net Loss attributable to HUTCHMED for the six months ended June
30, 2022 was $162.9 million compared to $102.4 million in the six
months ended June 30, 2021.
-- As a result, the net loss attributable to HUTCHMED in the
first half of 2022 was $0.19 per ordinary share / $0.96 per ADS,
compared to net loss attributable to HUTCHMED of $0.14 per ordinary
share / $0.70 per ADS in the six months ended June 30, 2021.
Financial Summary
Condensed Consolidated Balance Sheets Data
(in $'000)
As of June 30, As of December 31,
2022 2021
-------------- ------------------
(Unaudited)
Assets
Cash and cash equivalents and short-term investments 826,200 1,011,700
Accounts receivable 77,078 83,580
Other current assets 118,959 116,796
Property, plant and equipment 44,059 41,275
Investments in equity investees 82,999 76,479
Other non-current assets 45,038 42,831
-------------- ------------------
Total assets 1,194,333 1,372,661
============== ==================
Liabilities and shareholders' equity
Accounts payable 51,005 41,177
Other payables, accruals and advance receipts 233,606 210,839
Bank borrowings 418 26,905
Other liabilities 57,455 54,226
-------------- ------------------
Total liabilities 342,484 333,147
Company's shareholders' equity 799,728 986,893
Non-controlling interests 52,121 52,621
-------------- ------------------
Total liabilities and shareholders' equity 1,194,333 1,372,661
============== ==================
Condensed Consolidated Statements of Operations Data
(Unaudited, in $'000, except share and per share data)
Six Months Ended June
30,
------------------------
2022 2021
----------- -----------
Revenues:
Oncology/Immunology - Marketed Products 63,517 37,795
Oncology/Immunology - R&D 27,552 5,056
----------- -----------
Oncology/Immunology consolidated revenues 91,069 42,851
Other Ventures 110,978 114,511
----------- -----------
Total revenues 202,047 157,362
----------- -----------
Operating expenses:
Costs of revenues (137,318) (123,249)
Research and development expenses (181,741) (123,050)
Selling and general administrative expenses (79,742) (54,797)
Total operating expenses (398,801) (301,096)
----------- -----------
(196,754) (143,734)
Other (expense)/income, net (3,882) 3,287
----------- -----------
Loss before income taxes and equity in
earnings of equity
investees (200,636) (140,447)
Income tax benefit/(expense) 4,215 (1,859)
Equity in earnings of equity investees,
net of tax 33,549 42,966
----------- -----------
Net loss (162,872) (99,340)
Less: Net loss/(income) attributable to
non-controlling interests 11 (3,057)
----------- -----------
Net loss attributable to HUTCHMED (162,861) (102,397)
=========== ===========
Losses per share attributable to HUTCHMED
- basic and diluted
(US$ per share) (0.19) (0.14)
Number of shares used in per share calculation
- basic and diluted 849,283,553 729,239,181
Losses per ADS attributable to HUTCHMED
- basic and diluted
(US$ per ADS) (0.96) (0.70)
Number of ADSs used in per share calculation
- basic and diluted 169,856,711 145,847,836
FINANCIAL GUIDANCE
We provide financial guidance for 2022 below reflecting expected
revenue growth of ELUNATE(R) , SULANDA(R) and ORPATHYS(R) in China.
We believe that we remain on track to meet the 2022 guidance for
Oncology/Immunology revenues provided in the announcement of our
2021 full year results on March 3, 2022.
H1 2022 2022 Current Adjustments vs. Previous Guidance
Actual Guidance
------------------------------------------ ------------- ------------------ ---------------------------------
Oncology/Immunology consolidated revenues $91.1 million $160 - 190 million nil
------------------------------------------ ------------- ------------------ ---------------------------------
Shareholders and investors should note that:
-- we do not provide any guarantee that the statements contained
in the financial guidance will materialize or that the financial
results contained therein will be achieved or are likely to be
achieved; and
-- we have in the past revised our financial guidance and
reference should be made to any announcements published by us
regarding any updates to the financial guidance after the date of
publication of this announcement.
Use of Non-GAAP Financial Measures and Reconciliation -
References in this announcement to adjusted Group net cash flows
excluding financing activities and financial measures reported at
CER are based on non-GAAP financial measures. Please see the "Use
of Non-GAAP Financial Measures and Reconciliation" below for
further information relevant to the interpretation of these
financial measures and reconciliations of these financial measures
to the most comparable GAAP measures, respectively.
-----
Conference call and audio webcast presentation scheduled today
at 8 p.m. HKT / 1 p.m. BST / 8 a.m. EDT - Investors may participate
in the call as follows: +852 3027 6500 (Hong Kong) / +44 20 3194
0569 (U.K.) / +1 646 722 4977 (U.S.), or access a live audio
webcast of the call via HUTCHMED's website at
www.hutch-med.com/event/.
Additional dial-in numbers are also available at HUTCHMED's
website. Please use participant access code " 55793362# ."
-----
About HUTCHMED
HUTCHMED (Nasdaq/AIM:HCM; HKEX:13) is an innovative,
commercial-stage, biopharmaceutical company. It is committed to the
discovery, global development and commercialization of targeted
therapies and immunotherapies for the treatment of cancer and
immunological diseases. It has more than 4,900 personnel across all
its companies, at the center of which is a team of about 1,800 in
oncology/immunology. Since inception it has advanced 13 cancer drug
candidates from in-house discovery into clinical studies around the
world, with its first three oncology drugs now approved and
marketed in China. For more information, please visit:
www.hutch--med.com or follow us on LinkedIn.
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)
HUTCHMED@fticonsulting.com
Asia - Zhou Yi, Brunswick +852 9783 6894 (Mobile)
HUTCHMED@brunswickgroup.com
Nominated Advisor
Atholl Tweedie / Freddy Crossley,
Panmure Gordon (UK) Limited +44 (20) 7886 2500
References
Unless the context requires otherwise, references in this
announcement to the "Group," the "Company," "HUTCHMED, " "HUTCHMED
Group," "we," "us," and "our," mean HUTCHMED (China) Limited and
its consolidated subsidiaries and joint ventures unless otherwise
stated or indicated by context.
Past Performance and Forward-Looking Statements
The performance and results of operations of the Group contained
within this announcement are historical in nature, and past
performance is no guarantee of future results of the Group. This
announcement contains forward-looking statements within the meaning
of the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can
be identified by words like "will," "expects, " "anticipates,"
"future," "intends," "plans," "believes," "estimates," "pipeline,"
"could," "potential," "first-in-class," "best-in-class," "designed
to," "objective," "guidance," "pursue," or similar terms, or by
express or implied discussions regarding potential drug candidates,
potential indications for drug candidates or by discussions of
strategy, plans, expectations or intentions. You should not place
undue reliance on these statements. Such forward-looking statements
are based on the current beliefs and expectations of management
regarding future events, and are subject to significant known and
unknown risks and uncertainties. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those set
forth in the forward-looking statements. There can be no guarantee
that any of our drug candidates will be approved for sale in any
market, that any approvals which are obtained will be obtained at
any particular time, or that the sales of products marketed or
otherwise commercialized by HUTCHMED and/or its collaboration
partners (collectively, "HUTCHMED's Products") 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, including, among others, the risk that HUTCHMED's ADSs
could be barred from trading in the United States as a result of
the Holding Foreign Companies Accountable Act and the rules
promulgated thereunder; the uncertainties inherent in research and
development, including the inability to meet our key study
assumptions regarding enrollment rates, timing and availability of
subjects meeting a study's inclusion and exclusion criteria and
funding requirements, changes to clinical protocols, unexpected
adverse events or safety, quality or manufacturing issues; the
inability of a drug candidate to meet the primary or secondary
endpoint of a study; the inability of a drug candidate to obtain
regulatory approval in different jurisdictions or the utilization,
market acceptance and commercial success of HUTCHMED's Products
after obtaining regulatory approval; competing drugs
and product candidates that may be superior to, or more cost
effective than HUTCHMED's Products and drug candidates; the impact
of studies (whether conducted by HUTCHMED or others and whether
mandated or voluntary) or recommendations and guidelines from
governmental authorities and other third parties on the commercial
success of HUTCHMED's Products and candidates in development; the
ability of HUTCHMED to manufacture and manage supply chains for
multiple products and product candidates; the availability and
extent of reimbursement of HUTCHMED's Products from third-party
payers, including private payer healthcare and insurance programs
and government insurance programs; coverage and reimbursement
determinations by such payers and new policies and procedures
adopted by such payers; the costs of developing, producing and
selling HUTCHMED's Products; the ability of HUTCHMED to meet any of
its financial projections or guidance and changes to the
assumptions underlying those projections or guidance; 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, uncertainties regarding future global exchange rates and
uncertainties regarding the impact of the COVID-19 pandemic. For
further discussion of these and other risks, see HUTCHMED's filings
with the U.S. Securities and Exchange Commission, on AIM and on
HKEX. HUTCHMED 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 HUTCHMED obtained from industry publications and
reports generated by third-party market research firms. Although
HUTCHMED believes that the publications, reports and surveys are
reliable, HUTCHMED 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 (as it forms part of
retained EU law as defined in the European Union (Withdrawal) Act
2018).
Ends
OPERATIONS REVIEW
Oncology/Immunology
We discover, develop, manufacture and market targeted therapies
and immunotherapies for the treatment of cancer and immunological
diseases through a fully integrated team of approximately 960
scientists and staff (December 31, 2021: 820), and an in-house
oncology commercial organization of about 820 staff (December 31,
2021: 630).
We have advanced 13 oncology drug candidates into clinical
trials in China, with seven also in clinical development in the
U.S. and Europe. Our first three drug candidates, fruquintinib,
surufatinib and savolitinib, have all been approved and launched in
China and a fourth, tazemetostat, has been approved and launched in
Hainan Pilot Zone.
MARKETED PRODUCT SALES
Fruquintinib (ELUNATE(R) in China)
ELUNATE(R) is approved for the treatment of third-line
metastatic CRC for which there is an approximate incidence of
83,000 new patients per year in China. We estimate that in the
first half of 2022, approximately 14,000 (H1-21: approximately
10,000) new patients were treated with ELUNATE(R) in China
resulting in in-market sales of $50.4 million, up 26% versus H1-21
($40.1 million). ELUNATE(R) surpassed regorafenib in prescription
numbers for late stage CRC at the end of 2021 and that lead has
continued to grow in the first half of 2022.
Under the terms of our agreement with Lilly, HUTCHMED manages
all on-the-ground medical detailing, promotion and local and
regional marketing activities for ELUNATE(R) in China. We
consolidate as revenues approximately 70-80% of ELUNATE(R)
in-market sales from manufacturing fees, service fees and royalties
paid to us by Lilly. In the first half of 2022, we consolidated
$36.0 million in revenue for ELUNATE(R) , equal to 71.4% of
in-market sales.
Following negotiations with the China NHSA(44) , ELUNATE(R)
continues to be included in the NRDL for a new two-year term
starting in January 2022. For this renewal, we agreed to a discount
of 5% relative to the 2021 NRDL price.
In January 2022, ELUNATE(R) was approved in the Macau Special
Administrative Region, our first drug to be approved in the
territory and the first based on NMPA approval, following the
latest update to the Macau provisions on new drug importation which
allow drugs approved in one or more specified jurisdictions to be
authorized for use in Macau.
Surufatinib (SULANDA(R) in China)
SULANDA(R) was launched in China in 2021 for the treatment of
all advanced NETs(45) for which there is an approximate incidence
of 34,000 new patients per year in China.
In 2021, SULANDA(R) was sold as a self-pay drug. We used
means-tested early access and patient access programs to help
patients afford SULANDA(R) . Despite these access programs,
duration of treatment was often affected by the economic
constraints of patients. Following negotiations with the China
NHSA, SULANDA(R) was included in the NRDL starting in January 2022
at a 52% discount on our main 50mg dosage form, relative to the
2021 self-pay price. Under the NRDL, actual out-of-pocket costs for
patients in the first half of 2022 represented approximately 15-20%
of the 2021 self-pay price.
As a result of inclusion in the NRDL and our continued marketing
activities, patient access to SULANDA(R) , as well as duration of
treatment, have been expanding with total sales in the first half
of 2022 increasing by 69% to $13.6 million (H1-21: $8.0 million).
It should be noted that the first half of 2021 in-market sales
included normal pipeline fill behind the initial launch of
SULANDA(R) whereas 2022 figures represent consumption sales. In the
first half of 2022, approximately 7,500 new patients were treated
with SULANDA(R) , representing approximately 3.8 times the
approximately 2,000 new patients in the first half of 2021. In June
2022, approximately 1,300 continuing patients were also
treated.
There are two therapies for advanced NETs approved and NRDL
reimbursed in China: SUTENT(R) for the treatment of pancreatic NET
(approximately 10% of NET), and AFINITOR(R) in broadly the same
indication as SULANDA(R) .
In April 2022, SULANDA(R) was approved in the Macau Special
Administrative Region.
Savolitinib (ORPATHYS(R) in China)
In late June 2021, ORPATHYS(R) became the first-in-class
selective MET inhibitor to be approved in China. Our partner,
AstraZeneca, then launched ORPATHYS(R) in mid-July 2021, less than
three weeks after its conditional approval by the NMPA for patients
with MET exon 14 skipping alteration NSCLC.
More than a third of the world's lung cancer patients are in
China and, among those with NSCLC, approximately 2-3% have tumors
with MET exon 14 skipping alterations, representing an approximate
incidence of 13,000 new patients per year in China. Importantly
also, MET plays a role in multiple other solid tumors, with an
estimated total incidence of 120,000 new patients per year in
China.
AstraZeneca introduced a patient access program in late 2021
which subsidizes use of ORPATHYS(R), through progressive disease.
As a result, in-market sales for ORPATHYS(R) grew significantly in
the first half of 2022. In-market sales of ORPATHYS(R) were $23.3
million (H1-21: nil) resulting in our consolidation of $13.8
million (H1-21: nil) in revenues from manufacturing fees and
royalties in the first half of 2022.
Market understanding of the need for MET testing has improved
significantly, with ORPATHYS(R)'s brand share more than doubling
since the end of 2021 in the rapidly growing targeted therapy area.
In the National Health Commission's Treatment Guidelines for
Primary Lung Cancer 2022 and the China Medical Association Oncology
Committee Lung Cancer Group's China Medical Association Guideline
for Clinical Diagnosis and Treatment of Lung Cancer, ORPATHYS(R)
was identified as the only targeted therapy recommended for MET
exon 14 patients, while similar guideline from CSCO46 also
recommended ORPATHYS(R) as the standard of care for such
patients.
AstraZeneca and HUTCHMED are preparing to begin negotiations
with the China NMPA for potential inclusion in the 2023 NRDL.
ORPATHYS(R) is the first and only selective MET inhibitor on the
market in China. XALKORI(R) is an approved multi-kinase inhibitor
of ALK and ROS1 with modest MET activity. Several selective MET
inhibitors are in development in China, but none are currently
expected to reach the market before 2023.
RESEARCH & DEVELOPMENT
Savolitinib (ORPATHYS(R) in China)
Savolitinib is an oral, potent, and highly selective oral
inhibitor of MET. In global partnership with AstraZeneca,
savolitinib has been studied in NSCLC, PRCC(47) and gastric cancer
clinical trials with over 1,500 patients to date, both as a
monotherapy and in combinations.
In February 2022, a $15 million milestone payment from
AstraZeneca was triggered by the initiation of start-up activities
for the SAFFRON study. In total, AstraZeneca has paid HUTCHMED $85
million of the total $140 million in upfront payments, development
and approvals milestones that are potentially payable under the
2011 license and collaboration agreement.
Savolitinib - Lung cancer:
MET plays an important role in NSCLC . Savolitinib has made
significant development progress in lung cancer, completing NMPA
NDA review, gaining approval and successfully launching as a
monotherapy in China. It is also now in multiple late stage
registrational studies as a combination therapy.
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 Approved and NCT02897479
monotherapy alterations launched in
2021. Final
OS analysis
at ELCC 2022
-------------- ------------------------- ------ ---------------------- --------------- -----------
Savolitinib MET exon 14 skipping China III Confirmatory Ongoing since NCT04923945
monotherapy alterations 2021
-------------- ------------------------- ------ ---------------------- --------------- -----------
Savolitinib SOUND : MET-driven, China II Initiating NCT05374603
+ IMFINZI(R) EGFR wild type
-------------- ------------------------- ------ ---------------------- --------------- -----------
Savolitinib SAVANNAH : 2L/3L Global II Registration-intent Ongoing. Data NCT03778229
+ TAGRISSO(R) EGFRm+(48) ; TAGRISSO(R) that supported
refractory; MET+ Phase IIIs
at WCLC 2022
-------------- ------------------------- ------ ---------------------- --------------- -----------
Savolitinib SAFFRON: 2L/3L Global III Enrollment NCT05261399
+ TAGRISSO(R) EGFRm+; TAGRISSO(R) open
refractory; MET+
-------------- ------------------------- ------ ---------------------- --------------- -----------
Savolitinib SACHI : 2L EGFR China III Ongoing since NCT05015608
+ TAGRISSO(R) TKI(49) refractory 2021
NSCLC; MET+
-------------- ------------------------- ------ ---------------------- --------------- -----------
Savolitinib SANOVO : Naïve China III Ongoing since NCT05009836
+ TAGRISSO(R) patients with EGFRm 2021
& MET+
-------------- ------------------------- ------ ---------------------- --------------- -----------
Update on MET altered, EGFR wild type NSCLC in China - The June
2021 monotherapy approval by the NMPA was based on positive results
from a Phase II trial conducted in China in patients with NSCLC
with MET exon 14 skipping alterations (NCT02897479). Final OS and
subgroup analysis was presented for this trial at ELCC 2022. The
updated results further confirmed the favorable benefit of
savolitinib in these patients and in each subgroup and the
acceptable safety profile. In addition to this trial and the
confirmatory study in this patient population (NCT04923945), the
SOUND Phase II trial is an open-label, interventional, multicenter,
exploratory Phase II study to evaluate savolitinib combined with
IMFINZI(R) in EGFR/ALK/ROS1 wild-type, locally advanced or
metastatic NSCLC patients with MET aberrations (NCT05374603). The
primary endpoint is PFS.
Update on combination therapies in EGFR TKI-resistant NSCLC -
MET-aberration is a major mechanism for acquired resistance to both
first/second-generation EGFR TKIs as well as third-generation EGFR
TKIs like TAGRISSO(R). Among patients who experience disease
progression post-TAGRISSO(R) treatment, approximately 15-50%
present with MET aberration. The prevalence of MET amplification
and overexpression may differ depending on the sample type,
detection method and assay cut-off used. Savolitinib has been
studied extensively in these patients in the TATTON and SAVANNAH
studies. The encouraging results led to the initiation and planning
of three Phase III studies: SACHI and SANOVO were initiated in
China in 2021, and the global, pivotal Phase III SAFFRON study is
currently open for enrollment.
SAVANNAH (NCT03778229) - This global Phase II study in patients
who have progressed following TAGRISSO(R) due to MET amplification
or overexpression has three dose cohorts of savolitinib combined
with TAGRISSO(R). In addition to continuing TAGRISSO(R) treatment,
patients received savolitinib 300mg QD, 300mg BID, or 600mg QD. 294
patients are enrolled in the study. We continue to evaluate the
possibility of using the SAVANNAH study as the basis for U.S.
accelerated approval.
The first presentation of results will be at the upcoming 2022
WCLC. These results are based on an analysis of 193 efficacy
evaluable patients who received savolitinib 300mg once daily plus
TAGRISSO(R) 80mg once daily at data cut-off date of August 27,
2021. Qualifying MET aberrations are FISH5+50 or IHC50+51.
Importantly, additional analysis using a higher cut-off level of
MET aberration are presented. The higher cut-off levels for MET
aberration are FISH10+52 and/or IHC90+53. The prevalence of this
higher cut-off levels of MET aberration was 34% of patients
centrally tested for enrollment in this study vs. 62% at the lower,
qualifying cut-off level.
Results showed a trend toward improved response rates with
increasing level of MET aberration. Across all patients in this
analysis, ORR54 was 32% [95% CI: 26-39%], median DoR was 8.3 months
[95% CI: 6.9-9.7 months], and median PFS was 5.3 months [95% CI:
4.2-5.8 months]. These results are consistent with the TATTON and
ORCHARD global studies.
Among the 108 SAVANNAH patients who met the criteria for higher
cut-off levels of MET aberration, ORR was 49% [95% CI: 39-59%],
median DoR was 9.3 months [95% CI: 7.6-10.6 months], and median PFS
was 7.1 months [95% CI: 5.3-8.0 months]. Among the 87 patients who
did not receive prior chemotherapy, ORR was 52% [95% CI: 41-63%],
median DoR was 9.6 months [95% CI: 7.6-14.9 months], and median PFS
was 7.2 months [95% CI: 4.7-9.2 months]. The safety profile of
savolitinib plus TAGRISSO(R) was consistent with the known profiles
of the combination and each treatment alone.
SAFFRON (NCT05261399) - Findings based on SAVANNAH and the
TATTON study supported the initiation of the SAFFRON global Phase
III study in patients with EGFR-mutated, MET-driven, locally
advanced or metastatic NSCLC whose disease progressed on first- or
second-line treatment with TAGRISSO(R) as the most recent therapy,
with no prior chemotherapy in the metastatic setting allowed.
Patients will be prospectively selected for the higher level of MET
aberration of FISH10+ and/or IHC90+. The SAFFRON study will
evaluate the efficacy and safety of savolitinib in combination with
TAGRISSO(R) compared to pemetrexed plus platinum
doublet-chemotherapy, the current standard-of-care treatment in
this setting. The primary endpoint of the study is PFS.
Two registrational studies are ongoing in China in EGFR mutated
NSCLC with MET aberrations: the SANOVO (NCT05009836) study in
treatment naïve patients, and SACHI (NCT05015608) study in patients
whose disease progressed following treatment with any first-line
EGFR TKI.
Savolitinib - Kidney cancer:
MET is a key genetic driver in papillary RCC(55) , and emerging
evidence suggests that combining immunotherapies with a MET
inhibitor could enhance anti-tumor activity. PRCC is a subtype of
kidney cancer, representing about 15% of patients, with no
treatments approved for patients with tumors that harbor MET-driven
alterations. We have conducted multiple global studies of
savolitinib in PRCC patients, including the SAVOIR monotherapy and
CALYPSO combination therapy global Phase II trials, that both
demonstrated highly encouraging results. These results led to the
initiation of a global Phase III, the SAMETA study, in 2021.
The table below shows a summary of the clinical study for
savolitinib in kidney cancer patients.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
------------- ------------------------- ------ ----- ------------- -----------
Savolitinib SAMETA : MET-driven, Global III Ongoing since NCT05043090
+ IMFINZI(R) unresectable and locally 2021
advanced or metastatic
PRCC
------------- ------------------------- ------ ----- ------------- -----------
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, of which approximately 5% of all
gastric cancer patients, demonstrated promising efficacy, including
VIKTORY. The VIKTORY study reported a 50% ORR with savolitinib
monotherapy in gastric cancer patients whose tumors harbor MET
amplification.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
----------- ------------------------------ ----- ----------------- ------------- -----------
Savolitinib 2L+ gastric cancer with China II registrational Ongoing since NCT04923932
MET amplification. two-stage, 2021
single-arm study
----------- ------------------------------ ----- ----------------- ------------- -----------
Fruquintinib (ELUNATE(R) in China)
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 clinical trials with about 5,000
patients to date, both as a monotherapy and in combination with
other agents.
Aside from its first approved indication of third-line CRC (in
China), several studies of fruquintinib combined with checkpoint
inhibitors (including TYVYT(R), geptanolimab and tislelizumab) have
been underway, some of which presented encouraging data in 2021.
Registration-intent studies combined with chemotherapy (FRUTIGA
study in gastric cancer) or checkpoint inhibitors (TYVYT(R) combo,
in endometrial cancer) are ongoing in China, with further
registration studies in HCC56 and RCC under consideration.
We retain all rights to fruquintinib outside of China and are
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-2 : metastatic U.S. / III Fully enrolled. NCT04322539
CRC Europe Results expected
/ Japan in Aug 2022
/ Aus.
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib monotherapy CRC; TN(57) & U.S. Ib Ongoing; CRC NCT03251378
HR+(58) /Her2-(59) data at ASCO
breast cancer GI 2022
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib + TN breast cancer, U.S. Ib/II Ongoing since NCT04577963
tislelizumab endometrial cancer, 2021
(PD-1) MSS(60) -CRC
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib monotherapy FRESCO : >=3L China III Approved and NCT02314819
CRC; chemotherapy launched in
refractory 2018
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib + FRUTIGA : 2L China III Fully enrolled NCT03223376
paclitaxel gastric cancer
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib + TYVYT(R) CRC China II Fully enrolled; NCT04179084
(PD-1) data at ASCO
2021
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib + TYVYT(R) HCC China Ib/II Fully enrolled; NCT03903705
(PD-1) data at CSCO
2021. Ph III
in planning
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib + TYVYT(R) Endometrial cancer China II registration-intent Ongoing since NCT03903705
(PD-1) 2021; Ib data
at CSCO 2021
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib + TYVYT(R) RCC China Ib/II Fully enrolled; NCT03903705
(PD-1) data at CSCO
2021. Ph III
in planning
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib + TYVYT(R) Gastrointestinal China Ib/II Fully enrolled NCT03903705
(PD-1) tumors
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib + TYVYT(R) NSCLC China Ib/II Fully enrolled NCT03903705
(PD-1)
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib + TYVYT(R) Cervical cancer China Ib/II Fully enrolled NCT03903705
(PD-1)
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib + Solid tumors Korea / China Ib/II Ongoing NCT04716634
tislelizumab
(PD-1)
------------------------ --------------------- ------------- ---------------------- ----------------- -----------
Fruquintinib - CRC updates:
FRESCO-2 (NCT04322539) - This double-blind, placebo-controlled,
global Phase III study in patients with refractory metastatic CRC
reached its enrollment goal in December 2021. It recruited 691
patients from approximately 150 sites in 14 countries in fifteen
months, ahead of schedule. The primary endpoint of the study is OS.
Topline results are expected to be reported in August 2022 as the
pre-specified number of OS events that trigger the primary analysis
has accrued. If positive, HUTCHMED would simultaneously initiate
plans to apply for marketing authorization of fruquintinib with the
U.S. FDA, which granted Fast Track Designation in 2020, the EMA and
the Japanese PMDA.
U.S. Phase I/Ib CRC cohorts (NCT03251378) - Preliminary efficacy
and safety data of fruquintinib in patients with refractory,
metastatic CRC were presented at ASCO GI in early 2022. In patients
who had progressed on all standard therapies, including LONSURF(R)
and/or STIVARGA(R) , the DCR(61) was 68.3% and the median OS was
10.7 months [95% CI: 6.7-11.7]. In patients who had not received
LONSURF(R) or STIVARGA(R) , the DCR was 57.5% and the median OS was
9.3 months [95% CI: 5.2-NR(62) ]. The safety profile in both
patient populations was consistent with what has previously been
reported.
Fruquintinib - Gastric cancer:
FRUTIGA (NCT03223376) - This randomized, double-blind, Phase III
study in China to evaluate fruquintinib combined with paclitaxel
compared with paclitaxel monotherapy, for second-line treatment of
advanced gastric cancer, enrolled approximately 700 patients in
July 2022. Its co-primary endpoints are PFS and OS.
Fruquintinib - Combinations with checkpoint inhibitors:
Advanced endometrial cancer registration-intent cohort of
TYVYT(R) combination (NCT03903705) - Platinum-based systemic
chemotherapy is the standard first-line treatment for advanced
endometrial cancer. However, patients who progress following
first-line chemotherapy have limited treatment options, and the
prognosis remains poor. As disclosed at CSCO 2021, data in this
endometrial cancer cohort is encouraging.
As of the data cutoff date of August 31, 2021, 35 patients were
enrolled, including 7 treatment-naïve and 28 pretreated patients.
Of them, 29 were efficacy evaluable, 4 were treatment-naïve and 25
were pretreated. All 4 treatment-naïve patients experienced
confirmed tumor response, for ORR of 100% (95% CI: 39.8-100.0), and
median PFS was not reached. Among the 25 pretreated patients, the
confirmed ORR was 32.0% (95% CI: 14.9-53.5), DCR was 92.0% (95% CI:
74.0-99.0) and the median PFS was 6.9 months (95% CI: 4.1-NR).
Among the 19 proficient mismatch repair (pMMR) patients in
pretreated cohort, the confirmed ORR was 36.8% (95% CI: 16.3-61.6),
DCR was 94.7% (95% CI: 74.0-99.9), median PFS was 6.9 months (95%
CI: 4.1-NR), and the median OS was not reached.
We have agreed with the NMPA to expand this cohort into a
single-arm registrational Phase II study. The cohort is now
targeting to enroll over 130 patients.
We are currently evaluating the merits of and planning further
registration studies based on other cohorts, such as HCC and
RCC.
Tislelizumab combinations (NCT04577963 & NCT04716634) - In
August 2021, we initiated an open-label, multi-center,
non-randomized Phase Ib/II study in the U.S. to assess fruquintinib
in combination with tislelizumab in patients with locally advanced
triple negative breast cancer, advanced endometrial cancer or
MSS-CRC. The safety lead-in phase of the U.S. study has been
completed, to be followed by the dose-expansion phase shortly. The
Phase II study in China and Korea for fruquintinib in combination
with tislelizumab is being led by BeiGene for the treatment of
advanced or metastatic, unresectable gastric cancer, CRC or
NSCLC.
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
support an investigator initiated trial program for fruquintinib,
and there are about 40 of such trials ongoing in various solid
tumor settings.
Surufatinib (SULANDA(R) in China)
Surufatinib is a novel, oral angio-immuno kinase inhibitor that
selectively inhibits the tyrosine kinase activity associated with
VEGFR and FGFR, both shown to be involved in tumor angiogenesis,
and CSF-1R, which plays a key role in regulating tumor-associated
macrophages, promoting the body's immune response against tumor
cells. Surufatinib has been studied in clinical trials with around
1,200 patients to date, both as a monotherapy and in combinations,
and is approved in China. HUTCHMED currently retain all rights to
surufatinib worldwide.
Initial approvals for surufatinib in China are for the treatment
of advanced NET patients. NETs present in the body's organ system
with fragmented epidemiology. About 58% of NETs originate in the
gastrointestinal tract and pancreas, 27% in the lung or bronchus,
and a further 15% in other organs or unknown origins.
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. Several combination studies
with PD-1 antibodies have shown promising data.
A summary of the clinical studies of surufatinib is shown in the
table below.
Treatment Name, Line, Sites Phase Status/Plan NCT #
Patient Focus
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib monotherapy NETs U.S. Ib FDA Complete Response NCT02549937
Letter April 2022;
updated Ib data
at ASCO 2021
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib monotherapy NETs Europe II MAA withdrawn NCT04579679
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib monotherapy NETs Japan Bridging Ongoing since 2021. NCT05077384
Reg-enabling study
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + tislelizumab Solid tumors U.S. Ib/II Ongoing since 2021 NCT04579757
(PD-1) / Europe
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib monotherapy SANET-ep : epNET China III Approved & launched NCT02588170
in 2021
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib monotherapy SANET-p : pNET China III Approved & launched; NCT02589821
pooled analysis
at ASCO 2022
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + TUOYI(R) SURTORI-01 : China III Ongoing since 2021 NCT05015621
(PD-1) 2L NEC(63)
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + TUOYI(R) NENs(64) China II Fully enrolled; NCT04169672
(PD-1) data at ASCO 2021
& ESMO(65) IO(66)
2021
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + TUOYI(R) Biliary tract China II Fully enrolled NCT04169672
(PD-1) cancer
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + TUOYI(R) Gastric cancer China II Fully enrolled; NCT04169672
(PD-1) data updated at
ESMO IO 2021
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + TUOYI(R) Thyroid cancer China II Fully enrolled NCT04169672
(PD-1)
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + TUOYI(R) SCLC(67) China II Fully enrolled; NCT04169672
(PD-1) data at ESMO IO
2021
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + TUOYI(R) Soft tissue sarcoma China II Fully enrolled NCT04169672
(PD-1)
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + TUOYI(R) Endometrial cancer China II Fully enrolled NCT04169672
(PD-1)
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + TUOYI(R) Esophageal cancer China II Fully enrolled; NCT04169672
(PD-1) data at ESMO IO
2021
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + TUOYI(R) NSCLC China II Fully enrolled NCT04169672
(PD-1)
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib + PD-1/PD-L1 SCLC China II In planning N/A
-------------------------- ------------------- --------- -------- --------------------- -----------
Surufatinib - monotherapy in NET updates:
U.S. NDA and EMA MAA - Surufatinib received FDA Fast Track
Designations in April 2020 for the treatment of pNETs and epNETs.
Orphan Drug Designation for pNETs was granted in November 2019. In
a May 2020 pre-NDA meeting, we reached an agreement with the FDA
that the two positive Phase III studies of surufatinib in patients
with pNETs and epNETs in China, along with the bridging trial in
the U.S. could form the basis to support a U.S. NDA submission. The
FDA accepted the filing of the NDA in June 2021. However, in April
2022, we received a Complete Response Letter from the FDA regarding
the NDA for surufatinib for the treatment of pNETs and epNETs. FDA
determined that the current data package, based on two positive
Phase III trials in China and one bridging study in the U.S., does
not support an approval in the U.S. at this time.
The FDA evaluated the applicability of the SANET studies data
generated in one country to U.S. patients and U.S. medical
practice. The Complete Response Letter stated that the FDA will
require a multiregional clinical trial (MRCT) that includes
subjects more representative of the U.S. patient population and
aligned to current U.S. medical practice. In addition, COVID-19
related issues concerning inspection scheduling and access
contributed to the FDA action. This action by the FDA is not
related to any safety issues with surufatinib.
We also submitted an EMA MAA for surufatinib using the same data
package, which was validated and accepted in July 2021. However, on
August 1, 2022, HUTCHMED informed the EMA of its decision to
withdraw the MAA. This decision was reached following interactions
with the EMA which suggested that there is a low probability of a
positive opinion on the MAA. The EMA indicated that the SANET
studies were not representative of patients and medical practice in
Europe. The Company believes that their critiques on aspects of the
design and conduct of the trials are unlikely to be resolved by
re-analysis of the existing data set. Additionally, pre-approval
on-site inspections are required to confirm Good Manufacturing
Practice and Good Clinical Practice. Such inspections are currently
subject to restrictions due to COVID-containment measures and
security requirements for foreign visitors in China.
We will continue to work with regulators to explore the
feasibility of conducting a MRCT that would support approval in
U.S. and Europe.
Japan Bridging Study to Support Registration for Advanced NET
(NCT05077384) - Based on dialogue with the Japanese PMDA, it was
agreed that the Japanese NDA would include results from a
34-patient, registration-enabling bridging study in Japan to
complement the existing data package. The trial was initiated in
September 2021 and results are expected in the first half of 2023.
We plan to engage with the PMDA when these results are
available.
Surufatinib - combination therapy with checkpoint
inhibitors:
A Phase II China study (NCT04169672) combining surufatinib with
TUOYI(R) is enrolling approximately 260 patients in nine solid
tumor indications, including NENs, biliary tract cancer, gastric
cancer, thyroid cancer, SCLC, soft tissue sarcoma, endometrial
cancer, esophageal cancer and NSCLC. These have led to the
initiation in September 2021 of the first Phase III trial combining
surufatinib with a PD-1 antibody, the SURTORI-01 study in NEC, and
we are currently considering further registration studies.
In March 2021 we initiated an open-label, Phase Ib/II study of
surufatinib in combination with BeiGene's tislelizumab. This study
is ongoing in the U.S. and Europe, evaluating the safety,
tolerability, pharmacokinetics and efficacy in patients with
advanced solid tumors, including CRC, NET, small cell lung cancer,
gastric cancer, and soft tissue sarcoma and anaplastic thyroid
cancer. The dose finding phase of the study is now complete and the
expansion phase is ongoing (NCT04579757).
Surufatinib - exploratory development:
In China, we support an investigator initiated trial program for
surufatinib, with about 50 of such trials in various solid tumor
settings being conducted for both combination and single agent
regimens. These trials explore and answer important medical
questions in addition to our own company-sponsored clinical
trials.
Hematological Malignancies Candidates
HUTCHMED currently has six investigational drug candidates
targeting hematological malig-nan-cies in clinical development.
Amdizalisib (targeting PI3K ), sovleplenib (HMPL-523, targeting
Syk) and HMPL-760 (targeting BTK) are being studied in several
trials against B-cell dominant malignancies. In addition to the
three B-cell receptor pathway inhibitors, HUTCHMED is also
develop-ing HMPL-306 (targeting IDH1 and IDH2), tazemetostat (a
methyl-trans-ferase inhibitor of EZH2) and HMPL-A83 (an anti-CD47
monoclonal antibody).
Amdizalisib (HMPL-689)
Amdizalisib is a novel, highly selective oral inhibitor
targeting the isoform PI3K , a key component in the B-cell receptor
signaling pathway. Amdizalisib's pharmacokinetic properties have
been found to be favorable with good oral absorption, moderate
tissue distribution and low clearance in preclinical studies. We
also expect that amdizalisib will have low risk of drug
accumulation and drug-drug interactions, supporting feasibility of
development in combination with other medicines. The first of such
activities is in combination with tazemetostat (IND filed in June
2022). In 2021, registration-intent studies for amdizalisib were
initiated and Breakthrough Therapy Designation was granted for
relapse or refractory follicular lymphoma in China. HUTCHMED
currently retains all rights to amdizalisib worldwide. The table
below shows a summary of the clinical studies for amdizalisib.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
------------ ---------------------------- ------- ---------------------- -------------------- -----------
Amdizalisib Indolent NHL(68) , China Ib Ongoing; expansion NCT03128164
monotherapy peripheral T-cell lymphomas data presented
at ESMO 2021
------------ ---------------------------- ------- ---------------------- -------------------- -----------
Amdizalisib 3L Relapsed/refractory China II registration-intent Ongoing: initiated NCT04849351
monotherapy follicular lymphoma in Apr 2021.
Breakthrough
Therapy Designation
------------ ---------------------------- ------- ---------------------- -------------------- -----------
Amdizalisib 2L Relapsed/refractory China II registration-intent Ongoing: initiated NCT04849351
monotherapy marginal zone lymphoma in Apr 2021
------------ ---------------------------- ------- ---------------------- -------------------- -----------
Amdizalisib Indolent NHL U.S./ I/Ib Ongoing NCT03786926
monotherapy Europe
------------ ---------------------------- ------- ---------------------- -------------------- -----------
Phase II registration-intent trial (NCT04849351) - In April
2021, we commenced a registration-intent, single-arm, open-label
Phase II trial in China in approximately 100 patients with
relapsed/refractory follicular lymphoma and approximately 80
patients with relapsed/refractory marginal zone lymphoma, two
subtypes of non-Hodgkin's lymphoma. The primary endpoint is ORR.
The trial is being conducted in over 35 sites in China and is
expected to be fully enrolled around year end for follicular
lymphoma cohort and in the first half of 2023 for marginal zone
lymphoma cohort.
Sovleplenib (HMPL-523)
Sovleplenib is a novel, selective, oral inhibitor targeting Syk,
for the treatment of hematological malignancies and immune
diseases. Syk is a component in Fc receptor and B-cell receptor
signaling pathway.
In 2021, we initiated a Phase III study in China for primary
ITP, for which it has received Breakthrough Therapy Designation,
and presented data on both primary ITP and hematological
malignancies at ASH69 2021. HUTCHMED currently retains all rights
to sovleplenib worldwide. The table below shows a summary of the
clinical studies for sovleplenib.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
----------------------- ----------------------- --------- ------ -------------------------- -----------
Sovleplenib monotherapy ESLIM-01 : >= China III Ongoing: initiated NCT05029635
2L ITP in Oct 2021. Breakthrough
Therapy Designation
----------------------- ----------------------- --------- ------ -------------------------- -----------
Sovleplenib monotherapy Indolent NHL U.S. I/Ib Ongoing. Prelim. NCT03779113
/ Europe data at ASH 2021
----------------------- ----------------------- --------- ------ -------------------------- -----------
Sovleplenib monotherapy Multiple sub-types China I/Ib Completed NCT02857998
of B-cell malignancies
----------------------- ----------------------- --------- ------ -------------------------- -----------
Sovleplenib monotherapy Warm AIHA China II/III Initiating N/A
----------------------- ----------------------- --------- ------ -------------------------- -----------
Sovleplenib monotherapy Severe hospitalized China II In planning, China N/A
patients due to IND approved
COVID-19
----------------------- ----------------------- --------- ------ -------------------------- -----------
ESLIM-01 (Evaluation of Sovleplenib for immunological
diseases-01, NCT05029635) - In October 2021, we initiated a
randomized, double-blinded, placebo-controlled Phase III trial in
China of sovleplenib in approximately 180 adult patients with
primary ITP who have received at least one prior line of standard
therapy. ITP is an autoimmune disorder that can lead to increased
risk of bleeding. The primary endpoint of the study is the durable
response rate. In January 2022, the NMPA granted Breakthrough
Therapy Designation for this indication. Enrollment is expected to
be completed around the end of 2022.
China Phase II/III in warm AIHA - This is a randomized,
double-blind, placebo-controlled Phase II/III study to evaluate the
efficacy, safety, tolerability, and pharmacokinetics of sovleplenib
in the treatment of warm AIHA. AIHA is the result of destruction of
red blood cells due to the production of antibodies against red
blood cells which bind to antigens on the red blood cell membrane
in autoimmune disorders. If the results of the Phase II stage of
the study indicate sufficiently satisfactory efficacy and safety,
the Phase III stage will be initiated. The China IND was approved
in July 2022.
China Phase II in COVID-19 - Patients hospitalized with COVID-19
may experience severe inflammation, becoming at risk of multiple
organ failures, which is the most common cause of death. Syk
inhibition has been shown to reduce severe inflammation in severe
and critical patients. This study is a multicenter, randomized,
double-blind, placebo-controlled phase II study. The target
population is adult patients with severe/critical COVID-19
requiring hospitalization and supplemental oxygen. About 80
patients are planned to be randomized to receive sovleplenib or
placebo combined with standard therapy. The primary endpoint is
all-cause mortality by day 29. The China IND was approved in June
2022.
Tazemetostat
In August 2021, we entered into a strategic collaboration with
Epizyme to research, develop, manufacture and commercialize
tazemetostat in Greater China, including the mainland, Hong Kong,
Macau and Taiwan. Tazemetostat is an inhibitor of EZH2 developed by
Epizyme that is approved by the U.S. FDA for the treatment of
certain epithelioid sarcoma and follicular lymphoma patients. It
received accelerated approval from the FDA based on ORR and DoR in
January and June 2020 for epithelioid sarcoma and follicular
lymphoma, respectively.70
We are developing and plan to seek approval for tazemetostat in
various hematological and solid tumors, including epithelioid
sarcoma, follicular lymphoma and potentially other forms of
lymphoma in Greater China. We are participating in Epizyme's
SYMPHONY-1 (EZH-302) study, leading it in Greater China. The
parties also intend to conduct additional global studies jointly.
We will generally be responsible for funding all clinical trials of
tazemetostat in Greater China, including the portion of global
trials conducted there. We are responsible for the research,
manufacturing and commercialization of tazemetostat in Greater
China.
The table below shows a summary of the clinical studies for
tazemetostat.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
--------------- --------------------- ------ ---------------------- ------------------- -----------
Tazemetostat Metastatic or locally Hainan N/A - Hainan Approved & launched N/A
monotherapy advanced epithelioid Pilot Zone
sarcoma;
Relapsed/refractory
3L+ follicular
lymphoma
--------------- --------------------- ------ ---------------------- ------------------- -----------
Tazemetostat SYMPHONY-1 : 2L Global Ib/III Ongoing. PhIb NCT04224493
+ lenalidomide follicular lymphoma data at ASCO
+ rituximab 2022. HUTCHMED
(R(2)) is leading China
portion of global
Ph III, starting
H2 2022
--------------- --------------------- ------ ---------------------- ------------------- -----------
Tazemetostat Relapsed/refractory China II registration-intent Ongoing since NCT05467943
monotherapy 3L+ follicular (bridging) July 2022
lymphoma
--------------- --------------------- ------ ---------------------- ------------------- -----------
Tazemetostat Lymphoma sub-types China II In planning N/A
combinations
--------------- --------------------- ------ ---------------------- ------------------- -----------
Hainan Pilot Zone - In May 2022, tazemetostat was approved by
the Health Commission and Medical Products Administration of Hainan
Province to be used in the Hainan Boao Lecheng International
Medical Tourism Pilot Zone (Hainan Pilot Zone), under the
Clinically Urgently Needed Imported Drugs scheme, for the treatment
of certain patients with epithelioid sarcoma and follicular
lymphoma consistent with the label as approved by the FDA. Launched
in 2013 and located in China, the Hainan Pilot Zone is a
destination for international medical tourism and global hub for
scientific innovation, welcoming 83,900 medical tourists in 2020,
according to official data.
SYMPHONY-1 (NCT04224493) - This is a global, multicenter,
randomized, double-blind, active-controlled, 3-stage,
biomarker-enriched, Phase Ib/III study of tazemetostat in
combination with R(2) in patients with relapsed or refractory
follicular lymphoma after at least one prior line of therapy.
Epizyme conducted the Phase Ib portion of the study in 2021, which
determined the recommended Phase III dose and also demonstrated
potential efficacy in second-line follicular lymphoma. The safety
profile of the combination was consistent with the previously
reported safety information in the U.S. prescribing information for
both tazemetostat and R(2), respectively.
An interim analysis of the Phase Ib portion of the study, based
on 44 follicular lymphoma patients as of January 22, 2022, was
presented at ASCO 2022. The safety profile of the tazemetostat and
R(2) combination was consistent with the prescribing information
for both tazemetostat and R(2), respectively. Additionally, there
was no clear dose response for treatment-emergent adverse events
(TEAEs) or dose modifications. Of 38 evaluable patients, ORR was
95% with 50% complete response rate. Median PFS and DoR were not
yet reached.
In the Phase III portion of the trial, approximately 500
patients are randomly assigned to receive the recommended Phase III
dose of tazemetostat + R(2) or placebo + R(2). The study will also
include a maintenance arm with tazemetostat or placebo following
the first year of treatment with tazemetostat + R(2) or placebo +
R(2). The first patients were enrolled in May 2022 and we
anticipate the first China patient will enroll in the second half
of 2022.
China Phase II bridging study in relapsed/refractory follicular
lymphoma (NCT05467943) - In July 2022, we initiated a multicenter,
open-label, Phase II study to evaluate the efficacy, safety and
pharmacokinetics of tazemetostat for the treatment of patients with
relapsed/refractory follicular lymphoma intended to support
conditional registration in China. The primary objective is to
evaluate the efficacy of tazemetostat in patients with EZH2
mutation (Cohort 1). The secondary objectives are to evaluate the
efficacy of tazemetostat in patients with EZH2 wild-type (Cohort 2)
and to evaluate the safety and the pharmacokinetics of
tazemetostat.
China Phase II combination study in relapsed/refractory
follicular lymphoma - This is a multicenter, open-label, Phase II
study to evaluate the safety, tolerability and preliminary
anti-tumor efficacy of tazemetostat in combination with amdizalisib
in patients with R/R lymphoma. An IND was submitted in June
2022.
We intend to initiate other combination studies of tazemetostat
with other HUTCHMED assets.
HMPL-306
HMPL-306 is a novel dual-inhibitor of IDH1 and IDH2 enzymes.
IDH1 and IDH2 mutations have been implicated as drivers of certain
hematological malignancies, gliomas and solid tumors, particularly
among acute myeloid leukemia patients. HUTCHMED currently retains
all rights to HMPL-306 worldwide. The table below shows a summary
of the clinical studies for HMPL-306.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
-------------------- ---------------------------- ----- ----- ------------------- -----------
HMPL-306 monotherapy Hematological malignancies China I Ongoing: dose NCT04272957
expansion in 2023
-------------------- ---------------------------- ----- ----- ------------------- -----------
HMPL-306 monotherapy Solid tumors including U.S. I Ongoing since NCT04762602
but not limited Mar 2021. Dose
to gliomas, chondrosarcomas expansion expected
or cholangiocarcinomas to start in 2023
-------------------- ---------------------------- ----- ----- ------------------- -----------
HMPL-306 monotherapy Hematological malignancies U.S. I Ongoing: initiated NCT04764474
in Mar 2021
-------------------- ---------------------------- ----- ----- ------------------- -----------
HMPL-760
HMPL-760 is an investigational, non-covalent, third-generation
BTK inhibitor. It is a highly potent, selective, and reversible
inhibitor with long target engagement against BTK, including
wild-type and C481S-mutated BTK. China and U.S. Phase I studies
opened in early 2022 will include relapsed or refractory
non-Hodgkin's lymphoma or CLL71 patients with or without a prior
regimen containing a BTK inhibitor. HUTCHMED currently retains all
rights to HMPL-760 worldwide.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
-------------------- ------------------- ----- ----- ------------------ -----------
HMPL-760 monotherapy CLL, SLL(72) , China I Ongoing: initiated NCT05190068
other NHL in Jan 2022
-------------------- ------------------- ----- ----- ------------------ -----------
HMPL-760 monotherapy CLL, SLL, other U.S. I Initiating NCT05176691
NHL
-------------------- ------------------- ----- ----- ------------------ -----------
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. HUTCHMED currently retains 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 2L Cholangiocarcinoma China II Ongoing: 10-15% NCT04353375
(IHCC(73) with of IHCC pts' tumors
FGFR fusion) harbor FGFR2 fusion
------------------------- --------------------- ----- ----- -------------------- -----------
HMPL-453 + chemotherapies Multiple China I/II Ongoing: initiated NCT05173142
in Jan 2022
------------------------- --------------------- ----- ----- -------------------- -----------
HMPL-453 +TUOYI(R) Multiple China I/II Ongoing: initiated NCT05173142
(PD--1) in Jan 2022
------------------------- --------------------- ----- ----- -------------------- -----------
HMPL-295
HMPL-295 is a novel ERK inhibitor. ERK is a downstream component
of the RAS-RAF-MEK-ERK signaling cascade (MAPK pathway). This is
our first of multiple candidates in discovery targeting the MAPK
pathway. A China Phase I study was initiated in July 2021. HUTCHMED
currently retains all rights to HMPL-295 worldwide.
RAS-MAPK pathway is dysregulated in cancer, in which mutations
or non-genetic events hyper-activate the pathway in approximately
50% of cancers. RAS and RAF predict worse clinical prognosis in a
wide variety of tumor types, mediate resistance to targeted
therapies, and decrease the response to the approved standards of
care, namely, targeted therapy and immunotherapy. ERK inhibition
has the potential to overcome or avoid the intrinsic or acquired
resistance from the inhibition of RAS, RAF and MEK upstream
mechanisms.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
-------------------- ------------------- ----- ----- ------------------ -----------
HMPL-295 monotherapy Solid tumors China I Ongoing: initiated NCT04908046
in Jul 2021
-------------------- ------------------- ----- ----- ------------------ -----------
HMPL-653
HMPL-653 is a novel, highly selective, and potent CSF-1R
inhibitor designed to target CSF-1R driven tumors as a monotherapy
or in combination with other drugs. We initiated a China Phase I
study in January 2022. HUTCHMED currently retains all rights to
HMPL-653 worldwide.
CSF-1R is usually expressed on the surface of macrophages and
can promote growth and differentiation of macrophages. Studies have
shown that blocking the CSF-1R signaling pathway could effectively
modulate the tumor microenvironment, relieve tumor
immunosuppression, and synergize with other anti-cancer therapies
such as immune checkpoint inhibitors to achieve tumor inhibition.
It has been demonstrated in several clinical studies that CSF-1R
inhibitors could treat tenosynovial giant cell tumors, and treat a
variety of malignancies combined with immuno-oncology or other
therapeutic agents. Currently no CSF-1R inhibitor has been approved
in China.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
-------------------- ------------------- ----- ----- ------------------ -----------
HMPL-653 monotherapy Solid tumors & China I Ongoing: initiated NCT05190068
tenosynovial giant in Jan 2022, 110
cell tumors patients expected
to be enrolled
-------------------- ------------------- ----- ----- ------------------ -----------
HMPL-A83
HMPL-A83 is an investigational IgG4-type humanized anti-CD47
monoclonal antibody that exhibits high affinity for CD47. HMPL-A83
blocks CD47 binding to Signal regulatory protein (SIRP)
<ALPHA> and disrupts the "do not eat me" signal that cancer
cells use to shield themselves from the immune system. HUTCHMED
currently retains all rights to HMPL-A83 worldwide.
In preclinical studies, HMPL-A83 demonstrated a high affinity
for CD47 antigen on tumor cells and strong phagocytosis induction
of multiple tumor cells. HMPL-A83 also demonstrated weak affinity
for red blood cells and no induction of hemagglutination, implying
low risk of anemia, a potential event of special interest. HMPL-A83
has also demonstrated strong anti-tumor activity in multiple animal
models.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
-------------------- ------------------- ----- ----- ------------------ -----------
HMPL-A83 monotherapy Advanced malignant China I Ongoing: initiated NCT05429008
neoplasms in July 2022
-------------------- ------------------- ----- ----- ------------------ -----------
Immunology Collaboration with Inmagene
In January 2021, we entered into a strategic partnership with
Inmagene, a clinical development stage company with a focus on
immunological diseases, to further develop four novel preclinical
drug candidates we discovered for the potential treatment of
multiple immunological diseases. Under the terms of the agreement,
we granted Inmagene exclusive options to such drug candidates
solely for the treatment of immunological diseases. Funded by
Inmagene, we will work together to move the drug candidates towards
IND. If successful, Inmagene will then advance the drug candidates
through global clinical development. INDs for the first two
compounds were submitted in 2022.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
--------------------- --------------------- ------ ----- ------------------ -----------
IMG-007 (OX40 Healthy volunteers; Global I Ongoing: initiated NCT05353972
monoclonal antibody) adults with moderate in July 2022
to severe atopic
dermatitis
--------------------- --------------------- ------ ----- ------------------ -----------
IMG-004 (BTK Healthy volunteers Global I Initiating in H2 NCT05349097
inhibitor) 2022
--------------------- --------------------- ------ ----- ------------------ -----------
IMG-007 in atopic dermatitis - This is a novel antagonistic
monoclonal antibody targeting the OX40 receptor. OX40 is a
costimulatory receptor member of the tumor necrosis factor receptor
(TNFR) superfamily expressed predominantly on activated T cells.
The ligation of OX40 by its ligand OX40L leads to enhanced T cell
survival, proliferation, and effector functions. Preclinical
research results show that IMG-007 can bind to human OX40 receptor
with high affinity, thereby inhibit the binding of OX40 to OX40L,
reducing OX40L-dependent downstream signaling and cytokine release
by OX40+ T cells. By selectively shutting down OX40+ T cell
function, IMG-007 may provide a treatment option for pathological
OX40+ T cell-mediated immune diseases, such as atopic dermatitis.
Atopic dermatitis is a chronic inflammatory skin condition that is
estimated to affect 8-19% of children and 2-5% of adults in U.S.,
Europe, and East Asia. The Phase I study in healthy volunteers was
initiated in July 2022 in Australia.
IMG-004 in immunological diseases - This is a non-covalent,
reversible small molecule inhibitor targeting BTK. Designed
specifically for inflammatory and autoimmune diseases that usually
require long-term treatment, IMG-004 is potent, highly selective
and brain permeable. BTK is involved in innate and adaptive immune
responses related to certain immune-mediated diseases. Given the
central role of BTK in immunity pathways, BTK inhibitors may offer
a potential therapeutic approach for the treatment of a wide range
of inflammatory and autoimmune diseases. The Phase I study in
healthy volunteers IND has been cleared by the U.S. FDA and
enrollment is imminent.
OTHER VENTURES
Our Other Ventures include drug marketing and distribution
platforms covering about 290 cities and towns in China with around
2,900 mainly manufacturing and commercial personnel. Built over the
past 20 years, it primarily focuses on prescription drug and
science-based nutrition products through several joint ventures and
subsidiary companies.
In the first six months of 2022, our Other Ventures consolidated
revenues were $110.9 million (H1-21: $114.5m), with the decrease
mainly due to lower sales of consumer products to $5.3 million
(H1-22: $11.8m). Consolidated net income attributable to HUTCHMED
from our Other Ventures increased by 19% (16% at CER) to $35.4
million (H1-21: $29.8m, excluding net income attributable to
HUTCHMED of $11.5 million contributed from HBYS which was disposed
in September 2021).
Hutchison Sinopharm(74) : Our prescription drugs commercial
services business, which in addition to providing certain
commercial services for our own products, provides services to
third-party pharmaceutical companies in China, grew sales by 3% (2%
at CER) to $99.3 million in the first half of 2022 (H1-21:
$96.2m).
In 2021, the Hong Kong International Arbitration Centre made a
final award in favor of Hutchison Sinopharm against Luye75 in the
amount of RMB253.2 million ($38.0 million), plus costs and interest
(the "Award"), in connection with the termination of Hutchison
Sinopharm's right to distribute SEROQUEL(R) in China. In June 2022,
Luye provided a bank guarantee of up to RMB286.0 million to cover
the Award, pending the outcome of an application by Luye to the
High Court of Hong Kong to set aside the Award. On July 26, 2022,
Luye's application to set aside the Award was dismissed by the High
Court with costs awarded in favor of Hutchison Sinopharm and if
Luye does not appeal the dismissal, Hutchison Sinopharm will be
seeking to enforce the Award by drawing down on the bank
guarantee.
SHPL: Our own-brand prescription drugs business, operated
through our non-consolidated joint venture SHPL, grew sales by 18%
(16% at CER) to $212.4 million (H1-21: $180.4m). This sales growth
and favorable product mix led to an increase of 17% (15% at CER) in
net income attributable to HUTCHMED to $33.6 million (H1-21:
$28.6m).
The SHPL operation is large-scale, with a commercial team of
over 2,200 staff managing the medical detailing and marketing of
its 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 Good Manufacturing Practice-certified
factory holds 74 drug product manufacturing licenses and is
operated by about 530 manufacturing staff.
SXBX76 pill: SHPL's main product is SXBX pill, an oral
vasodilator prescription therapy for coronary artery disease. SXBX
pill is the third largest botanical prescription drug in this
indication in China, with a national market share in January to
April 2022 of 21.5% (2021: 19.6%). Sales increased by 19% (17% at
CER) to $197.9 million in the first half of 2022 (H1-21:
$167.0m).
SXBX pill is protected by a formulation patent that expires in
2029, but also retains certain state protection that extends
indefinitely, and is one of less than two dozen proprietary
prescription drugs represented on China's National Essential
Medicines List (NEML). Inclusion on this list means that all
Chinese state-owned health care institutions are required to carry
it. SXBX pill is fully reimbursed in all China.
Dividends: Our share of SHPL's profits are passed to the
HUTCHMED Group through dividend payments. In the first six months
of 2022, dividends of $22.7 million (H1-21: $42.1m) were paid from
SHPL to the HUTCHMED Group level with aggregate dividends received
by HUTCHMED since inception of over $260 million.
Weiguo Su
Chief Executive Officer and Chief Scientific Officer
August 1, 2022
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 Group net cash flows excluding financing activities
-- CER
Management uses such measures internally for planning and
forecasting purposes and to measure the HUTCHMED 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 Group net cash flows excluding financing activities: We
exclude deposits in and proceeds from short-term investments for
the period, and exclude the net cash generated from 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 change in net cash used in operating
activities to Adjusted Group net cash flows excluding financing
activities:
$'millions H1 2022 H1 2021
------------------------------------------------------- ------- -------
Net cash used in operating activities (89.9) (71.3)
Net cash generated from/(used in) investing activities 259.7 (155.9)
Effect of exchange rate changes on cash and cash
equivalents (5.2) 0.7
Excludes: Deposits in short-term investments 578.6 412.9
Excludes: Proceeds from short-term investments (854.1) (249.5)
-------------------------------------------------------- ------- -------
Adjusted Group net cash flows excluding financing
activities (110.9) (63.1)
-------------------------------------------------------- ------- -------
Reconciliation of GAAP revenues and net income attributable to
HUTCHMED to CER:
$'millions (except Six Months
%) Ended Change Amount Change %
-------------------- ------------------------ -----------------------
June June Exchange Exchange
30, 2022 30, 2021 Actual CER effect Actual CER effect
--------- --------- ------ ------ -------- ------ ----- --------
Consolidated revenues
47.
- Oncology/Immunology 91.1 42.9 48.2 7 0.5 113% 111% 2%
- Other Ventures^ 110.9 114.5 (3.6) (4.6) 1.0 -3% -4% 1%
^ Includes:
- Hutchison Sinopharm
- prescription drugs 99.3 96.2 3.1 2.1 1.0 3% 2% 1%
Non-consolidated
joint venture revenues
- SHPL 212.4 180.4 32.0 29.0 3.0 18% 16% 2%
- SXBX pill 197.9 167.0 30.9 28.1 2.8 19% 17% 2%
Consolidated net
income attributable
to HUTCHMED (5. (6.
- Other Ventures 35.4 41.3 9 ) 6 ) 0.7 -14% -16% 2%
- Consolidated entities 1.8 1.2 0.6 0.7 (0.1) 57% 58% -1%
- Equity investees 33.6 40.1 (6.5) (7.3) 0.8 -16% -18% 2%
- SHPL 33.6 28.6 5.0 4.2 0.8 17% 15% 2%
- HBYS (Note) - 11.5 (11.5) (11.5) - -100% -100% -
Excludes net income
attributable to HUTCHMED
contributed from HBYS
19 16
- Other Ventures 35.4 29.8 5.6 4.9 0.7 % % 3 %
- Consolidated entities 1.8 1.2 0.6 0.7 (0.1) 57% 58% -1%
- Equity investees 33.6 28.6 5.0 4.2 0.8 17% 15% 2%
- SHPL 33.6 28.6 5.0 4.2 0.8 17% 15% 2%
Note: On September 28, 2021, the Group completed the divestment
of HBYS.
GROUP CAPITAL RESOURCES
LIQUIDITY AND CAPITAL RESOURCES
To date, we have taken a multi-source approach to fund our
operations, including through cash flows generated and dividend
payments from our Oncology/Immunology and Other Ventures
operations, service and milestone and upfront payments from our
collaboration partners, bank borrowings, investments from third
parties, proceeds from our listings on various stock exchanges and
follow-on offerings.
Our Oncology/Immunology operations have historically not
generated significant profits and have operated at a net loss, as
creating potential global first-in-class or best-in-class drug
candidates requires a significant investment of resources over a
prolonged period of time. As such, we incurred net losses of $162.9
million for the six months ended June 30, 2022 and net losses of
$102.4 million for the six months ended June 30, 2021.
As of June 30, 2022, we had cash and cash equivalents and
short-term investments of $826.2 million and unutilized bank
facilities of $177.8 million. As of June 30, 2022, we had $0.4
million in bank borrowings.
Certain of our subsidiaries and joint ventures, including those
registered as wholly foreign-owned enterprises in China, are
required to set aside at least 10.0% of their after-tax profits to
their general reserves until such reserves reach 50.0% of their
registered capital. In addition, certain of our joint ventures are
required to allocate certain of their after-tax profits as
determined in accordance with related regulations and their
respective articles of association to the reserve funds, upon
approval of the board.
Profit appropriated to the reserve funds for our subsidiaries
and joint ventures incorporated in the PRC was nil and
approximately $8,000 for the six months ended June 30, 2022 and
2021, respectively. In addition, as a result of PRC regulations
restricting dividend distributions from such reserve funds and from
a company's registered capital, our PRC subsidiaries are restricted
in their ability to transfer a certain amount of their net assets
to us as cash dividends, loans or advances. This restricted portion
amounted to $0.2 million as of June 30, 2022.
In addition, our non-consolidated joint venture, SHPL, held an
aggregate of $58.1 million in cash and cash equivalents and no bank
borrowings as of June 30, 2022. Such cash and cash equivalents are
only accessible by us through dividend payments from the joint
venture. The level of dividends declared by the joint venture is
subject to agreement each year between us and our joint venture
partner based on the profitability and working capital needs of the
joint venture.
CASH FLOW
Six Months Ended June 30,
---------------------------
2022 2021
------------ -------------
(in $'000)
Cash Flow Data:
Net cash used in operating activities (89,859) (71,319)
Net cash generated from/(used in) investing activities 259,706 (155,888)
Net cash (used in)/generated from financing activities (74,638) 578,331
------------ -------------
Net increase in cash and cash equivalents 95,209 351,124
Effect of exchange rate changes (5,249) 687
Cash and cash equivalents at beginning of the period 377,542 235,630
------------ -------------
Cash and cash equivalents at end of the period 467,502 587,441
============ =============
Net Cash used in Operating Activities
Net cash used in operating activities was $71.3 million for the
six months ended June 30, 2021, compared to net cash used in
operating activities of $89.9 million for the six months ended June
30, 2022. The net change of $18.6 million was primarily
attributable to an increase in net loss of $63.6 million from $99.3
million for the six months ended June 30, 2021 to $162.9 million
for the six months ended June 30, 2022. The foregoing was partially
offset by an increase in changes of working capital of $46.8
million from $11.0 million for the six months ended June 30, 2021
to $57.8 million for the six months ended June 30, 2022.
Net Cash generated from/(used in) Investing Activities
Net cash used in investing activities was $155.9 million for the
six months ended June 30, 2021, compared to net cash generated from
investing activities of $259.7 million for the six months ended
June 30, 2022. The net change of $415.6 million was primarily
attributable to short-term investments which had net deposits of
$163.5 million for the six months ended June 30, 2021 as compared
to net withdrawals of $275.5 million for the six months ended June
30, 2022. The net change was partially offset by the deposit
received for the divestment of an equity investee of $15.9 million
during the six months ended June 30, 2021.
Net Cash (used in)/generated from Financing Activities
Net cash generated from financing activities was $578.3 million
for the six months ended June 30, 2021, compared to net cash used
in financing activities of $74.6 million for the six months ended
June 30, 2022. The net change of $652.9 million was mainly
attributable to net proceeds from issuances of shares of $614.9
million primarily from a private placement in April 2021 and our
public offering on the HKEX in June 2021. The net change was also
attributable to an increase in purchases of ADSs of $21.3 million
by a trustee for the settlement of equity awards of the Company
which totaled $26.8 million for the six months ended June 30, 2021
as compared to $48.1 million for the six months ended June 30,
2022, as well as a net decrease in bank borrowings of $26.5 million
due to a repayment of bank borrowings of $26.9 million partly
offset by proceeds from bank borrowings of $0.4 million during the
six months ended June 30, 2022.
LOAN FACILITIES
In November 2018, our subsidiary renewed a three-year revolving
loan facility with HSBC(77) . The facility amount of this loan was
HK$234.0 million ($30.0 million) with an interest rate at HIBOR(78)
plus 0.85% per annum. This credit facility was guaranteed by us and
includes certain financial covenant requirements. The revolving
loan facility expired in November 2021.
In May 2019, our subsidiary entered into a credit facility
arrangement with HSBC for the provision of unsecured credit
facilities in the aggregate amount of HK$400.0 million ($51.3
million). The 3-year credit facilities include (i) a HK$210.0
million ($26.9 million) term loan facility and (ii) a HK$190.0
million ($24.4 million) revolving loan facility, both with an
interest rate at HIBOR plus 0.85% per annum. These credit
facilities are guaranteed by us and include certain financial
covenant requirements. The term loan was drawn in October 2019 and
was repaid in May 2022. The revolving loan facility also expired in
May 2022.
In August 2020, our subsidiary entered into a 24-month revolving
credit facility with Deutsche Bank AG(79) in the amount of HK$117.0
million ($15.0 million) with an interest rate at HIBOR plus 4.5%
per annum. This revolving facility is guaranteed by us and includes
certain financial covenant requirements. As of June 30, 2022, no
amount was drawn from the revolving loan facility.
In October 2021, our subsidiary entered into a 10-year fixed
asset loan facility agreement with Bank of China Limited for the
provision of a secured credit facility in the amount of RMB754.9
million ($113.2 million) with an annual interest rate at the 5-year
China Loan Prime Rate less 0.80% (which was supplemented in June
2022). This credit facility is guaranteed by another subsidiary of
the Group, and secured by the underlying leasehold land and
buildings, and includes certain financial covenant requirements. As
of June 30, 2022, RMB2.8 million ($0.4 million) was drawn from the
fixed asset loan facility.
In May 2022, our subsidiary entered into a 12-month revolving
credit facility with HSBC in the amount of HK$390.0 million ($50.0
million) with an interest rate at HIBOR plus 0.5% per annum. This
revolving facility is guaranteed by us. As of June 30, 2022, no
amount was drawn from the revolving loan facility.
Our non-consolidated joint venture SHPL had no bank borrowings
outstanding as of June 30, 2022.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
The following table sets forth our contractual obligations as of
June 30, 2022. Our purchase obligations relate to property, plant
and equipment that are contracted for but not yet paid. Our lease
obligations primarily comprise future aggregate minimum lease
payments in respect of various factories, warehouses, offices and
other assets under non-cancellable lease agreements.
Payment Due by Period (in $'000)
-----------------------------------------------------------------
Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years
------ ---------------- --------- --------- -----------------
Bank borrowings 418 - - 39 379
Interest on bank borrowings 129 - - 37 92
Purchase obligations 50,336 48,145 2,191 - -
Lease obligations 12,678 5,404 4,891 1,926 457
------ ---------------- --------- --------- -----------------
63,561 53,549 7,082 2,002 928
====== ================ ========= ========= =================
SHPL
The following table sets forth the contractual obligations of
our non-consolidated joint venture SHPL as of June 30, 2022. SHPL's
purchase obligations comprise capital commitments for property,
plant and equipment contracted for but not yet paid. SHPL's lease
obligations primarily comprise future aggregate minimum lease
payments in respect of various offices under non-cancellable lease
agreements.
Payment Due by Period (in $'000)
----------------------------------------------------------------
Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years
----- ---------------- --------- --------- -----------------
Purchase obligations 2,617 2,617 - - -
Lease obligations 2,630 825 1,569 236 -
----- ---------------- --------- --------- -----------------
5,247 3,442 1,569 236 -
===== ================ ========= ========= =================
FOREIGN EXCHANGE RISK
A substantial portion of our revenues and expenses are
denominated in renminbi, and our consolidated financial statements
are presented in U.S. dollars. We do not believe that we currently
have any significant direct foreign exchange risk and have not used
any derivative financial instruments to hedge our exposure to such
risk. In general, our exposure to foreign exchange risks is
limited.
The value of the renminbi against the U.S. dollar and other
currencies may fluctuate and is affected by, among other things,
changes in China's political and economic conditions. The
conversion of renminbi into foreign currencies, including U.S.
dollars, has been based on rates set by the PBOC(80) . If we decide
to convert renminbi into U.S. dollars for the purpose of making
payments for dividends on our ordinary shares or ADSs or for other
business purposes, appreciation of the U.S. dollar against the
renminbi would have a negative effect on the U.S. dollar amounts
available to us. On the other hand, if we need to convert U.S.
dollars into renminbi for business purposes, e.g. capital
expenditures and working capital, appreciation of the renminbi
against the U.S. dollar would have a negative effect on the
renminbi amounts we would receive from the conversion. In addition,
for certain cash and bank balances deposited with banks in the PRC,
if we decide to convert them into foreign currencies, they are
subject to the rules and regulations of foreign exchange control
promulgated by the PRC government.
CREDIT RISK
Substantially all of our bank deposits are in major financial
institutions, which we believe are of high credit quality. We limit
the amount of credit exposure to any single financial institution.
We make periodic assessments of the recoverability of trade and
other receivables and amounts due from related parties. Our
historical experience in collection of receivables falls within the
recorded allowances, and we believe that we have made adequate
provision for uncollectible receivables.
INTEREST RATE RISK
We have no significant interest-bearing assets except for bank
deposits. Our exposure to changes in interest rates is mainly
attributable to our bank borrowings, which bear interest at
floating interest rates and expose us to cash flow interest rate
risk. We have not used any interest rate swaps to hedge our
exposure to interest rate risk. We have performed sensitivity
analysis for the effects on our results for the period from changes
in interest rates on floating rate borrowings. The sensitivity to
interest rates used is based on the market forecasts available at
the end of the reporting period and under the economic environments
in which we operate, with other variables held constant. According
to the analysis, the impact on our net loss of a 1.0% interest rate
shift would be a maximum increase/decrease of $0.1 million for the
six months ended June 30, 2022.
OFF-BALANCE SHEET ARRANGEMENTS
We did not have during the periods presented, and we do not
currently have, any material off-balance sheet arrangements
CONTINGENT LIABILITIES
Other than as disclosed in note 11 to the interim financial
statements, the Group does not have any other significant
commitments or contingent liabilities.
GEARING RATIO
The gearing ratio of the Group, which was calculated by dividing
total interest-bearing loans by total equity, was 0.05% as of June
30, 2022, a decrease from 2.6% as of December 31, 2021. The
decrease was primarily attributable to the decrease in
interest-bearing loans.
SIGNIFICANT INVESTMENTS HELD
Except for our investment in a non-consolidated joint venture
SHPL with a carrying value of $82.5 million including details below
and those as disclosed in note 7 to the interim financial
statements, we did not hold any other significant investments in
the equity of any other companies as of June 30, 2022.
Place of establishment and Nominal Value of Equity Interest
operations Registered Capital Attributable to the Group Principal activities
--------------------------- --------------------------- -------------------------- --------------------------
(in RMB'000)
PRC 229,000 50% Manufacture and
distribution of
prescription drug
products
Our own-brand prescription drugs business under our Other
Ventures is operated through SHPL. Dividends received from SHPL for
the six months ended June 30, 2022 were $22.7 million.
FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS
Note 11 to the interim financial statements discloses our
planned expenditures on capital assets as of June 30, 2022. At this
date there were no other plans to incur material expenditures on
additional investments or capital assets.
MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES, ASSOCIATES
AND JOINT VENTURES
During the six months ended June 30, 2022, we did not have any
other material acquisitions and disposals of subsidiaries,
associates and joint ventures.
PLEDGE OF ASSETS
Our 10-year fixed asset loan facility agreement with Bank of
China Limited is secured by the underlying leasehold land and
buildings. RMB2.8 million ($0.4 million) was drawn from the fixed
asset loan facility as of June 30, 2022.
INFLATION
In recent years, China has not experienced significant
inflation, and thus inflation has not had a material impact on our
results of operations. According to the National Bureau of
Statistics of China, the Consumer Price Index in China increased by
0.2%, 1.5% and 2.5% in 2020, 2021 and the first half of 2022,
respectively. Although we have not been materially affected by
inflation in the past, we can provide no assurance that we will not
be affected in the future by higher rates of inflation in
China.
INTERIM DIVID
The Board does not recommend any interim dividend for the six
months ended June 30, 2022.
OTHER INFORMATION
CORPORATE STRATEGY
The primary objective of the Company and its subsidiaries (the
"Group") is 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. The strategy of the Company is to leverage the highly
specialized expertise of the drug discovery division, known as the
Oncology/Immunology operations, to develop and expand its drug
candidate portfolio for the global market while also building on
the first-mover advantage in the development and launch of novel
cancer drugs in China. This is aligned with the Company's culture
of innovation and high engagement and empowerment with a high focus
on reward and recognition. The Chairman's Statement and the
Operations Review contain discussions and analyses of the Group's
opportunities, performance and the basis on which the Group
generates or preserves value over the longer term and the basis on
which the Group will execute its strategy for delivering the
objective of the Group. Further information on the sustainability
initiatives of the Group and its key relationships with
stakeholders can also be found in the standalone sustainability
report of the Group.
HUMAN RESOURCES
As at June 30, 2022, the Group employed approximately 2,110
(December 31, 2021: 1,760) full time staff members. Staff costs
during the six months ended June 30, 2022, including directors'
emoluments, totaled $118.9 million (H1-21: $85.5 million).
The Group fully recognizes the importance of high-quality human
resources in sustaining market leadership. Salary and benefits are
kept at competitive levels, while individual performance is
rewarded within the general framework of the salary, bonus and
incentive system of the Group, which is reviewed annually.
Employees are provided with a wide range of benefits that include
medical coverage, provident funds and retirement plans, and
long-service awards. The Group stresses the importance of staff
development and provides training programs on an ongoing basis.
Employees are also encouraged to play an active role in community
care activities.
SUSTAINABILITY
As an innovative, commercial-stage biopharmaceutical company,
HUTCHMED embraces sustainability at the core of how we operate.
Over the past two decades and on an ongoing basis, we are working
hard to contribute to the enhancement of healthcare systems by
continuously providing quality and accessible drugs. As the world
is gradually adapting to the changes and new normal brought about
by the COVID-19 pandemic, it has highlighted the importance of
incorporating sustainability factors into our strategy. HUTCHMED
embarked on our sustainability journey in 2020 by making voluntary
disclosures in our inaugural sustainability report to demonstrate
our efforts, and establishing a board level Sustainability
Committee in 2021 to support the Board of Directors (the "Board")
in fulfilling their responsibilities. Our second sustainability
report for 2021, with enhanced disclosures, was published in May
2022.
Going forward, HUTCHMED will be working with our stakeholders to
embrace sustainable business practices and develop a sustainability
strategy that will help focus our efforts on areas which are most
relevant to our business. Through a materiality assessment exercise
for 2021, we identified the following priority areas: business
ethics; drug research-related topics; drug development; commercial
operations responsibilities; environmental topics; and people
management. Over the course of 2022, we will continue to engage our
stakeholders to identify areas for improvement in these
sustainability fronts.
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
During the period from January 1, 2022 to June 30, 2022, neither
the Company nor any of its subsidiaries has purchased, sold or
redeemed any of the listed securities of the Company.
COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
The Company strives to attain and maintain high standards of
corporate governance best suited to the needs and interests of the
Group as it believes that effective corporate governance framework
is fundamental to promoting and safeguarding interests of
shareholders and other stakeholders and enhancing shareholder
value. Accordingly, the Company has adopted and applied corporate
governance principles and practices that emphasize a quality Board,
effective risk management and internal control systems, stringent
disclosure practices, transparency and accountability as well as
effective communication and engagement with shareholders and other
stakeholders. It is, in addition, committed to continuously
enhancing these standards and practices and inculcating a robust
culture of compliance and ethical governance underlying the
business operations and practices across the Group.
The Company has complied throughout the six months ended June
30, 2022 with all code provisions of the Hong Kong Corporate
Governance Code contained in Appendix 14 of the Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited
(the "Hong Kong Listing Rules").
COMPLIANCE WITH THE SHARE DEALINGS CODE FOR SECURITIES
TRANSACTIONS BY DIRECTORS
The Board has adopted the Code on Dealings in Shares which is on
terms no less exacting than the required standard set out in the
Model Code for Securities Transactions by Directors of Listed
Issuers set out in Appendix 10 of the Hong Kong Listing Rules as
the protocol regulating Directors' dealings in securities of the
Company. In response to specific enquiries made, all Directors have
confirmed their compliance with the required standards set out in
such code regarding their securities transactions throughout their
tenure during the six months ended June 30, 2022.
USE OF NET PROCEEDS
On June 30, 2021, the Company issued 104,000,000 new ordinary
shares for total gross proceeds of approximately $534.7 million
from the listing and offering of the Company's ordinary shares on
HKEX.
On July 15, 2021, the over-allotment option was fully exercised
and the Company issued an aggregate of 15,600,000 ordinary shares
for total gross proceeds of approximately $80.2 million.
The intended use of total net proceeds of approximately $585.2
million from the offering and the over-allotment option for the
purposes and in the amounts (adjusted on pro rata basis based on
the actual net proceeds) as disclosed in the prospectus issued by
the Company dated June 18, 2021 is as below:
Expected
Percentage of Unutilized Net Timeline for
Total Net Approximate Actual Usage up Proceeds as of Utilization of
Use of Proceeds Proceeds Amount to June 30, 2022 June 30, 2022 Proceeds (note)
------------------- ---------------- ---------------- ---------------- --------------- ---------------
(%) ($'millions) ($'millions) ($'millions)
Advance our
late-stage clinical
programs for
savolitinib,
surufatinib,
fruquintinib,
amdizalisib
and sovleplenib
through
registration trials
and potential NDA
submissions 50% 292.7 193.3 99.4 2023
Support further
proof-of-concept
studies and fund
the continued
expansion of our
product portfolio
in cancer and
immunological
diseases through
internal research,
including the
development
cost of
early-clinical and
preclinical-stage
pipeline drug
candidates 10% 58.5 40.4 18.1 2023
Further strengthen
our integrated
capabilities across
commercialization,
clinical and
regulatory
and manufacturing 20% 117.1 49.6 67.5 2023
Fund potential
global business
development and
strategic
acquisition
opportunities to
complement
our internal
research and
development
activities and
enhance our current
drug candidate
pipeline 15% 87.8 27.0 60.8 2023
Working capital,
expanding internal
capabilities
globally and in
China and general
corporate
purposes 5% 29.1 29.1 - Fully utilized
---------------- ---------------- ---------------- ---------------
100% 585.2 339.4 245.8
================ ================ ================ ===============
Note: There was no change in the intended use of net proceeds as
previously disclosed, and the Company plans to gradually utilize
the remaining net proceeds in accordance with such intended
purposes depending on actual market conditions and business needs,
which is expected to be fully utilized by the end of year 2023.
REVIEW OF INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The interim unaudited condensed consolidated financial
statements of the Group for the six months ended June 30, 2022 have
been reviewed by the auditor of the Company,
PricewaterhouseCoopers, in accordance with Hong Kong Standard on
Review Engagements 2410 - "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Hong Kong Institute of Certified Public Accountants for the Hong
Kong filing. The interim unaudited condensed consolidated financial
statements of the Group for the six months ended June 30, 2022 have
also been reviewed by the Audit Committee of the Company.
IMPORTANT EVENTS AFTER THE REPORTING DATE
Save as disclosed above, no important events affecting the
Company occurred since June 30, 2022 and up to the date of this
announcement.
PUBLICATION OF INTERIM RESULTS AND INTERIM REPORT
This interim results announcement is published on the websites
of HKEX ( www.hkexnews.hk ), the U.S. Securities and Exchange
Commission ( www.sec.gov/edgar ), the London Stock Exchange (
www.londonstockexchange.com ) and the Company ( www.hutch --
med.com ). The interim report of the Group for the six months ended
June 30, 2022 will be published on the websites of HKEX and the
Company, and dispatched to the Company's shareholders in due
course.
REFERENCES AND ABBREVIATIONS
1 NSCLC = Non-small cell lung cancer.
2 MET = Mesenchymal epithelial transition factor.
3 CRC = Colorectal cancer.
4 epNET = extra-pancreatic neuroendocrine tumor.
5 pNET= pancreatic neuroendocrine tumor.
6 R&D = Research and development.
7 FDA = Food and Drug Administration.
8 EMA = European Medicines Agency.
9 MAA = Marketing Authorization Application.
10 In-market sales = total sales to third parties provided by
Eli Lilly (ELUNATE(R)), AstraZeneca (ORPATHYS(R)) and HUTCHMED
(SULANDA(R) and TAZVERIK(R)).
11 NRDL = National Reimbursement Drug List.
12 Lilly = Eli Lilly and Company.
13 ITP = Immune thrombocytopenia purpura.
14 NMPA = National Medical Products Administration.
15 NDA = New Drug Application.
16 EU = European Union.
17 EGFR = Epidermal growth factor receptor.
18 WCLC = World Conference on Lung Cancer.
19 DoR = Duration of response.
20 PFS = Progression-free survival.
21 OS = Overall survival.
22 ELCC = European Lung Cancer Congress.
23 VEGFR = Vascular endothelial growth factor receptor.
24 ASCO GI = ASCO (American Society of Clinical Oncology)
Gastrointestinal Cancers Symposium.
25 PMDA = Pharmaceuticals and Medical Devices Agency.
26 FGFR = Fibroblast growth factor receptor.
27 CSF-1R = Colony-stimulating factor 1 receptor.
28 ASCO = American Society of Clinical Oncology.
29 PI3K = Phosphoinositide 3-kinase delta.
30 Syk = Spleen tyrosine kinase.
31 AIHA = autoimmune hemolytic anemia.
32 Epizyme = Epizyme Inc.
33 IDH = Isocitrate dehydrogenase.
34 BTK = Bruton's tyrosine kinase.
35 MAPK pathway = RAS-RAF-MEK-ERK signaling cascade.
36 IND = Investigational New Drug (application).
37 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.
38 SHPL = Shanghai Hutchison Pharmaceuticals Limited.
39 HBYS = Hutchison Whampoa Guangzhou Baiyunshan Chinese
Medicine Company Limited.
40 ADS = American depositary share.
41 HKEX = The Main Board of The Stock Exchange of Hong Kong
Limited.
42 GAAP = Generally Accepted Accounting Principles.
43 SG&A Expenses = selling, general and administrative
expenses.
44 NHSA = China National Healthcare Security Administration.
45 NET = Neuroendocrine tumor.
46 CSCO = Chinese Society of Clinical Oncology.
47 PRCC = Papillary renal cell carcinoma.
48 EGFRm+ = Epidermal growth factor receptor mutated.
49 TKI = Tyrosine kinase inhibitor.
50 FISH5+ = MET amplification as detected by FISH with MET copy
number >= 5 and/or MET: CEP signal ratio >= 2.
51 IHC50+ = MET overexpression as detected by IHC with 3+ in
>= 50% tumor cells.
52 FISH10+ = MET amplification as detected by FISH with MET copy
number >= 10.
53 IHC90+ = MET overexpression as detected by IHC with 3+ in
>= 90% tumor cells.
54 ORR = Objective response rate.
55 RCC = Renal cell carcinoma.
56 HCC = Hepatocellular carcinoma.
57 TN = Triple negative.
58 HR+ = Hormone receptor positive.
59 Her2- = Human epidermal growth factor receptor 2
negative.
60 MSS = Microsatellite Stable.
61 DCR = Disease Control Rate.
62 NR = not reached.
63 NEC = Neuroendocrine carcinoma.
64 NEN = Neuroendocrine neoplasms.
65 ESMO = European Society for Medical Oncology.
66 IO = Immuno-oncology.
67 SCLC = Small cell lung cancer.
68 NHL = Non-Hodgkin's Lymphoma.
69 ASH = American Society of Hematology.
70 TAZVERIK(R) is a methyltransferase inhibitor indicated for
the treatment of: adults and pediatric patients aged 16 years and
older with metastatic or locally advanced epithelioid sarcoma not
eligible for complete resection; adult patients with relapsed or
refractory follicular lymphoma whose tumors are positive for an
EZH2 mutation as detected by an FDA-approved test and who have
received at least two prior systemic therapies; and adult patients
with relapsed or refractory follicular lymphoma who have no
satisfactory alternative treatment options. These indications are
approved under accelerated approval based on overall response rate
and duration of response. Post marketing studies are required to
confirm the anticipated clinical benefit and retain the labeled
Accelerated Approval indications. The most common ( >=20%)
adverse reactions in patients with epithelioid sarcoma are pain,
fatigue, nausea, decreased appetite, vomiting and constipation. The
most common (>=20%) adverse reactions in patients with
follicular lymphoma are fatigue, upper respiratory tract infection,
musculoskeletal pain, nausea and abdominal pain. View the U.S. Full
Prescribing Information at
https://www.epizyme.com/wp-content/uploads/2021/06/TAZVERIK.pdf.
71 CLL = Chronic lymphocytic leukemia.
72 SLL = Small lymphocytic lymphoma.
73 IHCC = Intrahepatic cholangiocarcinoma.
74 Hutchison Sinopharm = Hutchison Whampoa Sinopharm
Pharmaceuticals (Shanghai) Company Limited.
75 Luye = Luye Pharma Hong Kong Ltd.
76 SXBX = She Xiang Bao Xin.
77 HSBC = The Hongkong and Shanghai Banking Corporation
Limited.
78 HIBOR = Hong Kong Interbank Offered Rate.
79 Deutsche Bank AG = Deutsche Bank AG, Hong Kong Branch.
80 PBOC = People's Bank of China.
HUTCHMED (CHINA) LIMITED
CONDENSED Consolidated Balance Sheets
(in US$'000, except share data)
June 30, December 31,
Note 2022 2021
----- ------------ -------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents 3 467,502 377,542
Short-term investments 3 358,698 634,158
Accounts receivable 4 77,078 83,580
Other receivables, prepayments and deposits 5 73,034 81,041
Inventories 6 45,925 35,755
-------------
Total current assets 1,022,237 1,212,076
Property, plant and equipment 44,059 41,275
Investments in equity investees 7 82,999 76,479
Other non-current assets 45,038 42,831
------------ -------------
Total assets 1,194,333 1,372,661
============ =============
Liabilities and shareholders' equity
Current liabilities
Accounts payable 8 51,005 41,177
Other payables, accruals and advance receipts 9 233,606 210,839
Bank borrowings 10 - 26,905
Other current liabilities 37,245 32,737
Total current liabilities 321,856 311,658
Bank borrowings 10 418 -
Other non-current liabilities 20,210 21,489
------------ -------------
Total liabilities 342,484 333,147
Commitments and contingencies 11
Company's shareholders' equity
Ordinary shares; $0.10 par value; 1,500,000,000 shares authorized;
864,575,340 and 864,530,850
shares issued at June 30, 2022 and December 31, 2021 respectively 12 86,457 86,453
Additional paid-in capital 1,484,578 1,505,196
Accumulated losses (773,189) (610,328)
Accumulated other comprehensive income 1,882 5,572
------------ -------------
Total Company's shareholders' equity 799,728 986,893
Non-controlling interests 52,121 52,621
------------ -------------
Total shareholders' equity 851,849 1,039,514
------------ -------------
Total liabilities and shareholders' equity 1,194,333 1,372,661
============ =============
The accompanying notes are an integral part of these interim
unaudited condensed consolidated financial statements.
HUTCHMED (CHINA) LIMITED
CONDENSED Consolidated Statements of Operations
(UNAUDITED, in US$'000, except share and per share data)
Six Months Ended June 30,
----------------------------
Note 2022 2021
------ ------------- -------------
Revenues
Goods -third parties 136,932 129,148
* related parties 17(i) 1,638 2,311
Services -commercialization-third parties 21,594 15,030
* collaboration research and development
-third parties 12,335 4,795
* research and development
-related parties 17(i) 263 261
Other collaboration revenue
-royalties-third parties 14,331 5,817
* licensing-third parties 14,954 -
Total revenues 14 202,047 157,362
------------- -------------
Operating expenses
Costs of goods-third parties (115,567) (107,511)
Costs of goods-related parties (1,198) (1,673)
Costs of services-commercialization-third parties (20,553) (14,065)
Research and development expenses 16 (181,741) (123,050)
Selling expenses (22,221) (18,007)
Administrative expenses (57,521) (36,790)
------------- -------------
Total operating expenses (398,801) (301,096)
------------- -------------
(196,754) (143,734)
Other (expense)/income, net (3,882) 3,287
------------- -------------
Loss before income taxes and equity in earnings of equity investees (200,636) (140,447)
Income tax benefit/(expense) 18 4,215 (1,859)
Equity in earnings of equity investees, net of tax 7 33,549 42,966
------------- -------------
Net loss (162,872) (99,340)
Less: Net loss/(income) attributable to non-controlling interests 11 (3,057)
------------- -------------
Net loss attributable to the Company (162,861) (102,397)
============= =============
Losses per share attributable to the Company-basic and diluted (US$ per
share) 19 (0.19) (0.14)
Number of shares used in per share calculation-basic and diluted 19 849,283,553 729,239,181
The accompanying notes are an integral part of these interim
unaudited condensed consolidated financial statements.
HUTCHMED (CHINA) LIMITED
CONDENSED Consolidated Statements of Comprehensive Loss
(UNAUDITED, in US$'000)
Six Months Ended June 30,
-------------------------------
2022 2021
--------------- ------------
Net loss (162, 872 ) (99,340)
Other comprehensive (loss)/income
Foreign currency translation (loss)/gain (4,175) 1,084
--------------- ------------
Total comprehensive loss (167,047) (98,256)
Less: Comprehensive loss/(income) attributable to
non-controlling interests 496 (3,285)
--------------- ------------
Total comprehensive loss attributable to the Company (166,551) (101,541)
=============== ============
The accompanying notes are an integral part of these interim
unaudited condensed consolidated financial statements.
HUTCHMED (CHINA) LIMITED
CONDENSED Consolidated Statements of Changes in Shareholders'
Equity
(UNAUDITED, in US$'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 Income Equity Interests Equity
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
As at January 1,
2021 727,722 72,772 822,458 (415,591) 4,477 484,116 34,833 518,949
Net
(loss)/income - - - (102,397) - (102,397) 3,057 (99,340)
Issuance in
relation
to public
offering 104,000 10,400 524,267 - - 534,667 - 534,667
Issuances in
relation
to private
investment
in public
equity
("PIPE") 16,393 1,639 98,361 - - 100,000 - 100,000
Issuance costs - - (26,952) - - (26,952) - (26,952)
Issuances in
relation
to share option
exercises 400 40 202 - - 242 - 242
Share-based
compensation
Share options - - 7,913 - - 7,913 12 7,925
Long-term
incentive
plan ("LTIP") - - 13,108 - - 13,108 26 13,134
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
- - 21,021 - - 21,021 38 21,059
LTIP-treasury
shares
acquired and
held
by Trustee - - (26,758) - - (26,758) - (26,758)
Dividend
declared
to a
non-controlling
shareholder of
a
subsidiary - - - - - - (9,256) (9,256)
Transfer between
reserves - - 8 (8) - - - -
Foreign currency
translation
adjustments - - - - 856 856 228 1,084
As at June 30,
2021 848,515 84,851 1,412,607 (517,996) 5,333 984,795 28,900 1,013,695
========= ========= =========== ============ ============== ============== ============ ==============
As at January 1,
2022 864,531 86,453 1,505,196 (610,328) 5,572 986,893 52,621 1,039,514
Net loss - - - (162,861) - (162,861) (11) (162,872)
Issuances in
relation
to share option
exercises 44 4 30 - - 34 - 34
Share-based
compensation
Share options - - 3,732 - - 3,732 9 3,741
LTIP - - 23,704 - - 23,704 (13) 23,691
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
- - 27,436 - - 27,436 (4) 27,432
LTIP-treasury
shares
acquired and
held
by Trustee - - (48,084) - - (48,084) - (48,084)
Foreign currency
translation
adjustments - - - - (3,690) (3,690) (485) (4,175)
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
As at June 30,
2022 864,575 86,457 1,484,578 (773,189) 1,882 799,728 52,121 851,849
========= ========= =========== ============ ============== ============== ============ ==============
The accompanying notes are an integral part of these interim
unaudited condensed consolidated financial statements.
HUTCHMED (CHINA) LIMITED
CONDENSED Consolidated Statements of Cash Flows
(UNAUDITED, in US$'000)
Six Months Ended June 30,
----------------------------
Note 2022 2021
-------- ------------- -------------
Net cash used in operating activities 21 (89,859) (71,319)
------------- -------------
Investing activities
Purchases of property, plant and equipment (15,754) (8,914)
Deposits in short-term investments (578,602) (412,961)
Proceeds from short-term investments 854,062 249,500
Deposit received for divestment of an equity investee - 15,912
Purchase of leasehold land - (355)
Refund of leasehold land deposit - 930
Net cash generated from/(used in) investing activities 259,706 (155,888)
------------- -------------
Financing activities
Proceeds from issuances of ordinary shares 34 634,909
Purchases of treasury shares 13(ii) (48,084) (26,758)
Dividend paid to a non-controlling shareholder of a subsidiary 17(iii) - (9,256)
Repayment of loan to a non-controlling shareholder of a subsidiary - (579)
Payment of issuance costs (83) (19,985)
Proceeds from bank borrowing 10 418 -
Repayment of bank borrowing 10 (26,923) -
------------- -------------
Net cash (used in)/generated from financing activities (74,638) 578,331
------------- -------------
Net increase in cash and cash equivalents 95,209 351,124
Effect of exchange rate changes on cash and cash equivalents (5,249) 687
------------- -------------
89,960 351,811
Cash and cash equivalents
Cash and cash equivalents at beginning of period 377,542 235,630
------------- -------------
Cash and cash equivalents at end of period 467,502 587,441
============= =============
The accompanying notes are an integral part of these interim
unaudited condensed consolidated financial statements.
HUTCHMED (CHINA) LIMITED
Notes to the INTERIM UNAUDITED CONDENSED Consolidated Financial
Statements
1. Organization and Nature of Business
HUTCHMED (China) 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,
including Hong Kong. In addition, the Group has established
international operations in the United States of America (the
"U.S.") and Europe.
The Company's ordinary shares are listed on the Main Board of
The Stock Exchange of Hong Kong Limited ("HKEX") and the AIM market
of the London Stock Exchange, and its American depositary shares
("ADS") are traded on the Nasdaq Global Select Market.
Liquidity
As at June 30, 2022, the Group had accumulated losses of
US$773,189,000 primarily due to its spending in drug research and
development 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,
2022, the Group had cash and cash equivalents of US$467,502,000,
short-term investments of US$358,698,000 and unutilized bank
borrowing facilities of US$177,814,000. Short-term investments
comprised of bank deposits maturing over three months.
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).
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. 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.
Recent Accounting Pronouncements
Amendments that have been issued by the Financial Accounting
Standards Board or other standards-setting bodies that do not
require adoption until a future date are not expected to have a
material impact on the Group's condensed consolidated financial
statements.
3. Cash and Cash Equivalents and Short-term Investments
December
June 30, 31,
2022 2021
---------- ----------
(in US$'000)
Cash and Cash Equivalents
Cash at bank and on hand 130,689 104,620
Bank deposits maturing in three months
or less 336,813 272,922
---------- ----------
467,502 377,542
---------- ----------
Short-term Investments
Bank deposits maturing over three months
(note) 358,698 634,158
---------- ----------
826,200 1,011,700
========== ==========
Note: The maturities for short-term investments ranged from 91
to 97 days and from 91 to 180 days for the six months ended June
30, 2022 and the year ended December 31, 2021 respectively.
Certain cash and bank balances denominated in Renminbi ("RMB"),
U.S. dollar ("US$") and UK Pound Sterling ("GBP") were deposited
with banks in the PRC. The conversion of these balances into
foreign currencies is subject to the rules and regulations of
foreign exchange control promulgated by the PRC government.
Cash and cash equivalents and short-term investments were
denominated in the following currencies:
December
June 30, 31,
2022 2021
---------- ----------
(in US$'000)
US$ 712,275 895,935
RMB 86,298 53,455
Hong Kong dollar ("HK$") 26,428 60,535
GBP 1,041 1,090
Euro 158 685
---------- ----------
826,200 1,011,700
========== ==========
4. Accounts Receivable
Accounts receivable from contracts with customers consisted of
the following:
June 30, December 31,
2022 2021
---------- --------------
(in US$'000)
Accounts receivable-third parties 75,870 82,434
Accounts receivable-related parties (Note
17(ii)) 1,329 1,166
Allowance for credit losses (121) (20)
---------- --------------
Accounts receivable, net 77,078 83,580
========== ==============
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.
An aging analysis for accounts receivable-third parties based on
the relevant invoice dates is as follows:
June 30, December 31,
2022 2021
---------- --------------
(in US$'000)
Not later than 3 months 64,022 78,288
Between 3 months to 6 months 9,259 2,867
Between 6 months to 1 year 1,440 78
Later than 1 year 1,149 1,201
---------- --------------
Accounts receivable-third parties 75,870 82,434
========== ==============
Movements on the allowance for credit losses:
2022 2021
------- ------
(in US$'000)
As at January 1 20 95
Increase in allowance for credit losses 119 21
Decrease in allowance due to subsequent
collection (14) (92)
Exchange difference (4) 1
As at June 30 121 25
======= ======
5. Other Receivables, Prepayments and Deposits
Other receivables, prepayments and deposits consisted of the
following:
June 30, December 31,
2022 2021
---------- --------------
(in US$'000)
Dividend receivables 46,387 46,387
Prepayments 19,889 14,128
Value-added tax receivables 2,251 16,616
Deposits 1,699 1,255
Amounts due from related parties (Note
17(ii)) 998 1,149
Others 1,810 1,506
---------- --------------
73,034 81,041
========== ==============
No allowance for credit losses has been made for other
receivables, prepayments and deposits for the six months ended June
30, 2022 and year ended December 31, 2021.
6. Inventories
Inventories, net of provision for excess and obsolete
inventories, consisted of the following:
June 30, December 31,
2022 2021
---------- --------------
(in US$'000)
Raw materials 21,611 15,837
Finished goods 24,314 19,918
---------- --------------
45,925 35,755
========== ==============
7. Investments in Equity Investees
Investments in equity investees consisted of the following:
December
June 30, 31,
2022 2021
---------- ----------
(in US$'000)
Shanghai Hutchison Pharmaceuticals Limited
("SHPL") 82,538 75,999
Other 461 480
---------- ----------
82,999 76,479
========== ==========
The equity investees are private companies and there are no
quoted market prices available for their shares.
Summarized financial information for the significant equity
investees SHPL and Hutchison Whampoa Guangzhou Baiyunshan Chinese
Medicine Company Limited ("HBYS") (divested on September 28, 2021),
both under Other Ventures segment, is as follows:
(i) Summarized balance sheets
SHPL
---------------------------
December
June 30, 31,
2022 2021
---------- ----------
(in US$'000)
Current assets 225,402 190,260
Non-current assets 84,971 91,605
Current liabilities (145,272) (128,993)
Non-current liabilities (6,026) (7,131)
---------- ----------
Net assets 159,075 145,741
========== ==========
(ii) Summarized statements of operations
SHPL HBYS
----------------- -------------------
Six Months Ended June 30,
--------------------------------------
2022 (note
2022 2021 (a)) 2021
-------- ------- ---------- -------
(in US$'000)
Revenue 212,413 180,413 - 153,689
======== ======= ========== =======
Gross profit 165,208 138,979 - 82,251
======== ======= ========== =======
Interest income 623 751 - 66
======== ======= ========== =======
Profit before taxation 78,472 67,108 - 33,397
Income tax expense
(note (b)) (11,209) (9,764) - (4,807)
-------- ------- ---------- -------
Net income (note (c)) 67,263 57,344 - 28,590
Non-controlling interests - - - (14)
-------- ------- ---------- -------
Net income attributable
to the shareholders
of equity investee 67,263 57,344 - 28,576
======== ======= ========== =======
Notes:
(a) On September 28, 2021, the Group completed the divestment of HBYS.
(b) The main entity within the SHPL group has been granted the
High and New Technology Enterprise status (the latest renewal of
this status covers the years from 2020 to 2022). The entity was
eligible to use a preferential income tax rate of 15% for the six
months ended June 30, 2022 and 2021 on this basis.
(c) Net income is before elimination of unrealized profits on
sales to the Group. The amount eliminated was approximately $80,000
and $34,000 for the six months ended June 30, 2022 and 2021
respectively.
For the six months ended June 30, 2022 and 2021, other equity
investee had net loss of approximately US$5,000 and net income of
approximately US$79,000 respectively.
(iii) Reconciliation of summarized financial information
Reconciliation of the summarized financial information presented
to the carrying amount of investments in equity investees is as
follows:
SHPL HBYS
------------------ --------------
2022 2021 2022 2021
-------- -------- ---- --------
(in US$'000)
Opening net assets after non-controlling interests as at January 1 145,741 152,714 - 119,424
Net income attributable to the shareholders of equity investee 67,263 57,344 - 28,576
Dividends declared (45,385) (84,103) - (46,538)
Other comprehensive (loss)/income (8,544) 820 - 1,388
-------- -------- ---- --------
Closing net assets after non-controlling interests as at June 30 159,075 126,775 - 102,850
======== ======== ==== ========
Group's share of net assets 79,538 63,387 - 51,425
Goodwill 3,000 3,078 - -
-------- -------- ---- --------
Carrying amount of investments as at June 30 82,538 66,465 - 51,425
======== ======== ==== ========
SHPL had the following capital commitments:
June 30,
2022
-------------
(in US$'000)
Property, plant and equipment
Contracted but not provided for 2,617
=============
8. Accounts Payable
June 30, December 31,
2022 2021
---------- --------------
(in US$'000)
Accounts payable-third parties 48,203 39,115
Accounts payable-non-controlling shareholders of subsidiaries (Note 17(iv)) 2,802 2,062
---------- --------------
51,005 41,177
========== ==============
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.
An aging analysis based on the relevant invoice dates is as
follows:
June 30, December 31,
2022 2021
---------- --------------
(in US$'000)
Not later than 3 months 38,404 35,615
Between 3 months to 6 months 10,380 3,705
Between 6 months to 1 year 834 588
Later than 1 year 1,387 1,269
---------- --------------
51,005 41,177
========== ==============
9. Other Payables, Accruals and Advance Receipts
Other payables, accruals and advance receipts consisted of the
following:
December
June 30, 31,
2022 2021
---------- ----------
(in US$'000)
Accrued research and development expenses 149,921 116,134
Accrued salaries and benefits 32,445 41,786
Accrued administrative and other general
expenses 17,450 15,836
Accrued selling and marketing expenses 11,370 8,412
Accrued capital expenditures 7,095 11,343
Deposits 2,286 2,111
Amounts due to related parties (Note 17(ii)) 2,062 1,915
Deferred government grants 311 314
Others 10,666 12,988
---------- ----------
233,606 210,839
========== ==========
10. Bank Borrowings
Bank borrowings consisted of the following:
December
June 30, 31,
2022 2021
---------- ----------
(in US$'000)
Current - 26,905
Non-current 418 -
---------- ----------
418 26,905
========== ==========
The weighted average interest rate for outstanding bank
borrowings for the six months ended June 30, 2022 and year ended
December 31, 2021 was 1.15% per annum and 1.08% per annum
respectively. The carrying amounts of the Group's outstanding bank
borrowings as at June 30, 2022 and December 31, 2021 were
denominated in RMB and HK$ respectively.
(i) 3--year term loan and revolving loan facilities and 1-year revolving loan facility
In May 2019, the Group through its subsidiary, entered into a
facility agreement with a bank for the provision of unsecured
credit facilities in the aggregate amount of HK$400,000,000
(US$51,282,000). The 3-year credit facilities included (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 the Hong Kong Interbank Offered Rate ("HIBOR")
plus 0.85% per annum, and an upfront fee of HK$819,000 (US$105,000)
on the term loan. These credit facilities were guaranteed by the
Company. The term loan was drawn in October 2019 and was repaid in
May 2022. The revolving loan facility also expired in May 2022.
In May 2022, the Group through its subsidiary, entered into a
1-year revolving loan facility with the bank in the amount of
HK$390,000,000 (US$50,000,000) with an interest rate at HIBOR plus
0.5% per annum. This credit facility is guaranteed by the Company.
As at June 30, 2022, no amount has been drawn from the revolving
loan facility.
(ii) 2--year revolving loan facility
In August 2020, the Group through its subsidiary, entered into a
2-year revolving loan facility with a bank in the amount of
HK$117,000,000 (US$15,000,000) with an interest rate at HIBOR plus
4.5% per annum. This credit facility is guaranteed by the Company.
As at June 30, 2022 and December 31, 2021, no amount has been drawn
from the revolving loan facility.
(iii) 10--year fixed asset loan facility
In October 2021, a subsidiary entered into a 10-year fixed asset
loan facility agreement with a bank for the provision of a secured
credit facility in the amount of RMB754,880,000 (US$113,232,000)
with an annual interest rate at the 5-year China Loan Prime Rate
less 0.8% (which was supplemented in June 2022) and interest
payments commencing upon completion of the underlying construction
in progress. This credit facility is guaranteed by the immediate
holding company of the subsidiary and secured by the underlying
leasehold land and buildings. As at June 30, 2022 and December 31,
2021, RMB2,790,000 (US$418,000) and nil had been drawn from the
fixed asset loan facility.
The Group's bank borrowings are repayable as from the dates
indicated as follows:
December
June 30, 31,
2022 2021
---------- ----------
(in US$'000)
Not later than 1 year - 26,923
Between 1 to 3 years - -
Between 3 to 4 years 17 -
Between 4 to 5 years 22 -
Later than 5 years 379 -
---------- ----------
418 26,923
========== ==========
As at June 30, 2022 and December 31, 2021, the Group had
unutilized bank borrowing facilities of US$177,814,000 and
US$157,430,000 respectively.
11. Commitments and Contingencies
The Group had the following capital commitments:
June 30,
2022
-------------
(in US$'000)
Property, plant and equipment
Contracted but not provided for 50,336
=============
The Group does not have any other significant commitments or
contingencies.
12. Ordinary Shares
As at June 30, 2022, the Company is authorized to issue
1,500,000,000 ordinary shares.
On April 14, 2021, the Company issued 16,393,445 ordinary shares
to a third party for gross proceeds of US$100.0 million through a
PIPE. Issuance costs totaled US$0.1 million.
On June 30, 2021 and July 15, 2021, the Company issued an
aggregate of 119,600,000 ordinary shares in a public offering on
the HKEX with over-allotment option exercised in full for aggregate
gross proceeds of US$614.9 million. Issuance costs totaled US$29.7
million.
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 (as amended on April 27, 2020) (the "HUTCHMED Share
Option Scheme"). Pursuant to the HUTCHMED 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.
As at June 30, 2022, the aggregate number of shares issuable
under the HUTCHMED Share Option Scheme was 48,811,458 ordinary
shares and the aggregate number of shares issuable under the prior
share option scheme which expired in 2016 was 660,570 ordinary
shares. The Company will issue new shares to satisfy share option
exercises. Additionally, the number of shares authorized but
unissued was 635,424,660 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 contractual life value
options in US$ per share (years) (in US$'000)
---------------------- ------------------ --------------------- ---------------------
Outstanding at
January 1, 2021 29,160,990 4.49 7.21 53,990
Granted 10,174,840 5.96
Exercised (815,190) 3.01
Cancelled (1,287,650) 5.50
Expired (42,400) 5.52
----------------------
Outstanding at
December 31, 2021 37,190,590 4.88 7.04 82,377
======================
Granted (note) 5,930,820 2.15
Exercised (44,490) 0.75
Cancelled (3,037,980) 5.12
Expired (998,145) 5.71
----------------------
Outstanding at June
30, 2022 39,040,795 4.44 6.93 3,598
======================
Vested and
exercisable at
December 31, 2021 16,077,770 4.24 4.91 46,491
Vested and
exercisable at
June 30, 2022 20,171,800 4.47 5.13 1,356
Note: Includes 861,220 share options (represented by 172,244
ADS) granted to an executive director in May 2022 where the number
of share options exercisable is subject to a performance target
based on a market condition covering the 3-year period from 2022 to
2024 which has been reflected in estimating the grant date fair
value. The grant date fair value of such awards is US$0.24 per
share using the Polynomial model. Vesting of such award will occur
in March 2025.
In estimating the fair value of share options granted, the
following assumptions were used in the Polynomial model for awards
granted in the periods indicated:
Six Months Ended June 30, 2022 Year Ended December 31, 2021
------------------------------- -----------------------------
Weighted average grant date fair value of share
options (in US$ per share) 0.76 2.24
Significant inputs into the valuation model
(weighted average):
Exercise price (in US$ per share) 2.15 5.96
Share price at effective date of grant (in US$
per share) 2.10 5.91
Expected volatility (note (a)) 46.1% 41.1%
Risk-free interest rate (note (b)) 2.85% 1.62%
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 reference the U.S. Treasury
yield curves because the Company's ADS are currently listed on the
NASDAQ and denominated in US$.
(c) The Company has not declared or paid any dividends and does
not currently expect to do so prior to the exercise of the granted
share options, and therefore uses an expected dividend yield of
zero in the Polynomial model.
The Company will issue new shares to satisfy share option
exercises. The following table summarizes the Company's share
option exercises:
Six Months Ended June 30,
----------------------------
2022 2021
------------ --------------
(in US$'000)
Cash received from share option exercises 34 242
Total intrinsic value of share option exercises 57 2,012
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,
----------------------------
2022 2021
------------- -------------
(in US$'000)
Research and development expenses 2,795 4,101
Selling and administrative expenses 871 3,749
Cost of revenues 75 75
------------- -------------
3,741 7,925
============= =============
As at June 30, 2022, the total unrecognized compensation cost
was US$17,673,000, and will be recognized on a graded vesting
approach over the weighted average remaining service period of 2.94
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, financings, 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 in 2021 and 2022 under the LTIP are as
follows:
Maximum cash amount Covered Performance target
Grant date (in US$ millions) financial years determination date
------------------ -------------------- ---------------- -------------------
March 26, 2021 57.3 2021 note (a)
September 1, 2021 7.3 2021 note (a)
September 1, 2021 0.5 note (b) note (b)
October 20, 2021 1.7 note (b) note (b)
December 14, 2021 0.1 note (b) note (b)
December 14, 2021 0.1 note (c) note (c)
May 23, 2022 60.4 2022 note (a)
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 Company using funds provided by the Company. 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
treasury Cost
shares (in US$'000)
------------ --------------
As at January 1, 2021 3,510,675 14,155
Purchased 4,907,045 27,309
Vested (278,545) (1,450)
------------ --------------
As at December 31, 2021 8,139,175 40,014
Purchased 14,028,465 48,084
Vested (2,466,705) (11,650)
------------ --------------
As at June 30, 2022 19,700,935 76,448
============ ==============
For the six months ended June 30, 2022 and 2021, US$8,397,000
and US$2,532,000 of the LTIP awards were forfeited respectively
based on the determined or estimated monetary amount as at the
forfeiture date.
The following table presents the share-based compensation
expenses recognized under the LTIP awards:
Six Months Ended June 30,
----------------------------
2022 2021
------------- -------------
(in US$'000)
Research and development expenses 7,196 6,725
Selling and administrative expenses 4,228 3,542
Cost of revenues 213 165
------------- -------------
11,637 10,432
============= =============
Recorded with a corresponding credit to:
Liability 3,297 5,814
Additional paid-in capital 8,340 4,618
------------- -------------
11,637 10,432
============= =============
For the six months ended June 30, 2022 and 2021, US$15,351,000
and US$8,516,000 were reclassified from liability to additional
paid-in capital respectively upon LTIP awards reaching the
determination date. As at June 30, 2022 and December 31, 2021,
US$782,000 and US$12,836,000 were recorded as liabilities
respectively for LTIP awards prior to the determination date.
As at June 30, 2022, the total unrecognized compensation cost
was approximately US$55,052,000, which considers expected
performance targets and the amounts expected to vest, and will be
recognized over the requisite periods.
14. Revenues
The following table presents disaggregated revenue, with sales
of goods recognized at a point-in-time and provision of services
recognized over time:
Six Months Ended June 30, 2022
---------------------------------------
Oncology/
Immunology Other Ventures Total
------------ --------------- --------
(in US$'000)
Goods-Marketed Products 27,592 - 27,592
Goods-Distribution and Other
Products - 110,978 110,978
Services-Commercialization-Marketed
Products 21,594 - 21,594
* Collaboration Research and Development 12,335 - 12,335
* Research and Development 263 - 263
Royalties 14,331 - 14,331
Licensing 14,954 - 14,954
------------ --------------- --------
91,069 110,978 202,047
============ =============== ========
Third parties 90,806 109,340 200,146
Related parties (Note 17(i)) 263 1,638 1,901
------------ --------------- --------
91,069 110,978 202,047
============ =============== ========
Six Months Ended June 30, 2021
---------------------------------------
Oncology/
Immunology Other Ventures Total
------------ --------------- --------
(in US$'000)
Goods-Marketed Products 16,948 - 16,948
Goods-Distribution and Other
Products - 114,511 114,511
Services-Commercialization-Marketed
Products 15,030 - 15,030
* Collaboration Research and Development 4,795 - 4,795
* Research and Development 261 - 261
Royalties 5,817 - 5,817
------------ --------------- --------
42,851 114,511 157,362
============ =============== ========
Third parties 42,590 112,200 154,790
Related parties (Note 17(i)) 261 2,311 2,572
------------ --------------- --------
42,851 114,511 157,362
============ =============== ========
15. In-Licensing Arrangement
On August 7, 2021, the Group and Epizyme, Inc. ("Epizyme")
entered into a license agreement (the "In-license Agreement") for
tazemetostat, a novel inhibitor of EZH2 that is approved by the
U.S. Food and Drug Administration for the treatment of certain
patients with epithelioid sarcoma and follicular lymphoma. The
Group will be responsible for the development and commercialization
of tazemetostat in the PRC, Hong Kong, Macau and Taiwan (the
"Territory") and also holds rights to manufacture tazemetostat for
the Territory. The Group also received a 4-year warrant,
exercisable up to August 7, 2025, to purchase up to 5,653,000
shares of Epizyme common stock for an exercise price of US$11.50
per share ("Warrant Exercise Price").
Under the terms of the In-license Agreement and warrant, the
Group paid Epizyme a US$25 million upfront payment and is obligated
for a series of success-based payments up to US$110 million in
development and regulatory milestones and up to US$175 million in
sales milestones. Success-based payments are recognized when the
related milestone is achieved. After tazemetostat is commercialized
in the Territory, the Group will incur tiered royalties based on
net sales. As at June 30, 2022, no amounts of development and
regulatory milestones, sales milestones or royalties had been
paid.
The US$25 million upfront payment was first allocated to the
warrant for its initial fair value of US$15 million, and the
remainder was allocated to the rights to tazemetostat which were
expensed to research and development expense as in-process research
and development.
The warrant was recorded as a financial asset at fair value with
changes to fair value recognized to the condensed consolidated
statements of operations. In June 2022, Epizyme announced it had
entered a definitive merger agreement under which a third party
would acquire all its outstanding shares for an amount per share
less than the Warrant Exercise Price. Consequently, as at June 30,
2022, there was no fair value attributed to the warrant. For the
six months ended June 30, 2022, a fair value loss of US$2.5 million
was recognized to other expenses in the condensed consolidated
statements of operations.
16. Research and Development Expenses
Research and development expenses are summarized as follows:
Six Months Ended June 30,
----------------------------
2022 2021
------------- -------------
(in US$'000)
Clinical trial related costs 122,513 72,721
Personnel compensation and related costs 52,738 41,056
Other research and development expenses 6,490 9,273
------------- -------------
181,741 123,050
============= =============
The Group has entered into multiple collaborative arrangements
under ASC 808 to evaluate the combination of the Group's drug
compounds with the collaboration partners' drug compounds. For the
six months ended June 30, 2022 and 2021, the Group has incurred
research and development expenses of US$6,818,000 and US$6,146,000
respectively, related to such collaborative arrangements.
17. Significant Transactions with Related Parties and
Non-Controlling Shareholders of Subsidiaries
The Group has the following significant transactions with
related parties and non-controlling shareholders of subsidiaries,
which were carried out in the normal course of business at terms
determined and agreed by the relevant parties:
(i) Transactions with related parties:
Six Months Ended June 30,
2022 2021
------------- ------------
(in US$'000)
Sales to:
Indirect subsidiaries of CK Hutchison Holdings Limited ("CK Hutchison") 1,638 2,311
============= ============
Revenue from research and development services from:
An equity investee 263 261
============= ============
Purchases from:
Equity investees 2,225 1,954
============= ============
Rendering of marketing services from:
Indirect subsidiaries of CK Hutchison 77 186
An equity investee 62 -
------------- ------------
139 186
============= ------------
Rendering of management services from:
An indirect subsidiary of CK Hutchison 490 485
============= ============
(ii) Balances with related parties included in:
June 30, December 31,
2022 2021
--------- -------------
(in US$'000)
Accounts receivable-related parties
Indirect subsidiaries of CK Hutchison (note (a)) 1,074 1,166
An equity investee (note (a)) 255 -
--------- -------------
1,329 1,166
Other receivables, prepayments and deposits
Equity investees (note (a)) 998 1,149
========= =============
Other payables, accruals and advance receipts
Indirect subsidiaries of CK Hutchison (note (b) and (d)) 2,002 1,915
An equity investee (note (a)) 60 -
--------- -------------
2,062 1,915
========= =============
Other non-current liabilities
An equity investee (note (c)) 591 736
An indirect subsidiary of CK Hutchison (note (d)) 10,013 9,766
--------- -------------
10,604 10,502
========= =============
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) Amounts due to indirect subsidiaries of CK Hutchison are
unsecured, repayable on demand and interest-bearing if not settled
within one month.
(c) Other deferred income represents amounts recognized from
granting of promotion and marketing rights.
(d) As at June 30, 2022 and December 31, 2021, branding
liability payable of approximately US$1,538,000 was included in
amounts due to related parties under other payables, accruals and
advance receipts. As at June 30, 2022 and December 31, 2021,
branding liability payable of approximately US$10,013,000 and
US$9,766,000 were included in other non-current liabilities.
(iii) Transactions with non--controlling shareholders of
subsidiaries:
Six Months Ended June 30,
---------------------------
2022 2021
------------- ------------
(in US$'000)
Sales 17,705 20,144
============= ============
Purchases 3,442 7,211
============= ============
Dividend paid - 9,256
============= ============
(iv) Balances with non--controlling shareholders of subsidiaries
included in:
December
June 30, 31,
2022 2021
--------- ---------
(in US$'000)
Accounts receivable 5,761 8,436
Accounts payable 2,802 2,062
========= =========
18. Income Tax Benefit/(Expense)
Six Months Ended June 30,
----------------------------
2022 2021
--------------- -----------
(in US$'000)
Current tax
HK 80 226
PRC 1,008 2,184
U.S. and others 1,694 231
--------------- -----------
Total current tax 2,782 2,641
Deferred income tax benefits (6,997) (782)
--------------- -----------
Income tax (benefit)/expense (4,215) 1,859
=============== ===========
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,
2022 2021
------------- -------------
(in US$'000)
Loss before income taxes and equity in earnings of equity investees (200,636) (140,447)
============= =============
Tax calculated at the statutory tax rate of the Company (33,105) (23,174)
Tax effects of:
Different tax rates applicable in different jurisdictions 1,771 3,585
Tax valuation allowance 41,374 28,971
Preferential tax rate difference (67) (253)
Preferential tax deduction and credits (18,169) (11,288)
Expenses not deductible for tax purposes 3,070 3,034
Utilization of previously unrecognized tax losses (1) (864)
Withholding tax on undistributed earnings of PRC entities 1,681 2,360
Income not subject to tax (611) (436)
Others (158) (76)
Income tax (benefit)/expense (4,215) 1,859
============= =============
19. Losses Per Share
(i) Basic losses per share
Basic losses per share is calculated by dividing the net loss
attributable to the Company by the weighted average number of
outstanding ordinary shares in issue during the period. Treasury
shares held by the Trustee are excluded from the weighted average
number of outstanding ordinary shares in issue for purposes of
calculating basic losses per share.
Six Months Ended June 30,
---------------------------
2022 2021
------------- ------------
Weighted average number of outstanding ordinary shares in issue 849,283,553 729,239,181
============= ============
Net loss attributable to the Company (US$'000) (162,861) (102,397)
Losses per share attributable to the Company (US$ per share) (0.19) (0.14)
(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 options and LTIP awards issued by the Company using the
treasury stock method.
For the six months ended June 30, 2022 and 2021, 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,
2022 and 2021.
20. Segment Reporting
The Group's operating segments are as follows:
(i) Oncology/Immunology: focuses on discovering, developing, and
commercializing targeted therapies and immunotherapies for the
treatment of cancer and immunological diseases. Oncology/Immunology
is further segregated into two core business areas:
(a) R&D: comprises research and development activities
covering drug discovery, development, manufacturing and regulatory
functions as well as administrative activities to support research
and development operations; and
(b) Marketed Products: comprises the sales, marketing,
manufacture and distribution of drug developed from research and
development activities.
(ii) Other Ventures: comprises other commercial businesses which
include the sales, marketing, manufacture and distribution of other
prescription drugs and consumer health products.
The performance of the reportable segments is assessed based on
segment operating (loss)/profit.
The segment information is as follows:
Six Months Ended June 30, 2022
Oncology/ Immunology
Marketed Other
R&D Products Ventures
U.S.
and
PRC Others Subtotal PRC Subtotal PRC Unallocated Total
(in US$'000)
Revenue from
external
customers 27,552 - 27,552 63,517 91,069 110,978 - 202,047
Interest income 376 - 376 - 376 92 1,514 1,982
Equity in earnings
of equity
investees,
net of tax (2) - (2) - (2) 33,551 - 33,549
Segment operating
(loss)/profit (92,529) (103,305) (195,834) 9,875 (185,959) 36,142 (16,866) (166,683)
Interest expense - - - - - - (404) (404)
Income tax
(expense)/benefit (255) 6,912 6,657 (436) 6,221 (317) (1,689) 4,215
Depreciation/
amortization (3,827) (237) (4,064) - (4,064) (154) (158) (4,376)
Additions to
non-current
assets (other
than financial
instruments
and deferred
tax assets) 8,947 227 9,174 - 9,174 160 13 9,347
June 30, 2022
Oncology/ Immunology
Marketed Other
R&D Products Ventures
U.S.
and
PRC Others Subtotal PRC Subtotal PRC Unallocated Total
(in US$'000)
Total assets 179,102 27,371 206,473 52,424 258,897 221,742 713,694 1,194,333
Property,
plant and
equipment 41,096 1,852 42,948 - 42,948 639 472 44,059
Right-of-use
assets 3,309 3,470 6,779 - 6,779 1,488 1,196 9,463
Leasehold
land 12,494 - 12,494 - 12,494 - - 12,494
Goodwill - - - - - 3,259 - 3,259
Other intangible
asset - - - - - 122 - 122
Investments
in equity
investees 461 - 461 - 461 82,538 - 82,999
Six Months Ended June 30, 2021
Oncology/ Immunology
Marketed Other
R&D Products Ventures
U.S.
and
PRC Others Subtotal PRC Subtotal PRC Unallocated Total
(in US$'000)
Revenue from
external
customers 5,056 - 5,056 37,795 42,851 114,511 - 157,362
Interest income 523 2 525 - 525 145 361 1,031
Equity in earnings
of equity
investees,
net of tax 40 - 40 - 40 42,926 - 42,966
Segment operating
(loss)/profit (69,961) (62,341) (132,302) 4,707 (127,595) 44,663 (14,307) (97,239)
Interest expense - - - - - - (242) (242)
Income tax
(expense)/benefit (109) 1,492 1,383 (571) 812 (265) (2,406) (1,859)
Depreciation/
amortization (3,198) (67) (3,265) - (3,265) (160) (97) (3,522)
Additions to
non-current
assets (other
than financial
instruments
and deferred
tax assets) 10,183 466 10,649 - 10,649 632 66 11,347
December 31, 2021
Oncology/ Immunology
Marketed Other
R&D Products Ventures
U.S.
and
PRC Others Subtotal PRC Subtotal PRC Unallocated Total
(in US$'000)
Total assets 166,802 19,870 186,672 35,978 222,650 225,898 924,113 1,372,661
Property,
plant and
equipment 38,049 1,862 39,911 - 39,911 746 618 41,275
Right-of-use
assets 4,798 3,768 8,566 - 8,566 1,827 1,486 11,879
Leasehold
land 13,169 - 13,169 - 13,169 - - 13,169
Goodwill - - - - - 3,380 - 3,380
Other intangible
asset - - - - - 163 - 163
Investments
in equity
investees 480 - 480 - 480 75,999 - 76,479
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
between PRC and U.S. and others under Oncology/Immunology segment
was US$68,015,000 and US$14,837,000 for the six months ended June
30, 2022 and 2021 respectively.
There were two customers which accounted for over 10% of the
Group's revenue for the six months ended June 30, 2022: Customer A
of US$39,034,000 and Customer B of US$36,282,000. There were two
customers which accounted for over 10% of the Group's revenue for
the six months ended June 30, 2021: Customer A of US$30,981,000 and
Customer C of US$20,144,000. Customers A and B are included in
Oncology/Immunology and Customer C is primarily included in Other
Ventures.
Unallocated expenses mainly represent corporate expenses which
include corporate employee benefit expenses and the relevant
share-based compensation expenses. Unallocated assets mainly
comprise cash and cash equivalents and short-term investments.
A reconciliation of segment operating loss to net loss
attributable to the Company is as follows:
Six Months Ended June 30,
---------------------------
2022 2021
------------
(in US$'000)
Segment operating loss (166,683) (97,239)
Interest expense (404) (242)
Income tax benefit/(expense) 4,215 (1,859)
Net loss/(income) attributable to non-controlling interests 11 (3,057)
Net loss attributable to the Company (162,861) (102,397)
21. 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,
2022 2021
(in US$'000)
Net loss (162,872) (99,340)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 4,376 3,522
Share-based compensation expense-share options 3,741 7,925
Share-based compensation expense-LTIP 11,637 10,432
Equity in earnings of equity investees, net of tax (33,549) (42,966)
Dividend received from an equity investee 22,692 42,051
Changes in right-of-use assets 2,221 (1,468)
Fair value loss on warrant 2,452 -
Other adjustments 1,665 (2,464)
Changes in working capital
Accounts receivable 6,397 (10,937)
Other receivables, prepayments and deposits 10,735 (5,368)
Inventories (10,362) (5,669)
Accounts payable 9,828 (3,099)
Other payables, accruals and advance receipts 39,235 33,863
Others 1,945 2,199
Total changes in working capital 57,778 10,989
Net cash used in operating activities (89,859) (71,319)
22. 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 seek damages. On October 21, 2021
(and a decision on costs and interest in December 2021), the Group
was awarded an amount of RMB253.2 million (equivalent to US$38.0
million) with interest of 5.5% per annum from the date of the award
until payment and recovery of costs of approximately US$2.2 million
(collectively the "Award"). On June 27, 2022, Luye provided the
Group a bank guarantee of up to RMB286.0 million to cover the Award
amounts, pending the outcome of an application by Luye to the High
Court of Hong Kong to set aside the Award. On July 26, 2022, Luye's
application to set aside the Award was dismissed by the High Court
with costs awarded in favor of the Group and if Luye does not
appeal the dismissal, the Group will be seeking to enforce the
Award by drawing down on the bank guarantee. No Award amounts have
been received as at the issuance date of these condensed
consolidated financial statements. Hence no Award amounts have been
recognized and no adjustment has been made to Seroquel-related
balances as at June 30, 2022. Such Seroquel-related balances
include accounts receivable, long-term prepayment, accounts payable
and other payables of US$1.1 million, US$0.6 million, US$0.9
million and US$1.2 million respectively.
23. Subsequent Events
The Group evaluated subsequent events through August 1, 2022,
which is the date when the interim unaudited condensed consolidated
financial statements were issued.
24. Reconciliation between U.S. GAAP and International Financial
Reporting Standards
These interim unaudited condensed consolidated financial
statements are prepared in accordance with U.S. GAAP, which differ
in certain respects from International Financial Reporting
Standards ("IFRS"). The effects of material differences prepared
under U.S. GAAP and IFRS are as follows:
(i) Reconciliation of condensed consolidated statements of operations
Six Months Ended June 30, 2022
IFRS adjustments
Amounts as Lease Divestment of an
reported under amortization Issuance costs equity investee Amounts under
U.S. GAAP (note (a)) (note (b)) (note (c)) IFRS
(in US$'000)
Costs of
goods-third
parties (115,567) 22 - - (115,545)
Research and
development
expenses (181,741) 14 - - (181,727)
Selling expenses (22,221) 25 - - (22,196)
Administrative
expenses (57,521) 93 - - (57,428)
Total operating
expenses (398,801) 154 - - (398,647)
Other
(expense)/income,
net (3,882) (161) - - (4,043)
Loss before income
taxes and equity
in earnings of
equity investees (200,636) (7) - - (200,643)
Income tax
benefit/(expense) 4,215 - - - 4,215
Equity in earnings
of equity
investees, net of
tax 33,549 (9) - - 33,540
Net loss (162,872) (16) - - (162,888)
Less: Net
loss/(income)
attributable to
non-controlling
interests 11 (1) - - 10
Net loss
attributable to
the Company (162,861) (17) - - (162,878)
Six Months Ended June 30, 2021
IFRS adjustments
Amounts as Lease Divestment of an
reported under amortization Issuance costs equity investee Amounts under
U.S. GAAP (note (a)) (note (b)) (note (c)) IFRS
(in US$'000)
Costs of
goods-third
parties (107,511) 19 - - (107,492)
Research and
development
expenses (123,050) 10 - - (123,040)
Selling expenses (18,007) 27 - - (17,980)
Administrative
expenses (36,790) 73 724 - (35,993)
Total operating
expenses (301,096) 129 724 - (300,243)
Other
(expense)/income,
net 3,287 (196) - - 3,091
Loss before income
taxes and equity
in earnings of
equity investees (140,447) (67) 724 - (139,790)
Income tax
benefit/(expense) (1,859) - - 727 (1,132)
Equity in earnings
of equity
investees, net of
tax 42,966 (3) - (10,003) 32,960
Net loss (99,340) (70) 724 (9,276) (107,962)
Less: Net
loss/(income)
attributable to
non-controlling
interests (3,057) 5 - 1,855 (1,197)
Net loss
attributable to
the Company (102,397) (65) 724 (7,421) (109,159)
(ii) Reconciliation of condensed consolidated balance sheets
June 30, 2022
IFRS adjustments
Amounts as LTIP
reported Lease Issuance Capitalization classification
under U.S. amortization costs of rights (note (e)) Amounts under
GAAP (note (a)) (note (b)) (note (d)) IFRS
(in US$'000)
Investments in
equity
investees 82,999 (32) - - - 82,967
Other
non-current
assets 45,038 (257) - 10,833 - 55,614
Total assets 1,194,333 (289) - 10,833 - 1,204,877
Other payables,
accruals and
advance
receipts 233,606 - - - (782) 232,824
Total current
liabilities 321,856 - - - (782) 321,074
Total
liabilities 342,484 - - - (782) 341,702
Additional
paid-in capital 1,484,578 - (697) - 782 1,484,663
Accumulated
losses (773,189) (250) 697 11,084 - (761,658)
Accumulated
other
comprehensive
income 1,882 (1) - (278) - 1,603
Total Company's
shareholders'
equity 799,728 (251) - 10,806 782 811,065
Non-controlling
interests 52,121 (38) - 27 - 52,110
Total
shareholders'
equity 851,849 (289) - 10,833 782 863,175
December 31, 2021
IFRS adjustments
Amounts Issuance Capitalization
as reported Lease costs of rights LTIP
under U.S. amortization (note (note classification Amounts
GAAP (note (a)) (b)) (d)) (note (e)) under IFRS
(in US$'000)
Investments in
equity
investees 76,479 (24) - - - 76,455
Other
non-current
assets 42,831 (257) - 11,296 - 53,870
Total assets 1,372,661 (281) - 11,296 - 1,383,676
Other payables,
accruals and
advance
receipts 210,839 - - - (12,836) 198,003
Total current
liabilities 311,658 - - - (12,836) 298,822
Total liabilities 333,147 - - - (12,836) 320,311
Additional
paid-in
capital 1,505,196 - (697) - 12,836 1,517,335
Accumulated
losses (610,328) (233) 697 11,084 - (598,780)
Accumulated other
comprehensive
income 5,572 (7) - 185 - 5,750
Total Company's
shareholders'
equity 986,893 (240) - 11,269 12,836 1,010,758
Non-controlling
interests 52,621 (41) - 27 - 52,607
Total
shareholders'
equity 1,039,514 (281) - 11,296 12,836 1,063,365
Notes:
(a) Lease amortization
Under U.S. GAAP, for operating leases, the amortization of
right-of-use assets and the interest expense element of lease
liabilities are recorded together as lease expenses, which results
in a straight-line recognition effect in the condensed consolidated
statements of operations.
Under IFRS, all leases are accounted for like finance leases
where right-of-use assets are generally depreciated on a
straight-line basis while lease liabilities are measured under the
effective interest method, which results in higher expenses at the
beginning of the lease term and lower expenses near the end of the
lease term.
(b) Issuance costs
Under U.S. GAAP and IFRS, there are differences in the criteria
for capitalization of issuance costs incurred in the offering of
equity securities.
(c) Divestment of an equity investee
Under U.S. GAAP, an equity method investment to be divested that
does not qualify for discontinued operations reporting would not
qualify for held-for-sale classification. The investment in HBYS
was not presented as a discontinued operation or as an asset
classified as held-for-sale after the signing of the sale and
purchase agreement in March 2021 and therefore, it was accounted
for under the equity method until closing on September 28,
2021.
Under IFRS, an equity method investment may be classified as
held-for-sale even if the discontinued operations criteria are not
met. The investment in HBYS was not presented as a discontinued
operation but was classified as held-for-sale and therefore equity
method accounting was discontinued in March 2021 on the initial
classification as held-for-sale. Accordingly, the reconciliation
includes a classification difference in the interim unaudited
condensed consolidated statement of operations between equity
earnings of equity investees, net of tax and income tax
expense.
(d) Capitalization of development and commercial rights
Under U.S. GAAP, the acquired development and commercial rights
do not meet the capitalization criteria as further development is
needed as of the acquisition date and there is no alternative
future use. Such rights are considered as in-process research and
development and were expensed to research and development
expense.
Under IFRS, the acquired development and commercial rights were
capitalized to intangible assets. The recognition criterion is
always assumed to be met as the price already reflects the
probability that future economic benefits will flow to the
Group.
(e) LTIP classification
Under U.S. GAAP, LTIP awards with performance conditions are
classified as liability-settled awards prior to the determination
date as they settle in a variable number of shares based on a
determinable monetary amount, which is determined upon the actual
achievement of performance targets. After the determination date,
the LTIP awards are reclassified as equity-settled awards.
Under IFRS, LTIP awards are classified as equity-settled awards,
both prior to and after the determination date, as they are
ultimately settled in ordinary shares or the equivalent ADS of the
Company instead of cash.
25. Dividends
No dividend has been paid or declared by the Company for the six
months ended June 30, 2022 and 2021.
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END
IR FLFVITSILIIF
(END) Dow Jones Newswires
August 01, 2022 07:04 ET (11:04 GMT)
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