Hutchmed (00013.HK) announced yesterday (the 2nd) that the new drug application for the combination therapy of Orpathys (savolitinib) and Tagrisso (osimertinib) has been accepted by the National Medical Products Administration and given priority review. Citibank published a research report stating that the combination therapy has advantages over peers, including specific biomarker MET elevation, and that it is an oral treatment without chemotherapy.

It was also mentioned that the company sold 45% of its stake in Hutchmed (China) for $0.608 billion, which corresponds to a PE of 14 to 15 times. This will further strengthen its capital and debt structure and enable it to concentrate resources on core Business areas. The report stated that the stock has performed weakly in the past three months, mainly due to the delay of Orpathys' NDA in the USA and the approval delay of sovleplenib.

The report believes that these negative impacts have been fully reflected in the stock price. Therefore, the Target Price has been raised from HKD 38.9 to HKD 42, maintaining the rating as 'Buy'. Additionally, the forecast for the company's revenue for this year and next year has been lowered by 5%, considering the Hutchmed (China) Trade, and adjusting the earnings per share forecast for the same period to USD 0.69 and USD 0.01 respectively.