BOCOM INTL believes that the conditions of this Trade involving Hutchmed (China) are reasonable and beneficial for the company's long-term development.
According to the Zhitong Finance APP, BOCOM INTL released a research report stating that it maintains a "Buy" rating for Hutchmed (China) (00013), believing that the conditions of this trade are reasonable and beneficial for the company's long-term development. The profit forecast has been adjusted, raising the DCF Target Price to 44 HKD. The company continues to make key progress in the development of its later-stage pipeline, with related catalysts in 2025 worthy of special attention, including: 1) based on the success of the SAVANNAH study, partner AstraZeneca will soon submit the first overseas NDA for Savolitinib to the FDA (for 2/3 LMET abnormal T790M resistant NSCLC); 2) the Phase III SACHI study (for 2 LMET amplified EGFR TKI resistant NSCLC) has reached its primary endpoint, and the sNDA application in China has been accepted and granted priority review; 3) after supplementary approval for Solritinib, the company is actively communicating with CDE and rolling out supplementary materials, with approval expected within the year.
Bocom International's main points are as follows:
Selling a non-core joint venture for 0.608 billion USD will further focus on Innovative Drugs research and development.
On January 1, 2025, Hutchmed (China) announced the sale of 45% equity in Shanghai Hutchmed to Shanghai Jinpu Health Private Equity Management Co., Ltd. and SH PHARMA for 0.608 billion USD (approximately 14 times the 2023 PE) in cash. Before the transaction, Hutchmed (China) and SH PHARMA each held 50% stakes in Shanghai Hutchmed. According to the terms of the agreement, Jinpu Health and SH PHARMA will acquire 35% and 10% equity in Shanghai Hutchmed for 0.473 billion and 135 million USD in cash, respectively, while Hutchmed (China) will retain 5% equity after the transaction. Hutchmed (China) expects the transaction to bring the company 0.477 billion USD in pre-tax income, most of which will reflect in the 2025 performance. Additionally, the company guarantees Jinpu Health that the net income of Shanghai Hutchmed will grow by at least about 5% annually over the next three years; if achieved, additional benefits will be received in 2026-27; if not, the total compensation will not exceed 95 million USD.
The differentiated advantage of the self-developed ATTC platform is significant and is about to enter the clinical validation stage:
The company plans to use the proceeds from the above transaction to further develop its internal product pipeline and promote the development of its core Business strategy, focusing on: 1) next-generation antibody-drug conjugate (ATTC) platform, which precisely targets proteins necessary for cancer growth by leveraging the synergy of antibody-small molecule inhibitors, effectively overcoming chemotherapy resistance, while the drug load based on targeted therapy is also expected to reduce various toxicities associated with cytotoxins, aiming to become a first-line standard treatment alongside immunotherapy/chemotherapy. Preclinical data shows strong anti-tumor activity and durable remission, exhibiting stronger anti-tumor activity compared to the use of antibody and targeted drugs alone, with the first candidate drug from this platform expected to enter clinical trials in H2 2025. 2) Subsequent Innovative Drugs developed simultaneously overseas and in China, as well as strategic layout of the Global BD.
