Hutchison China MediTech (HCM) is on the brink of global launches of two assets from its internally developed oncology portfolio. In 2022 we expect US launches of surufatinib (broad NET indication) two years earlier than forecast as well as savolitinib (NSCLC). Recently the FDA granted fast-track designation to fruquintinib in mCRC and we forecast global launch in 2023. In China, HCM has laid the foundations to capitalize on the slew of additional novel oncology drugs (expected by end 2021). HCM is well funded (following the recent $100m equity investment from General Atlantic, plus warrants granted for an additional $100m in 18 months) as it accelerates the global development of its unpartnered assets and expands its global commercial outreach. Beyond 2024 we expect sustainable profitability and margin expansion. Our increased valuation is $6.3bn.
Surufatinib could be the first universal drug to treat NET in all patients regardless of tumor subtype, setting it apart from currently approved drugs. In the US HCM has agreed with the FDA that it can file the US NDA on the basis of the completed Phase III China-based trials together with existing US data on NET patients, saving the need for a US Phase III trial. Savolitinib approval in MET-positive Tagrisso refractory NSCLC depends on the strength of the data readout from SAVANNAH (expected 2021). Savolitinib’s opportunity is increasingly being defined by Tagrisso moving up the treatment paradigm in NSCLC. At ASCO AZN presented overwhelmingly positive efficacy data on Tagrisso in adjuvant NSCLC (ADAURA). Tagrisso’s potential use in earlier stages has positive implications for savolitinib (given its use in combination to treat Tagrisso resistance) could lead to significant future upgrades.
HCM’s first innovation platform asset to launch, Elunate, is benefiting from NRDL inclusion (reimbursement from 1 January) and HCM is scaling up its China oncology commercial presence to capitalize on the potential launch of surufatinib. The NMPA accepted the NDA for savolitinib in MET exon 14 skipping NSCLC in May and we forecast launch during 2021 by partner AZN.
We value HCM at $6.3bn ($44.49/ADS) vs $5.9bn previously. The material changes to our valuation are the surufatinib and savolitinib peak forecast upgrades. We have adjusted our product timelines across the broader pipeline to reflect current progress and revisited our R&D and S&M costs accordingly.