HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>HUTCHMED has been a company that is easily overlooked by investors. However, its BD capabilities have been verified after the deal with Takeda, and its commercialization performance is also commendable.</li>
<li>Based on our forecast, total oncology/immunology consolidated revenue in 2023 could reach about US$220 million. If product sales growth remains benign, together with good cost control on R&amp;D/SG&amp;A, eventual breakeven is reachable.</li>
<li>However, based on the current development trend, HUTCHMED could have to remain at the stage of a biotech, and is difficult to become a biopharma. Investors should be aware of this.</li>
</ul>


HUTCHMED has been a company that is easily overlooked by investors. However, its BD capabilities have been verified after the deal with Takeda, and its commercialization performance is also commendable.
Based on our forecast, total oncology/immunology consolidated revenue in 2023 could reach about US$220 million. If product sales growth remains benign, together with good cost control on R&amp;D/SG&amp;A, eventual breakeven is reachable.
However, based on the current development trend, HUTCHMED could have to remain at the stage of a biotech, and is difficult to become a biopharma. Investors should be aware of this.


Hutchmed China Ltd (13.HK/HCM.US)- Stronger than Expected and Deserves More Attention from Investors

Thematic (Sector/Industry)

<ul>
<li>It is the time to reassess the commercialization performance and the outlook of China biotech companies, including BeiGene, Innovent, Henlus, Zai Lab, Hutchmed, Junshi, RemeGen, Innocare, Akeso. </li>
<li>We summarized the data of these biotech companies’ product revenue and profit performance to judge whether their commercialization capability is sufficient to afford production, sales teams and long-term R&amp;D activities. </li>
<li>Most China Biotech cannot be said to achieve "commercialization success", but they have showed some difference.We hope investors could have a better understanding about China biotech and make better decisions. </li>
</ul>


It is the time to reassess the commercialization performance and the outlook of China biotech companies, including BeiGene, Innovent, Henlus, Zai Lab, Hutchmed, Junshi, RemeGen, Innocare, Akeso. 
We summarized the data of these biotech companies’ product revenue and profit performance to judge whether their commercialization capability is sufficient to afford production, sales teams and long-term R&amp;D activities. 
Most China Biotech cannot be said to achieve "commercialization success", but they have showed some difference.We hope investors could have a better understanding about China biotech and make better decisions. 


China Biotech – The Commercialization Performance and The Outlook

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Jan 27th.</li>
<li>Top short increases and decreases were tabulated for one week and four week period. </li>
<li>We highlight short changes in Li Ning, Ccb, Beigene, Hworld, Hutchmed.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Jan 27th.
Top short increases and decreases were tabulated for one week and four week period. 
We highlight short changes in Li Ning, Ccb, Beigene, Hworld, Hutchmed.


HK Short Interest Weekly: Li Ning, Ccb, Beigene, Hworld, Hutchmed

<ul>
<li>New policy was released to support the development of surgical robots in China, which would be short-term catalyst for related companies, but it may not bring high profits.</li>
<li>In fact, since March, it may not be appropriate for healthcare companies to use the COVID-19 as a reason if their performance in the following months is not as expected.</li>
<li>Before DRGs/DIP policy becomes very “lethal”, there is a “policy vacuum period” in the next two or three years, which is a good opportunity to go long in China healthcare.</li>
</ul>


New policy was released to support the development of surgical robots in China, which would be short-term catalyst for related companies, but it may not bring high profits.
In fact, since March, it may not be appropriate for healthcare companies to use the COVID-19 as a reason if their performance in the following months is not as expected.
Before DRGs/DIP policy becomes very “lethal”, there is a “policy vacuum period” in the next two or three years, which is a good opportunity to go long in China healthcare.


China Healthcare Weekly (Jan.27) - Surgical Robots New Policy, COVID-19 Update, Policy Vacuum Period

<ul>
<li>HUTCHMED entered into an exclusive license agreement with Takeda- HUTCHMED will receive up to US$1.13 billion including US$400 million upfront, the third highest upfront among China’s TOP 10 license-out deals.</li>
<li>Even if fruquintinib may probably not become a blockbuster product in the future, HUTCHMED still gets a decent upfront to relieve its cash flow pressure and an internationalization admission ticket.</li>
<li>
<a href="https://www.smartkarma.com/entities/hutchmed-china-ltd" target="_blank" data-smartkarma-citation="entities:133:1" rel="noopener">Hutchmed China Ltd (13 HK) </a>is undervalued based on our sales forecast. After savolitinib has been included in the updated NRDL, this year’s performance growth is worth looking forward to.</li>
</ul>


HUTCHMED entered into an exclusive license agreement with Takeda- HUTCHMED will receive up to US$1.13 billion including US$400 million upfront, the third highest upfront among China’s TOP 10 license-out deals.
Even if fruquintinib may probably not become a blockbuster product in the future, HUTCHMED still gets a decent upfront to relieve its cash flow pressure and an internationalization admission ticket.

Hutchmed China Ltd (13 HK) is undervalued based on our sales forecast. After savolitinib has been included in the updated NRDL, this year’s performance growth is worth looking forward to.


Hutchmed China Ltd (13.HK/HCM.US) - The $1.13B Eye-Catching Deal with Takeda and the New Outlook

Hong Kong

HUTCHMED (China) Limited develops, manufactures, and sells pharmaceutical products. The Company offers drugs for oncology and autoimmune diseases treatment. HUTCHMED (China) markets its products worldwide.

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Hutchmed China Ltd (13 HK)