HUTCHMED Reports 2022 Full Year Results and Provides Business Updates
Landmark licensing deal with Takeda for fruquintinib outside of China, bringing HUTCHMED up to US$1.13 billion, plus royalties, and demonstrating execution of the new global strategy
Record Full Year 2022 oncology/immunology revenues driven by significant increase in China in-market sales of ELUNATE®, SULANDA® and ORPATHYS® alongside clinical and strategic progress
Company to Host Annual Results Call & Webcast Today at 9 p.m. HKT / 1 p.m. GMT / 8 a.m. EST
HONG KONG, SHANGHAI, China and FLORHAM PARK, N.J., Feb. 28, 2023 (GLOBE NEWSWIRE) -- HUTCHMED (China) Limited ("HUTCHMED", the "Company" or "we") (Nasdaq/AIM:HCM; HKEX:13), the innovative, commercial-stage biopharmaceutical company, today reports its financial results for the year ended December 31, 2022 and provides updates on key clinical and commercial developments.
All amounts are expressed in U.S. dollars unless otherwise stated.
KEY HIGHLIGHTS
Strategic
- Announced a strategy update, including a prioritization of late-stage assets and a new global partnership approach to bring innovative medicines to patients outside of China
- Signed a landmark licensing agreement with Takeda1 to license fruquintinib outside of China for a potential total of up to $1.13 billion, plus royalties on net sales, demonstrating this strategy in action
- Focus on driving near-term value creation and establishing a profitable, sustainable business over the long term
Product and pipeline
- FRESCO-2 Phase III data for fruquintinib in refractory metastatic CRC2, our first global multi-regional clinical trial and presented at ESMO3, met the primary end point of overall survival with a 34% reduction in risk of death
- Started rolling submission of NDA4 to U.S. FDA5 for fruquintinib for the treatment of refractory CRC
- Statistically significant PFS6 benefit in fruquintinib FRUTIGA Phase III in China with supplemental NDA in preparation
- Global SAVANNAH Phase II data for savolitinib showed 52% response rate and 9.6 months duration of response in high MET7 2L+ NSCLC8 patients with no prior chemotherapy
- ORPATHYS® (savolitinib) to be included in NRDL9 effective March 1, 2023
- Over 15 registration/registration-intent studies ongoing with six products
Financial
- Oncology/Immunology revenues up 37% (41% CER10) to $163.8 million and in line with guidance
- ELUNATE®, SULANDA® and ORPATHYS® combined in-market sales11 up 70%
- Substantial cash balance, plus $400 million upfront payment from Takeda at closing, will position HUTCHMED well on the path to a sustainable business
2022 FULL YEAR RESULTS & BUSINESS UPDATES
"I am proud of the progress that we at HUTCHMED have made during 2022," said Mr Simon To, Chairman of HUTCHMED. "This work is already bearing fruit, as indicated not only by the increase in revenues, but also the positive clinical and regulatory progress we have made with fruquintinib – culminating in the successful, post-period licensing agreement with Takeda, marking a significant delivery against the Company's strategy. This out-licensing ensures we remain true to the overall goal of our business of safeguarding access to our innovative medicines to patients globally. Further, our partnerships provide significant financial momentum while we focus on revenue growth from increased product sales in China."
"This strategy of revenue growth and strategic partnerships places us well on the path to a sustainable business. It is this path which will allow us to continue our expansion, as demonstrated by HUTCHMED's continued delivery in China where our oncology commercial team has reached about 900 people to support greater access to our medicines; our ongoing development of savolitinib, which became our third product on the NRDL; and the continued ability of our business to develop medicines towards global markets. It is through this ability that we expect to see multiple New Drug Applications being made not only in China but with key regulators around the world as we look to extend our ability to bring potentially life changing medicines to patients around the world."
"2022 has been a key turning point for HUTCHMED, but I believe it will enable us to truly reach our goal of becoming a global biopharmaceutical company."
Dr Weiguo Su, Chief Executive Officer and Chief Scientific Officer of HUTCHMED, said, "2022 was a pivotal year for HUTCHMED. Challenged by difficult market conditions, the team worked incredibly hard to position HUTCHMED for success today as well as for a promising future. In November, we announced a new strategy that focuses on accelerating our path to a sustainable and profitable business, which involves a reprioritization of pipeline assets and a partnership approach for bringing our innovative medicines more efficiently to patients outside of China. We believe that this new strategy has unlocked greater value in the Company and we are already seeing a positive impact from this approach."
"In early 2023 we announced a significant licensing deal with Takeda for the global development, commercialization and manufacturing of fruquintinib, outside of China. We are pleased to have attracted such a strong partner and to place fruquintinib in the hands of a company with the scale, expertise, resources and commitment to maximize its success globally, as we believe we are already doing in China. The expected proceeds from the deal notably extends our cash runway, and the additional bandwidth allows us to continue to pursue value-driving opportunities from our internal pipeline while supporting our commercial growth in China. The Takeda deal perfectly exemplifies our global partnership approach and showcases our commitment to fulfilling our promises, swiftly and effectively."
"This approach goes hand in hand with the strategic prioritization of our pipeline. This includes focusing our development efforts on late-stage assets through clinical development and towards patients. Ultimately, this is how we will accelerate our path to a sustainable business over the long term. As part of our pipeline prioritization, we have reduced some funding to select international clinical programs and we look to further develop of some of these programs through partnerships. Specifically, these changes affect amdizalisib, HMPL-306 and HMPL-760 international clinical programs. We will continue the surufatinib clinical program in Japan where a bridging study is fully recruited. Going forward, HUTCHMED still intends to continue to run early phase development programs for select drug candidates in the U.S., EU and Japan including sovleplenib where we believe our compounds are differentiated from a global perspective. This does not impact our commitment to patients, which, if anything, has intensified as we sharpen our focus on a smaller set of programs that we believe have the most immediate patient impact.
"I am proud of what the team has achieved this year amidst very difficult times for the sector, and feel very positive about our outlook."
I. COMMERCIAL OPERATIONS
- Total revenues increased 20% (24% CER) to $426.4 million in 2022 (2021: $356.1m), driven by commercial progress on our three in-house developed oncology drugs in China;
- Oncology/Immunology consolidated revenues up 37% (41% CER) to $163.8 million (2021: $119.6m);
- ELUNATE® (fruquintinib) in-market sales in 2022 increased 32% to $93.5 million (2021: $71.0m), reflecting its expanding lead in market share, particularly in tier 2 and 3 cities;
- SULANDA® (surufatinib) in-market sales in 2022 increased 178% to $32.3 million (2021: $11.6m), reflecting its first time NRDL inclusion which started in January 2022;
- ORPATHYS® (savolitinib) in-market sales in 2022 increased 159% to $41.2 million (2021: $15.9m) following its launch in the second half of 2021 through AstraZeneca's12 extensive oncology commercial organization. Rapid initial self-pay uptake due to being the first-in-class selective MET inhibitor in China, expect continued uptake to be supported by NRDL inclusion starting March 1, 2023;
- TAZVERIK® (tazemetostat) successfully launched in Hainan province in China in June 2022; and
- Successful management of commercial operations to expand coverage of oncology hospitals and physicians despite challenges of pandemic-related lockdowns in the first half of 2022.
| $'millions | In-market Sales* | Consolidated Revenues** | ||||||||||
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
| ELUNATE® | $ | 93.5 | $ | 71.0 | +32 | % | $ | 69.9 | $ | 53.5 | +31 | % |
| SULANDA® | $ | 32.3 | $ | 11.6 | +178 | % | $ | 32.3 | $ | 11.6 | +178 | % |
| ORPATHYS® | $ | 41.2 | $ | 15.9 | +159 | % | $ | 22.3 | $ | 11.3 | +97 | % |
| TAZVERIK® | $ | 0.1 | – | – | $ | 0.1 | – | – | ||||
| Product Sales | $ | 167.1 | $ | 98.5 | +70 | % | $ | 124.6 | $ | 76.4 | +63 | % |
| Other R&D13 services income | $ | 24.2 | $ | 18.2 | +33 | % | ||||||
| Milestone payment | $ | 15.0 | $ | 25.0 | -40 | % | ||||||
| Total Oncology/Immunology | $ | 163.8 | $ | 119.6 | +37 | % | ||||||
| * = For ELUNATE® and ORPATHYS®, represents total sales to third parties as provided by Lilly14 and AstraZeneca, respectively; and ELUNATE® sales to other third parties as invoiced by HUTCHMED. ** = For ELUNATE®, represents manufacturing fees, commercial service fees and royalties paid by Lilly, to HUTCHMED, and sales to other third parties invoiced by HUTCHMED; for ORPATHYS® represents manufacturing fees and royalties paid by AstraZeneca; for SULANDA® and TAZVERIK®, 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 ITP15;
- Received approval for TAZVERIK® 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® and SULANDA®, the first drugs approved in the territory based on China NMPA16 approval, following regulatory updates in Macau.
Ex-China
- Fruquintinib rolling NDA submission to U.S. FDA initiated in December 2022 for the treatment of refractory CRC. The U.S. FDA granted Fast Track Designation for the development of fruquintinib for the treatment of patients with metastatic CRC in June 2020, enabling the company to submit sections of the NDA on a rolling basis;
- Fruquintinib submissions to the EMA17 and the Japanese PMDA18 to follow the completion of the US NDA submission; all expected to be completed in 2023;
- Savolitinib granted Fast Track Designation by the FDA for the combination treatment with TAGRISSO® of NSCLC patients harboring MET overexpression and/or amplification following progression on TAGRISSO®; and
- Surufatinib U.S. NDA and EMA MAA19 withdrawn:
- A Complete Response Letter regarding the US NDA (CRL) was issued in April 2022 by the U.S. FDA, citing the requirement of a multi-regional clinical trial in a more representative patient population. Following the Letter, the U.S. NDA was withdrawn in January 2023; the MAA was withdrawn in August 2022, following interactions with EMA reviewers which suggested that there is a low probability of a positive opinion;
- In Japan, the bridging study is continuing and a pre-NDA PMDA consultation is targeted for the first half of 2023; and
- Pandemic-related issues concerning inspection access contributed to FDA and EMA actions.
III. CLINICAL DEVELOPMENT ACTIVITIES in 2022
Savolitinib (ORPATHYS® 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
- Presentation of SAVANNAH global Phase II study data showing improved response rates with increasing levels of MET aberration for the TAGRISSO® combination (NCT03778229) in NSCLC patients harboring EGFR20 mutation and MET amplification or overexpression at WCLC21 2022. Overall results demonstrated strong ORR22, DoR23 and PFS among patients with higher MET levels, particularly among those with no prior chemotherapy;
- Aligned with FDA for the pivotal Phase II study for accelerated approval of the TAGRISSO® combination for NSCLC MET patients following progression on TAGRISSO®, and began enrolling;
- Initiated SAFFRON, a global, pivotal Phase III study of the TAGRISSO® combination (NCT05261399), which triggered a $15 million milestone payment. Enrolled patients will have MET levels consistent with the higher MET level patient groups in SAVANNAH and have had no prior chemotherapy;
- Enrolling SACHI, a pivotal Phase III study of the TAGRISSO® combination in China for NSCLC patients with MET amplification following progression on EGFR inhibitor treatment (NCT05015608);
- Enrolling SANOVO, a pivotal Phase III study of the TAGRISSO® combination in China in NSCLC patients harboring EGFR mutation and MET overexpression, comparing the combination with TAGRISSO® monotherapy (NCT05009836);
- Presented final Phase II OS24 in patients with MET exon 14 skipping alteration NSCLC at ELCC25 2022 (NCT02897479);
- Enrolling the confirmatory China Phase IIIb study in MET exon 14 skipping altered NSCLC in both first-line and second-line and above patients (NCT04923945);
- Enrolling SAMETA, a global Phase III study in MET-driven PRCC26 of the IMFINZI® combination comparing to sunitinib (NCT05043090);
- Enrolled a China Phase II study in gastric cancer patients who have failed at least one line of systemic treatment (NCT04923932); and
- Initiated SOUND, a China Phase II study of the IMFINZI® combination in EGFR wild-type NSCLC patients with MET alterations (NCT05374603).
Potential upcoming clinical and regulatory milestones for savolitinib:
- Convert the gastric cancer Phase II study to a registration trial, following discussion with NMPA in the first half of 2023; and
- Complete enrollment of SAVANNAH pivotal Phase II study.
Fruquintinib (ELUNATE® in China), a highly selective oral inhibitor of VEGFR27 1/2/3 designed to improve kinase selectivity to minimize off-target toxicity and thereby improve tolerability; approved and launched in China
- Presented positive 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 at ESMO in September 2022. Treatment with fruquintinib resulted in a statistically significant and clinically meaningful increase in the primary endpoint of OS and the key secondary endpoint of PFS compared to placebo;
- Presented preliminary data from the U.S. Phase Ib monotherapy study of fruquintinib in patients with refractory metastatic CRC (NCT03251378) at 2022 ASCO GI28; and
- Reported top-line results of the FRUTIGA China Phase III registration study (NCT03223376) in 703 advanced gastric cancer patients. The study met one of the primary endpoints of statistically significant improvement in PFS, which is clinically meaningful. The other primary endpoint of OS was not statistically significant. There were statistically significant improvements in secondary endpoints including ORR and DCR29, and improved DoR; and
- Initiated China Phase III study of combination with PD-130 inhibitor sintilimab in RCC31 (NCT05522231).
Potential upcoming clinical and regulatory milestones for fruquintinib:
- Submit a supplementary NDA to the NMPA for fruquintinib in combination with paclitaxel in the treatment of advanced gastric cancer in H1 2023, supported by results of the FRUTIGA study;
- Complete recruitment of a Phase II registration enabling study for endometrial cancer of fruquintinib in combination with PD-1 inhibitor sintilimab around mid-2023 (NCT03903705);
- Submit FRUTIGA results for presentation at a scientific conference;
- Submit for presentation further Phase II data of fruquintinib with PD-1 inhibitors; and
- Publication of FRESCO-2 results in a peer-reviewed scientific journal.
Surufatinib (SULANDA® in China), an oral inhibitor of VEGFR, FGFR32 and CSF-1R33 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
- Presented a pooled analysis of safety data from the SANET-p and SANET-ep studies at the 2022 ASCO34 annual meetings; and
- Presented data from the Phase Ib/II global tislelizumab combination study at NANETS35 2022.
Potential upcoming clinical and regulatory milestones for surufatinib:
- Complete bridging study in NET patients in Japan (NCT05077384) in the first half of 2023 and discuss results with the Japanese PMDA.
Sovleplenib (HMPL-523), an investigative and highly selective oral inhibitor of Syk36, an important component of the Fc receptor and B-cell receptor signaling pathway
- Fully enrolled ESLIM-01 China Phase III study in primary ITP (NCT03951623) in December 2022.
Potential upcoming clinical milestones for sovleplenib:
- Report top-line results from ESLIM-01 China Phase III in the second half of 2023; and
- Complete Phase II Proof-of-Concept study in warm AIHA37 in China and decide on whether to proceed into Phase III.
Amdizalisib (HMPL-689), an investigative and highly selective oral inhibitor of PI3Kδ38 designed to address the gastrointestinal and hepatotoxicity associated with currently approved and clinical-stage PI3Kδ inhibitors
- Completed recruitment of patients for China registration Phase II study for the treatment of follicular lymphoma (with Breakthrough Therapy Designation) in February 2023 (NCT04849351); and
- Initiated China combination trial with tazemetostat in February 2023 (NCT05713110).
Potential upcoming clinical and regulatory milestones for amdizalisib:
- Report top-line results from the China registration Phase II study for the treatment of follicular lymphoma in H2 2023.
Tazemetostat (TAZVERIK® in the U.S., Japan and the Hainan Pilot Zone), a first-in-class, oral inhibitor of EZH2 licensed from Ipsen39 subsidiary Epizyme40 in China
- Initiated a China bridging study in follicular lymphoma in July 2022 for conditional registration based on U.S. approvals (NCT05467943);
- Ipsen presented updated data from the Phase Ib portion of the global SYMPHONY-1 Phase III trial at ASH (NCT04224493) of tazemetostat combined with lenalidomide and rituximab (R²) in patients with relapsed or refractory follicular lymphoma after at least one prior line of therapy; and
- Initiated the China portion of the global SYMPHONY-1 Phase III trial in September 2022.
Earlier stage investigational drug candidates
In addition to the six drug candidates being developed in over 15 registration studies above, HUTCHMED is developing six further oncology candidates in early stage clinical trials. These are HMPL-306, a highly selective oral inhibitor of IDH1/241 designed to address resistance to currently marketed IDH inhibitors; HMPL-760, a highly selective, third-generation oral inhibitor of BTK42 with improved potency versus first generation BTK inhibitors against both wild type & C481S mutant enzymes; HMPL-453, a highly selective oral inhibitor of FGFR 1/2/3; HMPL-295, a highly selective oral inhibitor of ERK43 in the MAPK pathway 44 with the potential to address intrinsic or acquired resistance from upstream mechanisms such as RAS-RAF-MEK; HMPL-653, an oral, highly selective, and potent CSF-1R inhibitor designed to target CSF-1R driven tumors as a monotherapy or in combinations; and HMPL-A83, a differentiated, red blood cell sparing CD47 monoclonal antibody.
Subject to data and consultation with the CDE45, several of these earlier stage drug candidates have potential to move into registration trials in 2023 and early 2024. We have recently agreed a registration enabling trial design for HMPL-453 for the treatment of IHCC46 with the CDE and preparations are underway to start the study. Results supporting this decision will be submitted for scientific presentation in 2023.
IV. COLLABORATION UPDATES
Takeda Exclusive Worldwide License for Fruquintinib Outside China
Subject to customary closing conditions, including completion of antitrust regulatory reviews:
- Takeda will become responsible for development, manufacturing and commercialization in all indications and territories outside of mainland China, Hong Kong and Macau; and
- HUTCHMED will be eligible to receive up to $1.13 billion, including $400 million upfront on closing of the agreement and up to $730 million in additional potential payments relating to regulatory, development and commercial sales milestones, as well as royalties on net sales.
Inmagene candidates discovered by HUTCHMED
Two Phase I trials initiated in Australia and the U.S. on two HUTCHMED drug candidates being developed by Inmagene: IMG-007, an investigative OX40 antagonistic monoclonal antibody designed to selectively shut down OX40+ T cell function; and IMG-004, a reversible, non-covalent, highly selective oral BTK inhibitor designed to target immunological diseases.
V. OTHER VENTURES
Other Ventures include our profitable prescription drug marketing and distribution platforms
- Other Ventures consolidated revenues increased by 11% (15% at CER) to $262.6 million (2021: $236.5m);
- SHPL47 non-consolidated joint venture revenues increased by 11% (14% at CER) to $370.6 million (2021: $332.6m);
- Consolidated net income attributable to HUTCHMED from our Other Ventures increased by 16% (17% at CER) to $54.6 million (2021: $47.3m which excluded $95.6m related to HBYS48), which was primarily due to the net income contributed from SHPL of $49.9 million (2021: $44.7m); and
- We continue to review divestment and equity capital market options and we have started the process for a share reform of the SHPL joint venture.
VI. IMPACT OF COVID-19
COVID-19 had some impact on our research, clinical studies and our commercial activities in 2022, particularly with respect to hospital lockdowns, travel restrictions, and shipping difficulties. Clinical sites in Shanghai were particularly impacted during April and May 2022. Measures were put in place to reduce 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. Restrictive measures related to the COVID-19 pandemic have gradually been lifted in China starting from December 2022, and we expect the travel, social and economic activities to normalize.
VII. SUSTAINABILITY
HUTCHMED has made continued progress in its commitment to the long-term sustainability of its businesses and communities in which it conducts business, including:
- Enhanced disclosures, including publishing our second Sustainability Report, and publishing eight new governance and sustainability-related policies and statements;
- Strengthened governance, including establishing a four-tier governance framework to facilitate oversight and implementation of sustainability issues;
- Committed to 11 short- to long-term sustainability goals and targets, incorporated sustainability KPIs on goals and targets into management's performance-based remuneration;
- Comprehensive stakeholder engagement conducted with over 2,400 key internal and external stakeholders involving quantitative and qualitative assessments, and a materiality analysis to help identify the most material sustainability issues to the Company;
- Enhanced sustainability awareness building in over 20 meetings/sessions during the year amongst the general staff, the Sustainability Working Group, senior management, the Sustainability Committee and the Board; and
- Climate risks action, including an assessment to identify climate-related risks and opportunities for the Company, and following the recommended disclosure framework of the Task Force on Climate-related Financial Disclosures (TCFD).
We believe all these efforts will guide us towards a more sustainable future. The 2022 Sustainability Report will be published alongside our 2022 Annual Report in due course and will include further information on HUTCHMED sustainability initiatives and their performance.
VIII. U.S. ACCOUNTING OVERSIGHT
As had been expected, in 2022 the U.S. Securities and Exchange Commission (SEC) named over 170 China-based companies, including HUTCHMED, to its conclusive list of public companies identified as having retained a registered public accounting firm that the Public Company Accounting Oversight Board ("PCAOB") is unable to inspect to investigate completely. However, on December 15, 2022, the PCAOB announced that it was able to inspect and investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and vacated its prior determination that it was unable to inspect or investigate them completely. As a result, we do not expect to be identified as a Commission-Identified Issuer for the fiscal year ended December 31, 2022 after we file our annual report on Form 20-F for such fiscal year.
This has had no impact on the business operations of the Company.
FULL YEAR 2022 FINANCIAL RESULTS
Cash, Cash Equivalents and Short-Term Investments were $631.0 million as of December 31, 2022 compared to $1,011.7 million as of December 31, 2021.
- Adjusted Group (non-GAAP49) net cash flows excluding financing activities in 2022 were -$297.9 million (2021: -$73.5m) mainly due to increased spending on Oncology/Immunology R&D; and
- Net cash used in financing activities in 2022 totaled $82.8 million (2021: net cash generated from financing activities of $650.0m primarily from the offering of shares on HKEX50) mainly due to the repayments of bank borrowings, dividends paid to non-controlling shareholders of subsidiaries and purchases of ADSs51 by a trustee for the settlement of equity awards.
Revenues for the year ended December 31, 2022 were $426.4 million compared to $356.1 million in 2021.
- Oncology/Immunology consolidated revenues increased 37% (41% at CER) to $163.8 million (2021: $119.6m) resulting from:
ELUNATE® revenues increased 31% to $69.9 million (2021: $53.5m) in manufacturing revenues, promotion and marketing service revenues and royalties, as our in-house sales team increased in-market sales 32% to $93.5 million (2021: $71.0m), as provided by Lilly;
SULANDA® revenues increased 178% to $32.3 million (2021: $11.6m), after inclusion on the NRDL starting in January 2022;
ORPATHYS® revenues increased 97% to $22.3 million (2021: $11.3m), in manufacturing revenues and royalties following its launch in the second half of 2021. AstraZeneca reported $41.2 million in-market sales (2021: $15.9m) of ORPATHYS® in 2022;
TAZVERIK® revenues of $0.1 million following its successful launch in Hainan province in June 2022;
Milestone payment of $15.0 million (2021: $25.0m milestone payment upon first sale of ORPATHYS® in China), to us by AstraZeneca, related to the initiation of SAFFRON; and
Other R&D services income of $24.2 million (2021: $18.2m), which were primarily fees from AstraZeneca and Lilly for the management of development activities in China.
- Other Ventures consolidated revenues increased 11% (15% at CER) to $262.6 million (2021: $236.5m), mainly due to higher sales of prescription drugs. This excludes the strong 11% (14% at CER) growth in non-consolidated revenues at SHPL of $370.6 million (2021: $332.6m).
Net Expenses for the year ended December 31, 2022 were $787.2 million compared to $550.7 million in 2021.
- Costs of Revenues were $311.1 million (2021: $258.2m), 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®, including the provision of promotion and marketing services to Lilly, and the costs for SULANDA® and ORPATHYS® which commenced commercial sales in July 2021;
- R&D Expenses were $386.9 million (2021: $299.1m), 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 $170.9 million (2021: $140.1m), while R&D expenses in China were $216.0 million (2021: $159.0m);
- SG&A Expenses52 were $136.1 million (2021: $127.1m), which increased primarily due to higher staff costs and selling expenses to support the expansion of our Oncology/Immunology commercial operations; and
- Other Items generated net income of $46.9 million (2021: $133.7m), which decreased primarily due to a one-off gain of $82.9 million in 2021 related to the divestment of HBYS.
Net Loss attributable to HUTCHMED for the year ended December 31, 2022 was $360.8 million compared to $194.6 million in 2021.
- The net loss attributable to HUTCHMED in 2022 was $0.43 per ordinary share / $2.13 per ADS, compared to net loss attributable to HUTCHMED of $0.25 per ordinary share / $1.23 per ADS in 2021.
FINANCIAL SUMMARY
Condensed Consolidated Balance Sheets Data
(in $'000)
| As of December 31, | ||||
| 2022 | 2021 | |||
| Assets | ||||
| Cash and cash equivalents and short-term investments | 630,996 | 1,011,700 | ||
| Accounts receivable | 97,988 | 83,580 | ||
| Other current assets | 110,904 | 116,796 | ||
| Property, plant and equipment | 75,947 | 41,275 | ||
| Investments in equity investees | 73,777 | 76,479 | ||
| Other non-current assets | 39,833 | 42,831 | ||
| Total assets | 1,029,445 | 1,372,661 | ||
| Liabilities and shareholders' equity | ||||
| Accounts payable | 71,115 | 41,177 | ||
| Other payables, accruals and advance receipts | 264,621 | 210,839 | ||
| Bank borrowings | 18,104 | 26,905 | ||
| Other liabilities | 38,735 | 54,226 | ||
| Total liabilities | 392,575 | 333,147 | ||
| Company's shareholders' equity | 610,367 | 986,893 | ||
| Non-controlling interests | 26,503 | 52,621 | ||
| Total liabilities and shareholders' equity | 1,029,445 | 1,372,661 | ||
Condensed Consolidated Statements of Operations Data
(in $'000, except share and per share data)
| Year Ended December 31, | |||||
| 2022 | 2021 | ||||
| Revenues: | |||||
| Oncology/Immunology – Marketed Products | 124,642 | 76,429 | |||
| Oncology/Immunology – R&D | 39,202 | 43,181 | |||
| Oncology/Immunology consolidated revenues | 163,844 | 119,610 | |||
| Other Ventures | 262,565 | 236,518 | |||
| Total revenues | 426,409 | 356,128 | |||
| Operating expenses: | |||||
| Costs of revenues | (311,103 | ) | (258,234 | ) | |
| Research and development expenses | (386,893 | ) | (299,086 | ) | |
| Selling and general administrative expenses | (136,106 | ) | (127,125 | ) | |
| Total operating expenses | (834,102 | ) | (684,445 | ) | |
| (407,693 | ) | (328,317 | ) | ||
| Gain on divestment of an equity investee | – | 121,310 | |||
| Other expense, net | (2,729 | ) | (8,733 | ) | |
| Loss before income taxes and equity in earnings of equity investees | (410,422 | ) | (215,740 | ) | |
| Income tax benefit/(expense) | 283 | (11,918 | ) | ||
| Equity in earnings of equity investees, net of tax | 49,753 | 60,617 | |||
| Net loss | (360,386 | ) | (167,041 | ) | |
| Less: Net income attributable to non-controlling interests | (449 | ) | (27,607 | ) | |
| Net loss attributable to HUTCHMED | (360,835 | ) | (194,648 | ) | |
| Losses per share attributable to HUTCHMED – basic and diluted (US$ per share) | (0.43 | ) | (0.25 | ) | |
| Number of shares used in per share calculation – basic and diluted | 847,143,540 | 792,684,524 | |||
| Losses per ADS attributable to HUTCHMED – basic and diluted (US$ per ADS) | (2.13 | ) | (1.23 | ) | |
| Number of ADSs used in per share calculation – basic and diluted | 169,428,708 | 158,536,905 | |||
FINANCIAL GUIDANCE
We provide financial guidance for 2023 below reflecting expected revenue growth of ELUNATE®, SULANDA® and ORPATHYS® in China and out-licensing revenue. While we are not providing net cash flow guidance for 2023, we will extend our cash runway through partnering and strategic shifting to focus on the most advanced assets from our internal development pipeline.
| 2022 Actual | 2023 Guidance | |
| Oncology/Immunology consolidated revenues | $163.8 million | $450 – $550 million |
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 9 p.m. HKT / 1 p.m. GMT / 8 a.m. EST – After registering, investors may access a live audio webcast of the call via HUTCHMED's website at www.hutch-med.com/event/.
Participants who wish to join the call and ask a question must register here. Upon registration, each participant will be provided with dial-in numbers and a unique PIN.
FINANCIAL STATEMENTS
HUTCHMED will today file with the U.S. Securities and Exchange Commission its Annual Report on Form 20-F.
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 5,000 personnel across all its companies, at the center of which is a team of about 1,800 in oncology/immunology. Since inception, HUTCHMED has focused on bringing cancer drug candidates from in-house discovery to patients 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) 306 4490 |
| Media Enquiries | |
| Americas – Brad Miles, Solebury Trout | +1 (917) 570 7340 (Mobile) [email protected] |
| Europe – Ben Atwell / Alex Shaw, FTI Consulting | +44 20 3727 1030 / +44 7771 913 902 (Mobile) / +44 7779 545 055 (Mobile) [email protected] |
| Asia – Zhou Yi, Brunswick | +852 9783 6894 (Mobile) [email protected] |
| 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 products and drug 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 drug candidates in development; the ability of HUTCHMED to manufacture and manage supply chains for multiple products and drug 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; 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).
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| REFERENCES AND ABBREVIATIONS | ||
| 1 | Takeda = Takeda Pharmaceuticals International AG. | |
| 2 | CRC = Colorectal cancer. | |
| 3 | ESMO = European Society for Medical Oncology. | |
| 4 | NDA = New Drug Application. | |
| 5 | FDA = Food and Drug Administration. | |
| 6 | PFS = Progression-free survival. | |
| 7 | MET = Mesenchymal epithelial transition factor. | |
| 8 | NSCLC = Non-small cell lung cancer. | |
| 9 | NRDL = National Reimbursement Drug List. | |
| 10 | 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. | |
| 11 | In-market sales = total sales to third parties provided by Eli Lilly (ELUNATE®), AstraZeneca (ORPATHYS®) and HUTCHMED (ELUNATE®, SULANDA® and TAZVERIK®). | |
| 12 | AstraZeneca = AstraZeneca AB (publ), a wholly-owned subsidiary of AstraZeneca PLC. | |
| 13 | R&D = Research and development. | |
| 14 | Lilly = Eli Lilly and Company. | |
| 15 | ITP = Immune thrombocytopenia purpura. | |
| 16 | NMPA = National Medical Products Administration. | |
| 17 | EMA = European Medicines Agency. | |
| 18 | PMDA = Pharmaceuticals and Medical Devices Agency. | |
| 19 | MAA = Marketing Authorization Application. | |
| 20 | EGFR = Epidermal growth factor receptor. | |
| 21 | WCLC = World Conference on Lung Cancer. | |
| 22 | ORR = Objective response rate. | |
| 23 | DoR = Duration of response. | |
| 24 | OS = Overall survival. | |
| 25 | ELCC = European Lung Cancer Congress. | |
| 26 | PRCC = Papillary renal cell carcinoma. | |
| 27 | VEGFR = Vascular endothelial growth factor receptor. | |
| 28 | ASCO GI = ASCO (American Society of Clinical Oncology) Gastrointestinal Cancers Symposium. | |
| 29 | DCR = Disease control rate. | |
| 30 | PD-1 = Programmed cell death protein-1. | |
| 31 | RCC = Renal cell carcinoma. | |
| 32 | FGFR = Fibroblast growth factor receptor. | |
| 33 | CSF-1R = Colony-stimulating factor 1 receptor. | |
| 34 | ASCO = American Society of Clinical Oncology. | |
| 35 | NANETS = North American Neuroendocrine Tumor Society Medical Symposium. | |
| 36 | Syk = Spleen tyrosine kinase. | |
| 37 | AIHA = autoimmune hemolytic anemia. | |
| 38 | PI3Kδ = Phosphoinositide 3-kinase delta. | |
| 39 | Ipsen = Ipsen SA, parent of Epizyme Inc. | |
| 40 | Epizyme = Epizyme Inc., a wholly owned subsidiary of Ipsen SA. | |
| 41 | IDH = Isocitrate dehydrogenase. | |
| 42 | BTK = Bruton's tyrosine kinase. | |
| 43 | ERK = Extracellular signal-regulated kinase. | |
| 44 | MAPK pathway = RAS-RAF-MEK-ERK signaling cascade. | |
| 45 | CDE = Center for Drug Evaluation | |
| 46 | IHCC = Intrahepatic cholangiocarcinoma. | |
| 47 | SHPL = Shanghai Hutchison Pharmaceuticals Limited. | |
| 48 | HBYS = Hutchison Whampoa Guangzhou Baiyunshan Chinese Medicine Company Limited. | |
| 49 | GAAP = Generally Accepted Accounting Principles. | |
| 50 | HKEX = The Main Board of The Stock Exchange of Hong Kong Limited. | |
| 51 | ADS = American depositary share. | |
| 52 | SG&A Expenses = selling, general and administrative expenses. | |
This announcement in its entirety is available at:
http://ml.globenewswire.com/Resource/Download/30f6c667-5599-4548-8a64-26c9b97b6884
