Hutchmed (china) Share Discussion Threads

[dbadvn] 14/3/2019 22:03

Met Johnny Cheng and Mark Lee Wed am. Both very impressive and obviously on top of there game.

Lauders - "I would be interested in knowing why HCM don't look to market more drugs within China from other global pharmaceutical companies" They acknowledged that they have done this in the past and say they would do so again if the commercial deal was correct , but they want to essentially focus on there own products. The large gap in cost between local and western drugs means that the market is limited even in China apparently. Also local companies are paying far too much for marketing rights for generics. Reading between the lines it would also seem that Western companies are building out their own sales groups as the Chinese Govt loosens requirements for partners/ JV etc.

Sporti - "I wish to know if the company has any plans of expanding its commercial platform into the neighbouring countries and subsequently a Global pharma. " Yes is the short answer. In the very long term they are focused on becoming the first Chinese global Parma company. They will sell products into neighbouring countries via license agreements or agencies but are focusing first on China , USA and Europe.
During this part of the discussion the relationship with Eli Lilley came up and it was obvious that this was the source of great frustration to them for the last 2 years or so - basically they stopped just short of saying that Lilley had tried to block their route to market . New arrangement is much improved although having Lilley sell in China and HCM sell outside China seems rather perverse....Upside is much better terms and, lower cost to HCM and compensation if Lilley try to launch competitive drug in China and increased royalities. Were disappointed that market did not recognise this but realised it was probably too technical . Unless I picked this up the wrong way this is the opposite of NoS and my previous understanding - I will follow up on that. At the end of the conversation they gave the distinct impression that they will avoid partnering within China if possible....

Other points:

Dropped Epitinihib due to the success of Tagrissso but very excited by the Savo / Tagrisso combination ( Savannah ).


Initial sales of Elunate going very well - past expectations.


HMPL 689 showing increasing signs of being a success and has large market.


Near term news flow WILL be good....


CFO discussed cash position - just will not be nailed down on cash flow positive expectations but admits cash is always on his mind. Don't expect to go to market for at least two years unless for a specific and exciting reason. Ready to outright sell an asset if they needed to and it was not core. 2nd land site sale will only come after next meeting of Chinese govt ( Q2) but value of land going up all the time . Not figured into forecasts because of uncertainty of timing. Also said change of Huchison management may mean that they will consider selling some equity to avoid consolidation accounting treatment which means Huchison books a loss. Saw this as a positive move for share price if it happens ( takeover premium ).

Lots of the detail is in their presentation but overall a great meeting and gives me a lot of confidence

[dbadvn] 13/3/2019 07:52

Ok.

I think NoS has the sales plan nailed but no harm in asking anyway. He is the cfo so I want him to give some indication of target numbers , cash flow in particular. Time for 15 years of investment to show a return! Even for the Chinese in the long term we are all dead ....

[sportii] 13/3/2019 07:47

Thanks Shaker and Nofs.

Shaker, it could be same practice in other Asian health care systems. Nice to know an update from you.
A push in the direction of developing into a global pharma, one day in the near future! WOW!!

[nerdofsteel] 13/3/2019 07:21

The Co. has now separated its pipeline into China & Global and that is what will drive the Commercial arm to go global. In other words they will not licence their wholly owned drugs such as Epitinib and Surufatinib outside China but plan on marketing them directly. Obviously Lilly and AZ will handle Elunate and Savolitinib outside China. Global Pharma here we come!

[shaker44] 13/3/2019 04:05

Sportii, I checked with my oncologist in Thailand and she confirms they do/will use drugs approved in china, even though not approved by usa fed. I believe that is true through southeast Asia incl India.

[sportii] 13/3/2019 03:54

dbadvn, Thank you for your efforts.
I wish to know if the company has any plans of expanding its commercial platform into the neighboring countries and subsequently a Global pharma. That would allow Elunate (and in future, other drugs in the pipeline) to be marketed outside China.

[lauders] 13/3/2019 02:02

DBADVN - Thanks for the offer re: questions. I would be interested in knowing why HCM don't look to market more drugs within China from other global pharmaceutical companies (i.e. AstraZeneca’s Seroquel (quetiapine) and Merck Serono’s Concor (bisoprolol)) like they have done in the past via their commercial business? Given their footprint in China and number of reps this seems like a "no-brainer" to generate more income to fund the research side even more. This is from page 38 of the Feb 2019 Trinity Delta note:

These businesses showed strong organic growth, with investment in increasing sales forces (from c 1,000 reps in 2008 to c 2,400 now) and geographic expansion into other adjoining regions paying dividends.

I suppose it isn't as simple as that and there are numerous reasons why they haven't done deals on more products like those just mentioned. Would be good to know more about this point. Cheers.

[thornyone] 12/3/2019 17:29

Your analysis seems more optimistic than the following:

(Sharecast News) - Hutchison China Meditech on Monday reported a drop in sales and increased annual loss after the implementation of new government policy in China.
The pharmaceutical company, which is also know as Chi-Med, reported a loss before tax of $86.7m for the year ended 31 December, an increase of 62% compared to the year before, after revenues dropped by 20% to $156.2m.

The AIM traded company said the decrease in revenue was due to a new two-invoice system in China, a new government policy intended to restrict the number of layers in the drug distribution system in China and to improve transparency, compliant business conduct, and efficiency and thereby lower the cost of drugs

Chi-Med said this has led to a shift in the company's revenue recognition for some third-party drugs, with the sales model for Seroquel, in which consolidated revenues historically reflected total gross sales of Seroquel, shifted to a fee-for-service model.

Losses were also exacerbated by an increase in research & development expenses on an adjusted basis to $142.2m from $88.0m the year before, as development of the company's eight clinical drug candidates picks up pace.

Simon To, chairman of Chi-Med, said: "We took a big step in 2018 to expand our US development capability in order that we can take full advantage of the global potential of our assets. We also entered the immuno oncology arena through multiple development collaborations combining PD-1 antibodies with our highly selective small molecules. The increased investment in all these activities is partially offset by robust income from our commercial operation in China, which also serves as a very powerful platform for future product launches."

[dbadvn] 12/3/2019 16:28

Meeting the CFO tomorrow am .

Any questions anyone wants me to put to him?

[nerdofsteel] 11/3/2019 13:54

A good extract to post Lauders! ADR's down slightly but at this point very low volume as usual. I was particularly encouraged by the overall revenue numbers which were much higher than forecast.

[mad foetus] 11/3/2019 13:31

have bought ack in, GLA

[nerdofsteel] 11/3/2019 07:40

I am midway through reading today's Results announcement but my initial thoughts are that these are materially ahead of expectations on many fronts. It's also great to see some initial Fruquintinib CRC sales numbers which appear to have started really well indeed.

[nerdofsteel] 08/3/2019 12:01

Monday

2018 Full Year Results
Announcement released: 7am BST (3pm HKT / 3am EDT)

Presentation webcast & call: 9am BST (5pm HKT / 5am EDT)
>> Click here for the webcast
US conference call: 9am EDT (1pm BST/9pm HKT)
---
To participate by phone, please use one of the following numbers. The conference ID for the calls is "Chi-Med".

UK Toll Free 0808 109 0700
USA Toll Free 1 866 966 5335

China Toll Free 4001 200558
Hong Kong Toll Free 800 900 476
Italy Toll Free 800 986 477
Singapore Toll Free 800 120 4789
Switzerland Toll Free 0800 800 038

New York City Local Access [phone]
London/Other International [phone]

[dbadvn] 05/3/2019 15:01

Never wrong to take a profit.

[nerdofsteel] 05/3/2019 08:20

I probably bought some of yours mad! I only buy since 2014 but wish I'd kept my 20,000 holding that I bought years ago for around £2.50 each!

[lauders] 05/3/2019 01:32

VERY short term MF! However, appreciate the honesty. You did make a profit too so that is good. I am not one for timing the markets and prefer to just buy and hold. You have made a profit whereas I am showing a loss at the moment. So, so far you are the winner ;-) Look forward to welcoming you back!

[mad foetus] 04/3/2019 19:23

Time to fess up! I sold this pm for a small profit. Saw the way Wall Street was going and closed a lot of positions. Hopefully back soon, was fully expecting a big up day for HCM in US.

[nerdofsteel] 04/3/2019 16:36

All good! glad to see you back mad foetus and also your post Lauders.

FY18 results next Monday - always a good event, particularly looking fotr FY19 guidance and it would be nice to get some kind of comments on Elunate sales even though it may be a bit early for anything formal.

[mad foetus] 04/3/2019 13:59

According to stocktwits Deutsche have initiated coverage with a buy reco. I know no more

[mad foetus] 04/3/2019 11:25

The US always drives the share price here and the thaw in Chinese relations may help us along imo. But you cannot ignore the long term record of creating shareholder value here

[lauders] 04/3/2019 11:17

Looks like good timing mad foetus. Perhaps a few were waiting for a break through the 4000p barrier. I should have bought more in the mid-3000p area but alas no funds of a sufficient size to make a buy worthwhile. Will be good to at least see how the sales of Elunate have started. If there are good signs there then that would be a good sign for HCM.

[mad foetus] 04/3/2019 10:18

Back in this morning, GLA

[nerdofsteel] 03/3/2019 17:30

I've put together my favourite collection of Warren Buffet quotes. I do think they are appropriate to an investment in Ch-Med in so many ways:

"If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes”
“Price is what you pay; Value is what you get.”
“Risk comes from not knowing what you are doing.”
“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
“The stock market is designed to transfer money from the active to the patient.”
“Wide diversification is only required when investors do not understand what they are doing.”