TIDMHCM
RNS Number : 3164R
Hutchmed (China) Limited
28 February 2023
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(R) ,
SULANDA(R) and ORPATHYS(R) 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 & Florham Park, NJ - Tuesday, February
28, 2023: 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 Takeda ([1]) 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 CRC ([2]) , our first global multi-regional clinical
trial and presented at ESMO ([3]) , met the primary end point of
overall survival with a 34% reduction in risk of death
-- Started rolling submission of NDA ([4]) to U.S. FDA ([5]) for
fruquintinib for the treatment of refractory CRC
-- Statistically significant PFS ([6]) 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 MET ([7])
2L+ NSCLC ([8]) patients with no prior chemotherapy
-- ORPATHYS(R) (savolitinib) to be included in NRDL ([9]) effective March 1, 2023
-- Over 15 registration/registration-intent studies ongoing with six products
Financial
-- Oncology/Immunology revenues up 37% (41% CER ([10]) ) to
$163.8 million and in line with guidance
-- ELUNATE(R) , SULANDA(R) and ORPATHYS(R) combined in-market sales ([11]) 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(R) (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(R) (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(R) (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's ([12]) 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(R) (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(R) $93.5 $71.0 +32% $69.9 $53.5 +31%
SULANDA(R) $32.3 $11.6 +178% $32.3 $11.6 +178%
ORPATHYS(R) $41.2 $15.9 +159% $22.3 $11.3 +97%
TAZVERIK(R) $0.1 - - $0.1 - -
-------------------- --------- ------- ----------- -------- -------- -----------
Product Sales $167.1 $98.5 +70% $124.6 $76.4 +63%
Other R&D ([13]) services income $24.2 $18.2 +33%
Milestone payment $15.0 $25.0 -40%
----------------------------------------------------- -------- -------- -----------
Total Oncology/Immunology $163.8 $119.6 +37%
----------------------------------------------------- -------- -------- -----------
* = For ELUNATE(R) and ORPATHYS(R) , represents total sales to
third parties as provided by Lilly ([14]) and AstraZeneca, respectively;
and ELUNATE(R) sales to other third parties as invoiced by HUTCHMED.
** = For ELUNATE (R) , represents manufacturing fees, commercial
service fees and royalties paid by Lilly, to HUTCHMED, and sales
to other third parties invoiced by HUTCHMED; for ORPATHYS (R) represents
manufacturing fees and royalties paid by AstraZeneca; for SULANDA
(R) and TAZVERIK(R) , 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 ITP
([15]) ;
-- Received approval for TAZVERIK(R) 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(R) and SULANDA(R) , the
first drugs approved in the territory based on China NMPA ([16])
approval, following regulatory updates in Macau.
Ex-China
-- Fruquintinib rolling NDA submission to U.S. FDA initiated in
December 202 2 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 EMA ([17]) and the Japanese
PMDA ([18]) 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(R) of NSCLC patients harboring
MET overexpression and/or amplification following progression on
TAGRISSO(R) ; and
-- Surufatinib U.S. NDA and EMA MAA ([19]) withdrawn:
o 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;
o In Japan, the bridging study is continuing and a pre-NDA PMDA
consultation is targeted for the first half of 2023; and
o Pandemic-related issues concerning inspection access contributed to FDA and EMA actions.
III. CLINICAL DEVELOPMENT ACTIVITIES in 2022
Savolitinib (ORPATHYS(R) 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(R) combination (NCT03778229) in NSCLC patients
harboring EGFR ([20]) mutation and MET amplification or
overexpression at WCLC ([21]) 2022 . Overall results demonstrated
strong ORR ([22]) , DoR ([23]) 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(R) combination for NSCLC MET
patients following progression on TAGRISSO(R) , and began
enrolling;
-- Initiated SAFFRON, a global, pivotal Phase III study of the
TAGRISSO(R) 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
(R) 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(R) combination in China in NSCLC patients harboring EGFR
mutation and MET overexpression, comparing the combination with
TAGRISSO(R) monotherapy (NCT05009836);
-- Presented final Phase II OS ([24]) in patients with MET exon
14 skipping alteration NSCLC at ELCC ([25]) 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 PRCC
([26]) of the IMFINZI(R) 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(R)
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(R) in China) , a highly selective oral
inhibitor of VEGFR ([27]) 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 GI ([28]) ; 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 DCR ([29]) , and improved
DoR; and
-- Initiated China Phase III study of combination with PD-1
([30]) inhibitor sintilimab in RCC ([31]) (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(R) in China) , an oral inhibitor of VEGFR,
FGFR ([32]) and CSF-1R ([33]) 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 ASCO ([34]) annual meetings;
and
-- Presented data from the Phase Ib/II global tislelizumab
combination study at NANETS ([35]) 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 Syk ([36]) , 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 AIHA ([37])
in China and decide on whether to proceed into Phase III.
Amdizalisib (HMPL-689) , an investigative and highly selective
oral inhibitor of PI3K ([38]) designed to address the
gastrointestinal and hepatotoxicity associated with currently
approved and clinical-stage PI3K 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(R) in the U.S., Japan and the Hainan
Pilot Zone) , a first-in-class, oral inhibitor of EZH2 licensed
from Ipsen ([39]) subsidiary Epizyme ([40]) 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 (R (2) ) 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 IDH1/2 ([41])
designed to address resistance to currently marketed IDH
inhibitors; HMPL-760 , a highly selective, third-generation oral
inhibitor of BTK ([42]) 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 ERK ([43])
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 CDE ([45]) , 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 IHCC ([46]) 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);
-- SHPL ([47]) 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 HBYS ([48]) ), 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-GAAP ([49]) ) 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 HKEX ([50]) )
mainly due to the repayments of bank borrowings, dividends paid to
non-controlling shareholders of subsidiaries and purchases of ADSs
([51]) 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(R) 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(R) revenues increased 178% to $32.3 million (2021:
$11.6m), after inclusion on the NRDL starting in January 2022;
ORPATHYS(R) 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(R) in 2022;
TAZVERIK(R) 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(R) 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(R) , including the provision of
promotion and marketing services to Lilly, and the costs for
SULANDA(R) and ORPATHYS(R) 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 Expenses ([52]) 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(R) , SULANDA(R) and ORPATHYS(R) 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 2023
Actual 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 a re based on non-GAAP financial measure s. 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, r espectively.
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)
bmiles@soleburystrat.com
Europe - Ben Atwell / Alex Shaw, FTI Consulting +44 20 3727 1030 / +44 7771 913 902 (Mobile) / +44 7779 545 055
(Mobile)
HUTCHMED@fticonsulting.com
Asia - Zhou Yi, Brunswick +852 9783 6894 (Mobile)
HUTCHMED@brunswickgroup.com
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 me et 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).
Ends
OPERATIONS REVIEW
Oncology/Immunology
We discover, develop, manufacture and market targeted therapies
and immunotherapies for the treatment of cancer and immunological
diseases through a fully integrated team of approximately 960
scientists and staff (December 31, 2021: 820), and an in-house
oncology commercial organization of over 870 staff (December 31,
2021: 630).
We have advanced 13 oncology drug candidates into clinical
trials in China, with four also in active clinical development in
the U.S. and Europe. Our first three drug candidates, fruquintinib,
surufatinib and savolitinib, have all been approved and launched in
China and the fourth, tazemetostat, has been approved and launched
in Hainan Pilot Zone and submitted for registration in Hong
Kong.
MARKETED PRODUCT SALES
Fruquintinib (ELUNATE(R) in China)
ELUNATE(R) is approved for the treatment of third-line
metastatic CRC for which there is an approximate incidence of
83,000 new patients per year in China. We estimate that in 2022,
approximately 32,000 (2021: approximately 22,000) new patients were
treated with ELUNATE(R) in China resulting in in-market sales of
$93.5 million, up 32% versus 2021 ($71.0 million). ELUNATE(R)
surpassed regorafenib in prescription numbers for late stage CRC at
the end of 2021 and that lead has continued to grow in 2022.
Under the terms of our agreement with Lilly, HUTCHMED manages
all on-the-ground medical detailing, promotion and local and
regional marketing activities for ELUNATE(R) in China. We
consolidate as revenues approximately 70-80% of ELUNATE(R)
in-market sales from manufacturing fees, service fees and royalties
paid to us by Lilly. In 2022, we consolidated $69.9 million in
revenue for ELUNATE(R) , equal to 74.8% of in-market sales.
Following negotiations with the China NHSA ([53]) , ELUNATE(R)
continues to be included in the NRDL for a new two-year term
starting in January 2022. For this renewal, we agreed to a discount
of 5% relative to the 2021 NRDL price.
In January 2022, ELUNATE(R) was approved in the Macau Special
Administrative Region, our first drug to be approved in the
territory and the first based on NMPA approval, following the
latest update to the Macau provisions on new drug importation which
allow drugs approved in one or more specified jurisdictions to be
authorized for use in Macau.
Surufatinib (SULANDA(R) in China)
SULANDA(R) was launched in China in 2021 for the treatment of
all advanced NETs ([54]) for which there is an approximate
incidence of 34,000 new patients per year in China.
In 2021, SULANDA(R) was sold as a self-pay drug. We used
means-tested early access and patient access programs to help
patients afford SULANDA(R) . Despite these access programs,
duration of treatment was often affected by the economic
constraints of patients. Following negotiations with the China
NHSA, SULANDA(R) was included in the NRDL starting in January 2022
at a 52% discount on our main 50mg dosage form, relative to the
2021 self-pay price. Under the NRDL, actual out-of-pocket costs for
patients in 2022 represented approximately 15-20% of the 2021
self-pay price.
As a result of inclusion in the NRDL and our continued marketing
activities, patient access to SULANDA(R) , as well as duration of
treatment, have been expanding with total sales in 2022 increasing
by 178% to $32.3 million (2021: $11.6 million). In 2022,
approximately 12,000 new patients were treated with SULANDA(R) ,
representing approximately 2.5 times the approximately 4,800 new
patients in 2021.
There are two therapies for advanced NETs approved and NRDL
reimbursed in China: SUTENT(R) for the treatment of pancreatic NET
(approximately 10% of NET), and AFINITOR(R) in broadly the same
indication as SULANDA(R) .
In April 2022, SULANDA(R) was approved in the Macau Special
Administrative Region.
Savolitinib (ORPATHYS(R) in China)
In late June 2021, ORPATHYS(R) became the first-in-class
selective MET inhibitor to be approved in China. Our partner,
AstraZeneca, then launched ORPATHYS(R) in mid-July 2021, less than
three weeks after its conditional approval by the NMPA for patients
with MET exon 14 skipping alteration NSCLC.
More than a third of the world's lung cancer patients are in
China. Among those with NSCLC globally, approximately 2-3% have
tumors with MET exon 14 skipping alterations.
In 2021 and 2022, ORPATHYS(R) was sold as a self-pay drug.
AstraZeneca introduced a patient access program in late 2021 which
subsidizes use of ORPATHYS(R) , through progressive disease.
In-market sales for ORPATHYS(R) grew by 159% in 2022 to $41.2
million (2021: $15.9m) resulting in our consolidation of $22.3
million (2021: $11.3m) in revenues from manufacturing fees and
royalties in 2022.
Following negotiations with the China NHSA in January 2023,
starting on March 1, 2023, ORPATHYS(R) will be included in the
updated NRDL, broadening patient access to this medicine.
Market understanding of the need for MET testing has improved
significantly, with ORPATHYS(R) 's brand share more than doubling
since the end of 2021 in the rapidly growing targeted therapy area.
In the National Health Commission's Treatment Guidelines for
Primary Lung Cancer 2022 and the China Medical Association Oncology
Committee Lung Cancer Group's China Medical Association Guideline
for Clinical Diagnosis and Treatment of Lung Cancer , ORPATHYS(R)
was identified as the only targeted therapy recommended for MET
exon 14 patients, while similar guideline from CSCO ([55]) also
recommended ORPATHYS(R) as the standard of care for such
patients.
ORPATHYS(R) is the first and only selective MET inhibitor on the
market in China. XALKORI(R) is an approved multi-kinase inhibitor
of ALK and ROS1 with modest MET activity. Several selective MET
inhibitors are in development in China, but none are currently
expected to reach the market before 2023.
Tazemetostat (TAZVERIK(R) in Hainan, China; the U.S. and
Japan)
In May 2022, tazemetostat was approved by the Health Commission
and Medical Products Administration of Hainan Province to be used
in the Hainan Boao Lecheng International Medical Tourism Pilot Zone
(Hainan Pilot Zone), under the Clinically Urgently Needed Imported
Drugs scheme, for the treatment of certain patients with
epithelioid sarcoma and follicular lymphoma consistent with the
label as approved by the FDA. Launched in 2013 and located in
China, the Hainan Pilot Zone is a destination for international
medical tourism and global hub for scientific innovation, welcoming
83,900 medical tourists in 2020, according to official data.
Following inclusion in the 2022 CSCO guidelines for epithelioid
carcinoma, three patients began treatment in 2022, with the first
patient having remained on medication for over six months.
In December 2022, an market authorization application was
submitted in Hong Kong.
RESEARCH & DEVELOPMENT
HUTCHMED announced its strategy in November 2022 aimed at
accelerating its path to profitability and establishing a long-term
sustainable business, by prioritizing late-stage and registrational
studies to bring the most advanced drug candidates through
regulatory approval as they are most likely to drive near-term
value, particularly the global regulatory approvals and partnership
of fruquintinib outside of China. Selected programs will be
considered as candidates for out-licensing opportunities,
particularly outside of China, with some early phase
U.S./EU-related studies deprioritized until then, enabling the
Company to focus internal resources on its later-stage drug
candidates. These studies include surufatinib (outside Japan and
China), amdizalisib, HMPL-760 and HMPL-306. Surufatinib,
amdizalisib, HMPL-760, HMPL-306 and sovleplenib are all considered
as candidates for out-licensing outside of China. HUTCHMED intends
to continue to run early phase development programs for selected
drug candidates in U.S., EU and Japan where we believe we can
differentiate from a global perspective.
Savolitinib (ORPATHYS(R) in China)
Savolitinib is an oral, potent, and highly selective oral
inhibitor of MET. In global partnership with AstraZeneca,
savolitinib is being studied in NSCLC, PRCC and gastric cancer
clinical trials with over 1,500 patients to date, both as a
monotherapy and in combinations.
In February 2022, a $15 million milestone payment from
AstraZeneca was triggered by the initiation of start-up activities
for the SAFFRON study. In total, AstraZeneca has paid HUTCHMED $85
million of the total $140 million in upfront payments, development
and approvals milestones that are potentially payable under the
relevant license and collaboration agreement.
Savolitinib - Lung cancer:
MET plays an important role in NSCLC. Savolitinib has made
significant development progress in lung cancer, completing NMPA
NDA review, gaining approval and successfully launching as a
monotherapy in China. It is also now in multiple late stage
registrational studies as a combination therapy.
The table below shows a summary of the clinical studies for
savolitinib in lung cancer patients.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
-------------- ---------------------------- ------ ---------------------- ------------------- -----------
Savolitinib MET exon 14 skipping China II Registration Approved & launched NCT02897479
monotherapy alterations in 2021; Final
OS analysis at
ELCC 2022
-------------- ---------------------------- ------ ---------------------- ------------------- -----------
Savolitinib MET exon 14 skipping China III Confirmatory Ongoing since 2021 NCT04923945
monotherapy alterations
-------------- ---------------------------- ------ ---------------------- ------------------- -----------
Savolitinib SOUND : MET-driven, China II Ongoing since 2022 NCT05374603
+ IMFINZI(R) EGFR wild type
-------------- ---------------------------- ------ ---------------------- ------------------- -----------
Savolitinib SAVANNAH : 2L/3L Global II Registration-intent Ongoing; Data that NCT03778229
+ TAGRISSO(R) EGFRm+ ([56]) ; TAGRISSO(R) supported Phase
refractory; MET+ IIIs at WCLC 2022
-------------- ---------------------------- ------ ---------------------- ------------------- -----------
Savolitinib SAFFRON: 2L/3L EGFRm+; Global III Ongoing since 2022 NCT05261399
+ TAGRISSO(R) TAGRISSO(R) refractory;
MET+
-------------- ---------------------------- ------ ---------------------- ------------------- -----------
Savolitinib SACHI : 2L EGFR TKI China III Ongoing since 2021 NCT05015608
+ TAGRISSO(R) ([57]) refractory
NSCLC; MET+
-------------- ---------------------------- ------ ---------------------- ------------------- -----------
Savolitinib SANOVO : Naïve China III Ongoing since 2021 NCT05009836
+ TAGRISSO(R) patients with EGFRm
& MET+
-------------- ---------------------------- ------ ---------------------- ------------------- -----------
Update on MET altered, EGFR wild type NSCLC in China - The June
2021 monotherapy approval by the NMPA was based on positive results
from a Phase II trial conducted in China in patients with NSCLC
with MET exon 14 skipping alterations (NCT02897479). Final OS and
subgroup analysis was presented for this trial at ELCC 2022 and
published in the journal JTO Clinical and Research Reports . The
updated results further confirmed the favorable benefit of
savolitinib in these patients and in each subgroup and the
acceptable safety profile.
In addition to this trial and the confirmatory study in this
patient population (NCT04923945), the SOUND Phase II trial is an
open-label, interventional, multicenter, exploratory Phase II study
to evaluate savolitinib combined with IMFINZI(R) in EGFR/ALK/ROS1
wild-type, locally advanced or metastatic NSCLC patients with MET
aberrations (NCT05374603). The primary endpoint is PFS.
Update on combination therapies in EGFR TKI-resistant NSCLC -
MET-aberration is a major mechanism for acquired resistance to both
first/second-generation EGFR TKIs as well as third-generation EGFR
TKIs like TAGRISSO(R) . Among patients who experience disease
progression post-TAGRISSO(R) treatment, approximately 15-50%
present with MET aberration. The prevalence of MET amplification
and overexpression may differ depending on the sample type,
detection method and assay cut-off used. Savolitinib has been
studied extensively in these patients in the TATTON and SAVANNAH
studies. The encouraging results led to the initiation and planning
of three Phase III studies: SACHI and SANOVO were initiated in
China in 2021, and the global, pivotal Phase III SAFFRON study is
currently open for enrollment.
In January 2023, the U.S. FDA designated as a Fast Track
development program the investigation of savolitinib for use in
combination with TAGRISSO(R) for the treatment of patients with
locally advanced or metastatic NSCLC whose tumors have MET
overexpression and/or amplification, as detected by an FDA-approved
test, and who have had disease progression during or following
prior TAGRISSO(R) .
SAVANNAH (NCT03778229) - This global Phase II study in patients
who have progressed following TAGRISSO(R) due to MET amplification
or overexpression has three dose cohorts of savolitinib combined
with TAGRISSO(R) . In addition to continuing TAGRISSO(R) treatment,
patients received savolitinib 300mg QD, 300mg BID, or 600mg QD. The
study reopened for enrollment to further reinforce the strength of
data, initially presented at WCLC 2022. Recruitment is expected to
be completed in the second half of 2023. We continue to evaluate
the possibility of using the SAVANNAH study as the basis for U.S.
accelerated approval.
The first presentation was at 2022 WCLC. These results were
based on an analysis of 193 efficacy evaluable patients who
received savolitinib 300mg once daily plus TAGRISSO(R) 80mg once
daily at data cut-off date of August 27, 2021. Qualifying MET
aberrations were FISH5+ ([58]) or IHC50+ ([59]) . Importantly,
additional analysis using a higher cut-off level of MET aberration
were presented. The higher cut-off levels for MET aberration are
FISH10+ ([60]) and/or IHC90+ ([61]) . The prevalence of this higher
cut-off levels of MET aberration was 34% of patients centrally
tested for enrollment in this study versus 62% at the lower,
qualifying cut-off level.
Results showed a trend toward improved response rates with
increasing level of MET aberration. Across all patients in this
analysis, ORR was 32% (95% CI: 26-39%), median DoR was 8.3 months
(95% CI: 6.9-9.7 months), and median PFS was 5.3 months (95% CI:
4.2-5.8 months). These results are consistent with the TATTON and
ORCHARD global studies. Among the 108 SAVANNAH patients who met the
criteria for higher cut-off levels of MET aberration, ORR was 49%
(95% CI: 39-59%), median DoR was 9.3 months (95% CI: 7.6-10.6
months), and median PFS was 7.1 months (95% CI: 5.3-8.0
months).
Importantly, among the 87 patients who did not receive prior
chemotherapy, ORR was 52% (95% CI: 41-63%), median DoR was 9.6
months (95% CI: 7.6-14.9 months), and median PFS was 7.2 months
(95% CI: 4.7-9.2 months). The safety profile of savolitinib plus
TAGRISSO(R) was consistent with the known profiles of the
combination and each treatment alone.
SAFFRON (NCT05261399) - Findings based on SAVANNAH and the
TATTON studies supported the initiation of the SAFFRON global Phase
III study in patients with EGFR-mutated, MET-driven, locally
advanced or metastatic NSCLC whose disease progressed on first- or
second-line treatment with TAGRISSO(R) as the most recent therapy,
with no prior chemotherapy in the metastatic setting allowed.
Patients are prospectively selected for the higher level of MET
aberration of FISH10+ and/or IHC90+. The SAFFRON study will
evaluate the efficacy and safety of savolitinib in combination with
TAGRISSO(R) compared to pemetrexed plus platinum
doublet-chemotherapy, the current standard-of-care treatment in
this setting. The primary endpoint of the study is PFS. Enrollment
of SAVANNAH is being prioritized until it is fully enrolled.
Two registrational studies are ongoing in China in EGFR mutated
NSCLC with MET aberrations: the SANOVO (NCT05009836) study in
treatment naïve patients, and SACHI (NCT05015608) study in patients
whose disease progressed following treatment with any first-line
EGFR TKI. Both trials are expected to complete enrollment in
2024.
Savolitinib - Kidney cancer:
MET is a key genetic driver in papillary RCC , and emerging
evidence suggests that combining immunotherapies with a MET
inhibitor could enhance anti-tumor activity. PRCC is a subtype of
kidney cancer, representing about 15% of patients, with no
treatments approved for patients with tumors that harbor MET-driven
alterations. We have conducted multiple global studies of
savolitinib in PRCC patients, including the SAVOIR monotherapy and
CALYPSO combination therapy global Phase II trials, that both
demonstrated highly encouraging results. These results led to the
initiation of a global Phase III, the SAMETA study, in 2021.
The table below shows a summary of the clinical study for
savolitinib in kidney cancer patients.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
------------- ------------------------- ------ ----- ------------- -----------
Savolitinib SAMETA : MET-driven, Global III Ongoing since NCT05043090
+ IMFINZI(R) unresectable and locally 2021
advanced or metastatic
PRCC
------------- ------------------------- ------ ----- ------------- -----------
Savolitinib - Gastric cancer:
MET-driven gastric cancer has a very poor prognosis. Multiple
Phase II studies have been conducted in Asia to study savolitinib
in MET-driven gastric cancer, of which approximately 5% of all
gastric cancer patients, demonstrated promising efficacy, including
VIKTORY. The VIKTORY study reported a 50% ORR with savolitinib
monotherapy in gastric cancer patients whose tumors harbor MET
amplification.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
----------- ------------------------------ ----- ---------------------- --------------------------- -----------
Savolitinib 2L+ gastric cancer with China II registration-intent Ongoing since NCT04923932
MET amplification. Two-stage, 2021; Consult
single-arm study CDE on registration-intent
in H1 2023
----------- ------------------------------ ----- ---------------------- --------------------------- -----------
Fruquintinib (ELUNATE(R) in China)
Fruquintinib is a novel, selective, oral inhibitor of VEGFR
1/2/3 kinases that was designed to improve kinase selectivity to
minimize off-target toxicity and thereby improve efficacy and
tolerability. Fruquintinib has been studied in clinical trials with
about 5,000 patients to date, both as a monotherapy and in
combination with other agents.
Aside from its first approved indication of third-line CRC (in
China), studies of fruquintinib combined with various checkpoint
inhibitors (including TYVYT(R) , geptanolimab and tislelizumab) are
underway, some of which presented encouraging data in 2021.
Registration-intent studies combined with chemotherapy (FRUTIGA
study in gastric cancer) or checkpoint inhibitors (TYVYT(R) combo,
in endometrial cancer and RCC) are ongoing in China.
We are partnered with Lilly in China and have agreed to partner
with Takeda outside of China. The table below shows a summary of
the clinical studies for fruquintinib.
Treatment Name, Line, Sites Phase Status/Plan NCT #
Patient Focus
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib monotherapy FRESCO-2 : metastatic U.S. / III U.S., EU, Japan NCT04322539
CRC Europe filings to complete
/ Japan in 2023; Results
/ Aus. at ESMO 2022
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib monotherapy CRC; TN ([62]) U.S. I/Ib CRC data at ASCO NCT03251378
& HR+ ([63]) GI 2022. Close
/Her2- ([64]) to completion
breast cancer
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib + MSS ([65]) -CRC U.S. Ib/II Ongoing since NCT04577963
tislelizumab (PD-1) 2021; Fully enrolled;
Submitting data
to conference
in H2 2023
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib monotherapy FRESCO : >= China III Approved and NCT02314819
3L CRC; chemotherapy launched in 2018
refractory
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib + FRUTIGA : 2L China III Supplemental NCT03223376
paclitaxel gastric cancer NDA to be filed
in H1 2023
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib + CRC China II Fully enrolled; NCT04179084
TYVYT(R) (PD-1) Data at European
Journal of Cancer
181 (2023) 26-37
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib + Endometrial cancer China II registration-intent Ongoing since NCT03903705
TYVYT(R) (PD-1) 2021; Ib data
at CSCO 2021
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib + RCC China Ib/II Fully enrolled; NCT03903705
TYVYT(R) (PD-1) 1L & 2L data
submission in
2023
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib + RCC China III Ongoing since NCT05522231
TYVYT(R) (PD-1) 2022
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib + Gastrointestinal China Ib/II Fully enrolled; NCT03903705
TYVYT(R) (PD-1) tumors Data submission
in 2023
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib + NSCLC China Ib/II Fully enrolled; NCT03903705
TYVYT(R) (PD-1) Data submission
in 2023 if mature
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib + Cervical cancer China Ib/II Fully enrolled; NCT03903705
TYVYT(R) (PD-1) Data submission
in 2023 if mature
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib + CRC Korea Ib/II Fully enrolled NCT04716634
tislelizumab (PD-1) / China
------------------------ --------------------- -------- ---------------------- ---------------------- -----------
Fruquintinib - CRC updates:
FRESCO-2 (NCT04322539) - Positive results from this
double-blind, placebo-controlled, global Phase III study in 691
patients with refractory metastatic CRC were presented at ESMO
2022. The study demonstrated that treatment with fruquintinib
resulted in a statistically significant and clinically meaningful
increase in OS and the key secondary endpoint of PFS compared to
treatment with placebo. Specifically, the median OS was 7.4 months
for the 461 patients treated with fruquintinib compared to 4.8
months for the 230 patients in the placebo group (HR 0.66; 95% CI
0.55-0.80; p<0.001). Median PFS was 3.7 months with fruquintinib
compared to 1.8 months with placebo (HR 0.32; 95% CI 0.27-0.39;
p<0.001). DCR was 55.5% with fruquintinib compared to 16.1% with
placebo.
The safety profile of fruquintinib in FRESCO-2 was consistent
with previously reported fruquintinib studies. Grade 3 or above
adverse events occurred in 62.7% of patients who received
fruquintinib, compared to 50.4% of patients who received placebo.
Grade 3 or above adverse events that occurred in more than 5% of
patients who received fruquintinib were hypertension (13.6% vs.
0.9% in the placebo group), asthenia (7.7% vs. 3.9% in the placebo
group) and hand-foot syndrome (6.4% vs. 0% in the placebo
group).
Filing of a rolling submission of a NDA was initiated in
December 2022, and expected to be completed in the first half of
2023. MAA filing to the EMA and NDA filing to the PMDA are expected
to follow in 2023.
U.S. Phase I/Ib CRC cohorts (NCT03251378) - Preliminary efficacy
and safety data of fruquintinib in patients with refractory,
metastatic CRC were presented at ASCO GI in early 2022. The study
provided proof-of-concept evidence to initiate the FRESCO-2
study.
Fruquintinib - Gastric cancer:
FRUTIGA (NCT03223376) - This randomized, double-blind, Phase III
study in China to evaluate fruquintinib combined with paclitaxel
compared with paclitaxel monotherapy, for second-line treatment of
advanced gastric cancer, enrolled approximately 700 patients in
July 2022. Its co-primary endpoints are PFS and OS. The trial met
the PFS endpoint at a statistically and clinically meaningful
level. The OS endpoint was not statistically significant per the
pre-specified statistical plan, although there was an improvement
in median OS. Fruquintinib also demonstrated a statistically
significant improvement in secondary endpoints including ORR, DCR
and DoR. The safety profile of fruquintinib in FRUTIGA was
consistent with previously reported studies. Full detailed results
are subject to ongoing analysis and are expected to be disclosed at
an upcoming scientific meeting.
Fruquintinib - Combinations with checkpoint inhibitors:
Advanced endometrial cancer registration-intent cohort of
TYVYT(R) combination (NCT03903705) - Platinum-based systemic
chemotherapy is the standard first-line treatment for advanced
endometrial cancer. However, patients who progress following
first-line chemotherapy have limited treatment options, and the
prognosis remains poor. Initially presented at CSCO 2021, data in
this endometrial cancer cohort is encouraging.
We agreed with the NMPA to expand this cohort into a single-arm
registrational Phase II study. The cohort is targeting to enroll
over 130 patients.
Advanced metastatic renal cell carcinoma (NCT05522231) - In
first-line clear-cell renal cell carcinoma ("ccRCC"), clinical
benefits have been demonstrated for the combination of
antiangiogenic therapy and immunotherapy. However, there is limited
evidence on the benefits of this combination in the second-line
setting. Phase II data disclosed at CSCO 2021 showed encouraging
anti-tumor efficacy and durability in these patients.
A Phase III trial of fruquintinib in combination with TYVYT(R)
as second-line treatment for locally advanced or metastatic RCC was
initiated in October 2022. The study is a randomized, open-label,
active-controlled study to evaluate the efficacy and safety of
fruquintinib in combination with TYVYT(R) versus axitinib or
everolimus monotherapy for the second-line treatment of advanced
RCC. The primary endpoint is PFS. Approximately 260 patients will
be enrolled in the study.
Tislelizumab combinations (NCT04577963 & NCT04716634) - In
August 2021, we initiated an open-label, multi-center,
non-randomized Phase Ib/II study in the U.S. to assess fruquintinib
in combination with tislelizumab in patients with MSS-CRC. The
Phase II study in China and Korea for fruquintinib in combination
with tislelizumab is being led by BeiGene for the treatment of
advanced or metastatic, unresectable CRC.
Fruquintinib - Exploratory development:
In China, we support an investigator initiated trial program for
fruquintinib, and there are about 30 of such trials ongoing in
various solid tumor settings.
Fruquintinib - Partnership with Takeda:
In January 2023, HUTCHMED entered into an agreement whereby
Takeda will receive an exclusive worldwide license to develop and
commercialize fruquintinib in all indications and territories
outside of mainland China, Hong Kong and Macau, where it is
marketed and will continue to be marketed by HUTCHMED in
partnership with Lilly. Subject to the terms of the agreement,
HUTCHMED will be eligible to receive up to US$1.13 billion,
including US$400 million upfront on closing of the agreement, and
up to US$730 million in additional potential payments relating to
regulatory, development and commercial sales milestones, as well as
royalties on net sales. The deal is subject to customary closing
conditions, including completion of antitrust regulatory reviews.
Following these clearances, Takeda will become solely responsible
for the development and commercialization of fruquintinib in all
the included territories.
Surufatinib (SULANDA(R) in China)
Surufatinib is a novel, oral angio-immuno kinase inhibitor that
selectively inhibits the tyrosine kinase activity associated with
VEGFR and FGFR, both shown to be involved in tumor angiogenesis,
and CSF-1R, which plays a key role in regulating tumor-associated
macrophages, promoting the body's immune response against tumor
cells. Surufatinib has been studied in clinical trials with around
1,200 patients to date, both as a monotherapy and in combinations,
and is approved in China. HUTCHMED currently retains all rights to
surufatinib worldwide.
Initial approvals for surufatinib in China are for the treatment
of advanced NET patients. NETs present in the body's organ system
with fragmented epidemiology. About 58% of NETs originate in the
gastrointestinal tract and pancreas, 27% in the lung or bronchus,
and a further 15% in other organs or unknown origins.
Surufatinib's ability to inhibit angiogenesis, block the
accumulation of tumor associated macrophages and promote
infiltration of effector T cells into tumors could help improve the
anti-tumor activity of PD-1 antibodies. Several combination studies
with PD-1 antibodies have shown promising data.
A summary of the clinical studies of surufatinib is shown in the
table below.
Treatment Name, Line, Sites Phase Status/Plan NCT #
Patient Focus
-------------------------- ---------------- --------- --------- ---------------------- -----------
Surufatinib monotherapy NETs U.S. Ib/II Completed NCT02549937
& Europe Bridging
-------------------------- ---------------- --------- --------- ---------------------- -----------
Surufatinib monotherapy NETs Japan Bridging Ongoing since 2021 NCT05077384
-------------------------- ---------------- --------- --------- ---------------------- -----------
Surufatinib + tislelizumab Solid tumors U.S. Ib/II Since 2021; Enrollment NCT04579757
(PD-1) / Europe stopped
-------------------------- ---------------- --------- --------- ---------------------- -----------
Surufatinib monotherapy SANET-ep : epNET China III Approved; Launched NCT02588170
([66]) in 2021
-------------------------- ---------------- --------- --------- ---------------------- -----------
Surufatinib monotherapy SANET-p : pNET China III Approved; Launched NCT02589821
([67]) in 2021; Pooled
analysis at ASCO
2022
-------------------------- ---------------- --------- --------- ---------------------- -----------
Surufatinib + TUOYI(R) SURTORI-01 : China III Ongoing since 2021 NCT05015621
(PD-1) 2L NEC ([68])
-------------------------- ---------------- --------- --------- ---------------------- -----------
Surufatinib + TUOYI(R) NENs ([69]) China II Fully enrolled; NCT04169672
(PD-1) Data at ASCO 2021
& ESMO IO ([70])
2021
-------------------------- ---------------- --------- --------- ---------------------- -----------
Surufatinib + TUOYI(R) Biliary tract China II Fully enrolled NCT04169672
(PD-1) cancer
-------------------------- ---------------- --------- --------- ---------------------- -----------
Surufatinib + TUOYI(R) SCLC ([71]) China II Ongoing since 2022 NCT05509699
(PD-1)
-------------------------- ---------------- --------- --------- ---------------------- -----------
Surufatinib + TUOYI(R) Solid tumors China II Fully enrolled NCT04169672
(PD-1)
-------------------------- ---------------- --------- --------- ---------------------- -----------
Surufatinib - Monotherapy in NET updates:
U.S. NDA and EMA MAA - Surufatinib received FDA Fast Track
Designations in April 2020 for the treatment of pNETs and epNETs.
Orphan Drug Designation for pNETs was granted in November 2019. In
a May 2020 pre-NDA meeting, we reached an agreement with the FDA
that the two positive Phase III studies of surufatinib in patients
with pNETs and epNETs in China, along with the bridging trial in
the U.S. could form the basis to support a U.S. NDA submission. The
FDA accepted the filing of the NDA in June 2021. However, in April
2022, we received a Complete Response Letter from the FDA regarding
the NDA for surufatinib for the treatment of pNETs and epNETs.
Based on interactions with the FDA and EMA, a new multi-regional
clinical trial (MRCT) would be required to move forward with this
program in the U.S. and Europe.
We will continue to explore conducting a multi-regional clinical
trial with a partner that would support approval in U.S. and
Europe.
Japan Bridging Study to Support Registration for Advanced NET
(NCT05077384) - Based on dialogue with the Japanese PMDA, it was
agreed that the Japanese NDA would include results from a
34-patient, registration-enabling bridging study in Japan to
complement the existing data package. The trial was initiated in
September 2021 and results are expected in the first half of 2023.
We plan to engage with the PMDA when these results are
available.
Surufatinib - Combination therapy with checkpoint
inhibitors:
A Phase II China study (NCT04169672) combining surufatinib with
TUOYI(R) enrolled patients in nine solid tumor types, including
NENs, biliary tract cancer, gastric cancer, thyroid cancer, SCLC,
soft tissue sarcoma, endometrial cancer, esophageal cancer and
NSCLC. These have led to the initiation in September 2021 of the
first Phase III trial combining surufatinib with a PD-1 antibody,
the SURTORI-01 study in NEC and a Phase II study in SCLC in
2022.
We de-prioritized and stopped recruitment into an open-label,
Phase Ib/II study of surufatinib in combination with BeiGene's
tislelizumab in the U.S. and Europe. The study was to evaluate the
safety, tolerability, pharmacokinetics and efficacy in patients
with multiple advanced solid tumors (NCT04579757).
Surufatinib - Exploratory development:
In China, we support an investigator initiated trial program for
surufatinib, with about 50 of such trials in various solid tumor
settings being conducted for both combination and single agent
regimens. These trials explore and answer important medical
questions in addition to our own company-sponsored clinical
trials.
Hematological Malignancies Candidates
HUTCHMED currently has six investigational drug candidates
targeting hematological malig-nan-cies in clinical development.
Amdizalisib (targeting PI3K ), sovleplenib (HMPL-523, targeting
Syk) and HMPL-760 (targeting BTK) are being studied in several
trials against B-cell dominant malignancies. In addition to the
three B-cell receptor pathway inhibitors, HUTCHMED is also
develop-ing HMPL-306 (targeting IDH1 and IDH2), tazemetostat (a
methyl-trans-ferase inhibitor of EZH2) and HMPL-A83 (an anti-CD47
monoclonal antibody).
Sovleplenib (HMPL-523)
Sovleplenib is a novel, selective, oral inhibitor targeting Syk,
for the treatment of hematological malignancies and immune
diseases. Syk is a component in Fc receptor and B-cell receptor
signaling pathway.
In 2021, we initiated a Phase III study in China for primary
ITP, for which it has received Breakthrough Therapy Designation,
and presented data on both primary ITP and hematological
malignancies at ASH ([72]) 2021. HUTCHMED currently retains all
rights to sovleplenib worldwide. The table below shows a summary of
the clinical studies for sovleplenib.
Treatment Name, Line, Sites Phase Status/Plan NCT #
Patient Focus
----------------------- -------------- ------- ------ ---------------------------- -----------
Sovleplenib monotherapy ESLIM-01 China III Fully enrolled; Breakthrough NCT05029635
: >= 2L ITP Therapy Designation
----------------------- -------------- ------- ------ ---------------------------- -----------
Sovleplenib monotherapy Indolent NHL U.S. / I/Ib Ongoing; Prelim. data NCT03779113
([73]) Europe at ASH 2021
----------------------- -------------- ------- ------ ---------------------------- -----------
Sovleplenib monotherapy Warm AIHA China II/III Ongoing since 2022; NCT05535933
Phase III decision
in 2023 pending Phase
II results
----------------------- -------------- ------- ------ ---------------------------- -----------
ESLIM-01 (Evaluation of Sovleplenib for immunological
diseases-01, NCT05029635) - In October 2021, we initiated a
randomized, double-blinded, placebo-controlled Phase III trial in
China of sovleplenib in approximately 180 adult patients with
primary ITP who have received at least one prior line of standard
therapy. ITP is an autoimmune disorder that can lead to increased
risk of bleeding. The primary endpoint of the study is the durable
response rate. In January 2022, the NMPA granted Breakthrough
Therapy Designation for this indication. Enrollment was completed
in December 2022.
China Phase II/III in warm AIHA - This is a randomized,
double-blind, placebo-controlled Phase II/III study to evaluate the
efficacy, safety, tolerability, and pharmacokinetics of sovleplenib
in the treatment of warm AIHA. AIHA is the result of destruction of
red blood cells due to the production of antibodies against red
blood cells which bind to antigens on the red blood cell membrane
in autoimmune disorders. If the results of the Phase II stage of
the study indicate sufficiently satisfactory efficacy and safety,
the Phase III stage will be initiated. The China IND was approved
in July 2022. The first patient was enrolled in September 2022. The
enrollment of Phase II part of the study is expected to be
completed in 2023, and lead to a decision on whether to initiate
Phase III.
Amdizalisib (HMPL-689)
Amdizalisib is a novel, highly selective oral inhibitor
targeting the isoform PI3K , a key component in the B-cell receptor
signaling pathway. Amdizalisib's pharmacokinetic properties have
been found to be favorable with good oral absorption, moderate
tissue distribution and low clearance in preclinical studies. We
also expect that amdizalisib will have low risk of drug
accumulation and drug-drug interactions, supporting feasibility of
development in combination with other medicines. The first of such
activities is in combination with tazemetostat. HUTCHMED currently
retains all rights to amdizalisib worldwide. The table below shows
a summary of the clinical studies for amdizalisib.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
------------ ------------------------ ------------ ---------------------- --------------------- -----------
Amdizalisib Indolent NHL, peripheral China Ib Ongoing; Expansion NCT03128164
monotherapy T-cell lymphomas data presented at
ESMO 2021
------------ ------------------------ ------------ ---------------------- --------------------- -----------
Amdizalisib 3L Relapsed/refractory China II registration-intent Fully enrolled; NCT04849351
monotherapy follicular lymphoma Breakthrough Therapy
Designation
------------ ------------------------ ------------ ---------------------- --------------------- -----------
Amdizalisib 2L Relapsed/refractory China II registration-intent Ongoing since Apr NCT04849351
monotherapy marginal zone lymphoma 2021
------------ ------------------------ ------------ ---------------------- --------------------- -----------
Amdizalisib Indolent NHL U.S./ Europe I/Ib De-prioritized NCT03786926
monotherapy
------------ ------------------------ ------------ ---------------------- --------------------- -----------
Phase II registration-intent trial (NCT04849351) - In April
2021, we commenced a registration-intent, single-arm, open-label
Phase II trial in China in approximately 100 patients with
relapsed/refractory follicular lymphoma and approximately 80
patients with relapsed/refractory marginal zone lymphoma, two
subtypes of non-Hodgkin's lymphoma. The primary endpoint is ORR.
The trial is being conducted in over 35 sites in China, has fully
enrolled the follicular lymphoma cohort and is expected to complete
enrollment for the marginal zone lymphoma cohort around
mid-year.
Tazemetostat
In August 2021, we entered into a strategic collaboration with
Epizyme, a subsidiary of Ipsen, to research, develop, manufacture
and commercialize tazemetostat in Greater China, including the
mainland, Hong Kong, Macau and Taiwan. Tazemetostat is an inhibitor
of EZH2 developed by Ipsen that is approved by the U.S. FDA for the
treatment of certain epithelioid sarcoma and follicular lymphoma
patients. It received accelerated approval from the FDA based on
ORR and DoR in January and June 2020 for epithelioid sarcoma and
follicular lymphoma, respectively.
We are developing and plan to seek approval for tazemetostat in
various hematological and solid tumors, in Greater China. We are
participating in Ipsen's SYMPHONY-1 (EZH-302) study, leading it in
Greater China. We will generally be responsible for funding all
clinical trials of tazemetostat in Greater China, including the
portion of global trials conducted there. We are responsible for
the research, manufacturing and commercialization of tazemetostat
in Greater China.
The table below shows a summary of the clinical studies for
tazemetostat.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
--------------- ----------------------------- ------ ---------------------- ------------------ -----------
Tazemetostat Metastatic or locally Hainan N/A - Hainan Approved; Launched N/A
monotherapy advanced epithelioid Pilot Zone in 2022
sarcoma; Relapsed/refractory
3L+ follicular lymphoma
--------------- ----------------------------- ------ ---------------------- ------------------ -----------
Tazemetostat SYMPHONY-1 : 2L follicular Global Ib/III Ongoing; PhIb NCT04224493
+ lenalidomide lymphoma data at ASH 2022;
+ rituximab China portion
(R(2)) of global Ph
III started H2
2022
--------------- ----------------------------- ------ ---------------------- ------------------ -----------
Tazemetostat Relapsed/refractory China II registration-intent Ongoing since NCT05467943
monotherapy 3L+ follicular lymphoma (bridging) July 2022
--------------- ----------------------------- ------ ---------------------- ------------------ -----------
Tazemetostat Lymphoma sub-types China II Ongoing since NCT05713110
+ amdizalisib Feb 2023
--------------- ----------------------------- ------ ---------------------- ------------------ -----------
SYMPHONY-1 (NCT04224493) - This is a global, multicenter,
randomized, double-blind, active-controlled, 3-stage,
biomarker-enriched, Phase Ib/III study of tazemetostat in
combination with R(2) in patients with relapsed or refractory
follicular lymphoma after at least one prior line of therapy. Ipsen
conducted the Phase Ib portion of the study in 2021, which
determined the recommended Phase III dose and also demonstrated
potential efficacy in second-line follicular lymphoma. The safety
profile of the combination was consistent with the previously
reported safety information in the U.S. prescribing information for
both tazemetostat and R(2), respectively.
An interim analysis of the Phase Ib portion of the study, based
on 44 follicular lymphoma patients as of June 14, 2022, was
presented at ASH 2022. The safety profile of the tazemetostat and
R(2) combination was consistent with the prescribing information
for both tazemetostat and R(2), respectively. Additionally, there
was no clear dose response for treatment-emergent adverse events
(TEAEs) or dose modifications. Of 41 evaluable patients, ORR was
97.6% with 51.2% complete response rate. Median PFS and DoR were
not yet reached with a median follow-up of 11.2 months.
In the Phase III portion of the trial, approximately 500
patients are randomly assigned to receive the recommended Phase III
dose of tazemetostat + R(2) or placebo + R(2). The study will also
include a maintenance arm with tazemetostat or placebo following
the first year of treatment with tazemetostat + R(2) or placebo +
R(2). The first patient was enrolled in May 2022 and the first
China patient was enrolled in September 2022.
China Phase II bridging study in relapsed/refractory follicular
lymphoma (NCT05467943) - In July 2022, we initiated a multicenter,
open-label, Phase II study to evaluate the efficacy, safety and
pharmacokinetics of tazemetostat for the treatment of patients with
relapsed/refractory follicular lymphoma intended to support
conditional registration in China. The primary objective is to
evaluate the efficacy of tazemetostat in patients with EZH2
mutation (Cohort 1). The secondary objectives are to evaluate the
efficacy of tazemetostat in patients with EZH2 wild-type (Cohort 2)
and to evaluate the safety and the pharmacokinetics of
tazemetostat. Enrollment of cohort 2 is complete and cohort 1 is
ongoing.
China Phase II combination study in relapsed/refractory
follicular lymphoma (NCT05713110) - This is a multicenter,
open-label, Phase II study to evaluate the safety, tolerability and
preliminary anti-tumor efficacy of tazemetostat in combination with
amdizalisib in patients with R/R lymphoma. The first patient was
dosed in February 2023.
HMPL-306
HMPL-306 is a novel dual-inhibitor of IDH1 and IDH2 enzymes.
IDH1 and IDH2 mutations have been implicated as drivers of certain
hematological malignancies, gliomas and solid tumors, particularly
among acute myeloid leukemia patients. HUTCHMED currently retains
all rights to HMPL-306 worldwide. The table below shows a summary
of the clinical studies for HMPL-306.
Treatment Name, Line, Patient Focus Sites Phase Status/Plan NCT #
------------ --------------------------------------- ----- ----- ---------------------- -----------
HMPL-306 Hematological malignancies China I Ongoing since NCT04272957
monotherapy 2020; RP2D determined
------------ --------------------------------------- ----- ----- ---------------------- -----------
HMPL-306 Solid tumors including but U.S. I Ongoing since NCT04762602
monotherapy not limited to gliomas, 2021; nominate
chondrosarcomas or cholangiocarcinomas RP2D in 2023.
------------ --------------------------------------- ----- ----- ---------------------- -----------
HMPL-306 Hematological malignancies U.S. I Ongoing since NCT04764474
monotherapy 2021; nominate
RP2D in 2023
------------ --------------------------------------- ----- ----- ---------------------- -----------
HMPL-760
HMPL-760 is an investigational, non-covalent, third-generation
BTK inhibitor. It is a highly potent, selective, and reversible
inhibitor with long target engagement against BTK, including
wild-type and C481S-mutated BTK. China Phase I studies opened in
early 2022 will include relapsed or refractory B-cell non-Hodgkin's
lymphoma or CLL ([74]) patients with or without a prior regimen
containing a BTK inhibitor. HUTCHMED currently retains all rights
to HMPL-760 worldwide.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
-------------------- ------------------- ----- ----- -------------- -----------
HMPL-760 monotherapy CLL, SLL ([75]) China I Ongoing since NCT05190068
, other B-NHL Jan 2022
-------------------- ------------------- ----- ----- -------------- -----------
HMPL-760 monotherapy CLL, SLL, other U.S. I De-prioritized NCT05176691
NHL
-------------------- ------------------- ----- ----- -------------- -----------
HMPL-453
HMPL-453 is a novel, selective, oral inhibitor targeting FGFR
1/2/3. Aberrant FGFR signaling is associated with tumor growth,
promotion of angiogenesis, as well as resistance to anti-tumor
therapies. Approximately 10-15% of IHCC patients have tumors
harboring FGFR2 fusion. HUTCHMED currently retains all rights to
HMPL-453 worldwide. The table below shows a summary of the clinical
studies for HMPL-453.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
------------------------- --------------------- ----- ----- ----------------------- -----------
HMPL-453 monotherapy 2L Cholangiocarcinoma China II Ongoing since NCT04353375
(IHCC with FGFR 2020; Data submission
fusion) planned in 2023;
Preparing registration
study
------------------------- --------------------- ----- ----- ----------------------- -----------
HMPL-453 + chemotherapies Multiple China I/II Ongoing since NCT05173142
2022
------------------------- --------------------- ----- ----- ----------------------- -----------
HMPL-453 +TUOYI(R) Multiple China I/II Ongoing since NCT05173142
(PD--1) 2022
------------------------- --------------------- ----- ----- ----------------------- -----------
After consultation with the CDE, a monotherapy registration
trial design has been agreed, and preparations are underway.
HMPL-295
HMPL-295 is a novel ERK inhibitor. ERK is a downstream component
of the RAS-RAF-MEK-ERK signaling cascade (MAPK pathway). This is
our first of multiple candidates in discovery targeting the MAPK
pathway. A China Phase I study was initiated in July 2021. HUTCHMED
currently retains all rights to HMPL-295 worldwide.
RAS-MAPK pathway is dysregulated in cancer, in which mutations
or non-genetic events hyper-activate the pathway in up to 50% of
cancers. RAS and RAF predict worse clinical prognosis in a wide
variety of tumor types, mediate resistance to targeted therapies,
and decrease the response to the approved standards of care,
namely, targeted therapy and immunotherapy. ERK inhibition has the
potential to overcome or avoid the intrinsic or acquired resistance
from the inhibition of RAS, RAF and MEK upstream mechanisms.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
-------------------- ------------------- ----- ----- ------------- -----------
HMPL-295 monotherapy Solid tumors China I Ongoing since NCT04908046
2021
-------------------- ------------------- ----- ----- ------------- -----------
HMPL-653
HMPL-653 is a novel, highly selective, and potent CSF-1R
inhibitor designed to target CSF-1R driven tumors as a monotherapy
or in combination with other drugs. We initiated a China Phase I
study in January 2022. HUTCHMED currently retains all rights to
HMPL-653 worldwide.
CSF-1R is usually expressed on the surface of macrophages and
can promote growth and differentiation of macrophages. Studies have
shown that blocking the CSF-1R signaling pathway could effectively
modulate the tumor microenvironment, relieve tumor
immunosuppression, and synergize with other anti-cancer therapies
such as immune checkpoint inhibitors to achieve tumor inhibition.
It has been demonstrated in several clinical studies that CSF-1R
inhibitors could treat tenosynovial giant cell tumors, and treat a
variety of malignancies combined with immuno-oncology or other
therapeutic agents. Currently no CSF-1R inhibitor has been approved
in China.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
-------------------- --------------------------- ----- ----- --------------- -----------
HMPL-653 monotherapy Solid tumors & tenosynovial China I Ongoing since NCT05190068
giant cell tumors Jan 2022; 110
expected to be
enrolled
-------------------- --------------------------- ----- ----- --------------- -----------
HMPL-A83
HMPL-A83 is an investigational IgG4-type humanized anti-CD47
monoclonal antibody that exhibits high affinity for CD47. HMPL-A83
blocks CD47 binding to Signal regulatory protein (SIRP)
<ALPHA> and disrupts the "do not eat me" signal that cancer
cells use to shield themselves from the immune system. HUTCHMED
currently retains all rights to HMPL-A83 worldwide.
In preclinical studies, HMPL-A83 demonstrated a high affinity
for CD47 antigen on tumor cells and strong phagocytosis induction
of multiple tumor cells, as well as weak affinity for red blood
cells and no induction of hemagglutination, implying low risk of
anemia, a potential event of special interest. HMPL-A83 has also
demonstrated strong anti-tumor activity in multiple animal
models.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
-------------------- ------------------- ----- ----- ------------- -----------
HMPL-A83 monotherapy Advanced malignant China I Ongoing since NCT05429008
neoplasms July 2022
-------------------- ------------------- ----- ----- ------------- -----------
Immunology Collaboration with Inmagene
In January 2021, we entered into a strategic partnership with
Inmagene, a clinical development stage company with a focus on
immunological diseases, to further develop four novel preclinical
drug candidates we discovered for the potential treatment of
multiple immunological diseases. Under the terms of the agreement,
we granted Inmagene exclusive options to such drug candidates
solely for the treatment of immunological diseases. Funded by
Inmagene, we work together to move the drug candidates towards IND.
If successful, Inmagene will then advance the drug candidates
through global clinical development. INDs for the first two
compounds were submitted in 2022.
Treatment Name, Line, Patient Sites Phase Status/Plan NCT #
Focus
------------- ---------------------------- ------ ----- ------------------ -----------
IMG-007 (OX40 Healthy volunteers; Global I Ongoing since 2022 NCT05353972
monoclonal adults with moderate
antibody) to severe atopic dermatitis
------------- ---------------------------- ------ ----- ------------------ -----------
IMG-004 (BTK Healthy volunteers Global I Ongoing since 2022 NCT05349097
inhibitor)
------------- ---------------------------- ------ ----- ------------------ -----------
IMG-007 in atopic dermatitis - This is a novel antagonistic
monoclonal antibody targeting the OX40 receptor. OX40 is a
costimulatory receptor member of the tumor necrosis factor receptor
(TNFR) superfamily expressed predominantly on activated T cells.
The Phase I study in healthy volunteers was initiated in July 2022
in Australia.
IMG-004 in immunological diseases - This is a non-covalent,
reversible small molecule inhibitor targeting BTK. Designed
specifically for inflammatory and autoimmune diseases that usually
require long-term treatment, IMG-004 is potent, highly selective
and brain permeable. The Phase I study in healthy volunteers in the
U.S. was initiated in August 2022.
MANUFACTURING
We continue to use contract manufacturing organizations in China
to produce our clinical and commercial API ([76]) supplies. For
manufacturing drug products, we currently use a combination of
contract manufacturers and our internal manufacturing facility. We
have a drug product facility in Suzhou which manufactures both
clinical and commercial supplies for some of our products. We are
building a new drug product facility in Pudong, Shanghai, which
will increase our novel drug product manufacturing capacity by over
five times. The construction and qualification of the Shanghai
facility is expected to be completed in mid-2023 and technology
transfer will start for some projects into the facility in late
2023. We expect to manufacture clinical supplies from the new
facility starting in 2023 and commercial supplies around 2025 after
the necessary regulatory filings and approvals.
We completed technology transfer for the API and drug product of
amdizalisib and sovleplenib into the selected commercial
manufacturing facilities in preparation for potential NDA filings.
Process validation for these products (both API and drug product)
is expected to complete in 2023.
We completed the NDA enabling work related to manufacturing for
the global launch of fruquintinib at the commercial manufacturing
sites. Process validation for API of this product has been
completed, and process validation for drug product will be
completed in the second half of 2023 in time for potential approval
and launch.
OTHER VENTURES
Our Other Ventures include drug marketing and distribution
platforms covering about 290 cities and towns in China with over
2,900 mainly manufacturing and commercial personnel. Built over the
past 20 years, it primarily focuses on prescription drugs and
science-based nutrition products through several joint ventures and
subsidiary companies.
In 2022, our Other Ventures delivered encouraging growth with
consolidated revenues up 11% (15% at CER) to $262.6 million (2021:
$236.5m). Consolidated net income attributable to HUTCHMED from our
Other Ventures increased by 16% (17% at CER) to $54.6 million
(2021: $47.3m, excluding net income attributable to HUTCHMED of
$7.1m contributed from HBYS which was disposed in September 2021;
$82.9m from the divestment of HBYS and $5.6m from land
compensation, before withholding tax).
Hutchison Sinopharm ([77]) : Our prescription drugs commercial
services business, which in addition to providing certain
commercial services for our own products, provides services to
third-party pharmaceutical companies in China, grew sales by 16%
(21% at CER) to $237.3 million in 2022 (2021: $204.1m).
In 2021, the Hong Kong International Arbitration Centre made a
final award in favor of Hutchison Sinopharm against Luye ([78]) in
the amount of RMB253.2 million ($36.4 million), plus costs and
interest (the "Award"), in connection with the termination of
Hutchison Sinopharm's right to distribute SEROQUEL(R) in China. In
June 2022, Luye provided a bank guarantee of up to RMB286.0 million
to cover the Award, pending the outcome of an application by Luye
to the High Court of Hong Kong to set aside the Award. On July 26,
2022, Luye's application to set aside the Award was dismissed by
the High Court with costs awarded in favor of Hutchison Sinopharm.
On October 7, 2022, Luye filed a Notice of Appeal to the Court of
Appeal regarding the dismissal and was accepted on November 8,
2022. A Court of Appeal hearing date has been set for June
2023.
SHPL: Our own-brand prescription drugs business, operated
through our non-consolidated joint venture SHPL, grew sales by 11%
(14% at CER) to $370.6 million (2021: $332.6m). This sales growth
and favorable product mix led to an increase of 12% (13% at CER) in
net income attributable to HUTCHMED to $49.9 million (2021:
$44.7m).
The SHPL operation is large-scale, with a commercial team of
about 2,300 staff managing the medical detailing and marketing of
its products not just in hospitals in provincial capitals and
medium-sized cities, but also in the majority of county-level
hospitals in China. SHPL's Good Manufacturing Practice-certified
factory holds 74 drug product manufacturing licenses and is
operated by about 550 manufacturing staff.
SXBX ([79]) pill : SHPL's main product is SXBX pill, an oral
vasodilator prescription therapy for coronary artery disease. SXBX
pill is the third largest botanical prescription drug in this
indication in China, with a national market share in January to
December 2022 of 21.0% (2021: 19.6%). Sales increased by 11% (14%
at CER) to $341.6 million in 2022 (2021: $307.1m).
SXBX pill is protected by a formulation patent that expires in
2029, but also retains certain state protection that extends
indefinitely, and is one of less than two dozen proprietary
prescription drugs represented on China's National Essential
Medicines List (NEML). Inclusion on this list means that all
Chinese state-owned health care institutions are required to carry
it. SXBX pill is fully reimbursed in all China.
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.
Dividends: Our share of SHPL's profits are passed to the
HUTCHMED Group through dividend payments. In 2022, dividends of
$43.7 million (2021: $49.9m) were paid from SHPL to the HUTCHMED
Group level with aggregate dividends received by HUTCHMED since
inception of over $280 million.
Weiguo Su
Chief Executive Officer and Chief Scientific Officer
February 28, 2023
USE OF NON-GAAP FINANCIAL MEASURES AND RECONCILIATION
In addition to financial information prepared in accordance with
U.S. GAAP, this announcement also contains certain non-GAAP
financial measures based on management's view of performance
including:
-- Adjusted Group net cash flows excluding financing activities
-- CER
Management uses such measures internally for planning and
forecasting purposes and to measure the HUTCHMED Group's overall
performance. We believe these adjusted financial measures provide
useful and meaningful information to us and investors because they
enhance investors' understanding of the continuing operating
performance of our business and facilitate the comparison of
performance between past and future periods. These adjusted
financial measures are non-GAAP measures and should be considered
in addition to, but not as a substitute for, the information
prepared in accordance with U.S. GAAP. Other companies may define
these measures in different ways.
Adjusted Group net cash flows excluding financing activities: We
exclude deposits in and proceeds from short-term investments for
the period, and exclude the net cash generated from financing
activities for the period to derive our adjusted Group net cash
flows excluding financing activities. We believe the presentation
of adjusted Group net cash flows excluding financing activities
provides useful and meaningful information about the change in our
cash resources excluding those from financing activities which may
present significant period-to-period differences.
CER: We remove the effects of currency movements from
period-to-period comparisons by retranslating the current period's
performance at previous period's foreign currency exchange rates.
Because we have significant operations in China, the RMB to U.S.
dollar exchange rates used for translation may have a significant
effect on our reported results. We believe the presentation at CER
provides useful and meaningful information because it facilitates
period-to-period comparisons of our results and increases the
transparency of our underlying performance.
Reconciliation of GAAP change in net cash used in operating
activities to Adjusted Group net cash flows excluding financing
activities:
$'millions 2022 2021
-------------------------------------------------------- --------- -------
Net cash used in operating activities (268.6) (204.2)
Net cash generated from/(used in) investing activities 296.6 (306.3)
Effect of exchange rate changes on cash and cash
equivalents (9.5) 2.4
Excludes: Deposits in short-term investments 1,202.0 1,356.0
Excludes: Proceeds from short-term investments (1,518.4) (921.4)
-------------------------------------------------------- --------- -------
Adjusted Group net cash flows excluding financing
activities (297.9) (73.5)
-------------------------------------------------------- --------- -------
Reconciliation of GAAP revenues and net income attributable to
HUTCHMED to CER:
$'millions (except
%) Year Ended Change Amount Change %
-------------------------------------------------- ------------------ ------------------------ -----------------------
December December Exchange Exchange
31, 2022 31, 2021 Actual CER effect Actual CER effect
-------------------------------------------------- -------- -------- ------ ------ -------- ------ ----- --------
Consolidated revenues
- Oncology/Immunology 163.8 119.6 44.2 48.9 (4.7) 37% 41% -4%
- Other Ventures^ 262.6 236.5 26.1 36.4 (10.3) 11% 15% -4%
^ Includes:
* Hutchison Sinopharm - prescription drugs 237.3 204.1 33.2 43.2 (10.0) 16% 21% -5%
Non-consolidated
joint venture revenues
- SHPL 370.6 332.6 38.0 47.1 (9.1) 11% 14% -3%
* SXBX pill 341.6 307.1 34.5 42.7 (8.2) 11% 14% -3%
Consolidated net
income attributable
to HUTCHMED - Other
Ventures 54.6 142.9 (88.3) (87.7) (0.6) -62% -61% -1%
* Consolidated entities 4.7 2.6 2.1 2.3 (0.2) 86% 89% -3%
* Equity investees 49.9 140.3 (90.4) (90.0) (0.4) -64% -64% -
* SHPL 49.9 44.7 5.2 5.6 (0.4) 12% 13% -1%
* HBYS (Note) - 95.6 (95.6) (95.6) - -100% -100% -
Excludes net income
attributable to HUTCHMED
contributed from HBYS
and one-time gains
- Other Ventures 54.6 47.3 7.3 7.9 (0.6) 16% 17% -1%
* Consolidated entities 4.7 2.6 2.1 2.3 (0.2) 86% 89% -3%
* Equity investees 49.9 44.7 5.2 5.6 (0.4) 12% 13% -1%
* SHPL 49.9 44.7 5.2 5.6 (0.4) 12% 13% -1%
Note: On September 28, 2021, the Group completed the divestment
of HBYS and the net income attributable to HUTCHMED contributed
from HBYS was $7.1 million for the period ended September 28, 2021.
For the year ended December 31, 2021, one-time gains include gain
on divestment of $82.9 million and land compensation gain of $5.6
million.
GROUP CAPITAL RESOURCES
LIQUIDITY AND CAPITAL RESOURCES
To date, we have taken a multi-source approach to fund our
operations, including through cash flows generated and dividend
payments from our Oncology/Immunology and Other Ventures
operations, service and milestone and upfront payments from our
collaboration partners, bank borrowings, investments from third
parties, proceeds from our listings on various stock exchanges and
follow-on offerings.
Our Oncology/Immunology operations have historically not
generated significant profits and have operated at a net loss, as
creating potential global first-in-class or best-in-class drug
candidates requires a significant investment of resources over a
prolonged period of time. As such, we incurred net losses of $360.8
million for the year ended December 31, 2022 and net losses of
$194.6 million for the year ended December 31, 2021.
As of December 31, 2022, we had cash and cash equivalents and
short-term investments of $631.0 million and unutilized bank
facilities of $140.3 million. As of December 31, 2022, we had $18.1
million in bank borrowings.
Certain of our subsidiaries and joint ventures, including those
registered as wholly foreign-owned enterprises in China, are
required to set aside at least 10.0% of their after-tax profits to
their general reserves until such reserves reach 50.0% of their
registered capital. In addition, certain of our joint ventures are
required to allocate certain of their after-tax profits as
determined in accordance with related regulations and their
respective articles of association to the reserve funds, upon
approval of the board.
Profit appropriated to the reserve funds for our subsidiaries
and joint ventures incorporated in the PRC was approximately
$318,000 and $89,000 for the years ended December 31, 2022 and
2021, respectively. In addition, as a result of PRC regulations
restricting dividend distributions from such reserve funds and from
a company's registered capital, our PRC subsidiaries are restricted
in their ability to transfer a certain amount of their net assets
to us as cash dividends, loans or advances. This restricted portion
amounted to $0.1 million as of December 31, 2022.
In addition, our non-consolidated joint venture, SHPL, held an
aggregate of $33.9 million in cash and cash equivalents and no bank
borrowings as of December 31, 2022. Such cash and cash equivalents
are only accessible by us through dividend payments from the joint
venture. The level of dividends declared by the joint venture is
subject to agreement each year between us and our joint venture
partner based on the profitability and working capital needs of the
joint venture.
CASH FLOW
Year Ended December 31,
-------------------------
2022 2021
------------ -----------
(in $'000)
Cash Flow Data:
Net cash used in operating activities (268,599) (204,223)
Net cash generated from/(used in) investing activities 296,588 (306,320)
Net cash (used in)/generated from financing activities (82,763) 650,028
------------ -----------
Net (decrease)/increase in cash and cash equivalents (54,774) 139,485
Effect of exchange rate changes (9,490) 2,427
Cash and cash equivalents at beginning of the year 377,542 235,630
------------ -----------
Cash and cash equivalents at end of the year 313,278 377,542
============ ===========
Net Cash used in Operating Activities
Net cash used in operating activities was $204.2 million for the
year ended December 31, 2021, compared to net cash used in
operating activities of $268.6 million for the year ended December
31, 2022. The net change of $64.4 million was primarily
attributable to higher operating expenses of $149.7 million from
$684.4 million for the year ended December 31, 2021 to $834.1
million for the year ended December 31, 2022. The foregoing was
partially offset by an increase in revenue of $70.3 million from
$356.1 million for the year ended December 31, 2021 to $426.4
million for the year ended December 31, 2022 and an increase in
changes of working capital of $26.2 million from $32.5 million for
the year ended December 31, 2021 to $58.7 million for the year
ended December 31, 2022.
Net Cash generated from/(used in) Investing Activities
Net cash used in investing activities was $306.3 million for the
year ended December 31, 2021, compared to net cash generated from
investing activities of $296.6 million for the year ended December
31, 2022. The net change of $602.9 million was primarily
attributable to short-term investments which had net deposits of
$434.6 million for the year ended December 31, 2021 as compared to
net withdrawals of $316.4 million for the year ended December 31,
2022. The net change was partially offset by the proceeds received
from divestment of an equity investee of $159.1 million during the
year ended December 31, 2021, compared to a dividend of $16.5
million received from divestment of the same equity investee during
the year ended December 31, 2022.
Net Cash (used in)/generated from Financing Activities
Net cash generated from financing activities was $650.0 million
for the year ended December 31, 2021, compared to net cash used in
financing activities of $82.8 million for the year ended December
31, 2022. The net change of $732.8 million was mainly attributable
to net proceeds from issuances of shares of $685.4 million from a
private placement in April 2021 and our public offering on the HKEX
with over-allotment option exercised in full in June and July,
2021. The net change was also attributable to an increase in
purchases of ADSs of $20.8 million by a trustee for the settlement
of equity awards of the Company which totaled $27.3 million for the
year ended December 31, 2021 as compared to $48.1 million for the
year ended December 31, 2022, as well as an increase in dividends
paid to non-controlling shareholders of subsidiaries of $15.7
million from $9.9 million for the year ended December 31, 2021 to
$25.6 million for the year ended December 31, 2022.
LOAN FACILITIES
In May 2019, our subsidiary entered into a credit facility
arrangement with HSBC ([80]) for the provision of unsecured credit
facilities in the aggregate amount of HK$400.0 million ($51.3
million). The 3-year credit facilities include (i) a HK$210.0
million ($26.9 million) term loan facility and (ii) a HK$190.0
million ($24.4 million) revolving loan facility, both with an
interest rate at HIBOR ([81]) plus 0.85% per annum. These credit
facilities are guaranteed by us and include certain financial
covenant requirements. The term loan was drawn in October 2019 and
was repaid in May 2022. The revolving loan facility also expired in
May 2022.
In August 2020, our subsidiary entered into a 24-month revolving
loan facility with Deutsche Bank AG ([82]) in the amount of
HK$117.0 million ($15.0 million) with an interest rate at HIBOR
plus 4.5% per annum. This revolving facility is guaranteed by us
and includes certain financial covenant requirements. The revolving
loan facility expired in August 2022.
In October 2021, our subsidiary entered into a 10-year fixed
asset loan facility agreement with Bank of China Limited for the
provision of a secured credit facility in the amount of RMB754.9
million ($108.4 million) with an annual interest rate at the 5-year
China Loan Prime Rate less 0.80% (which was supplemented in June
2022). This credit facility is guaranteed by another subsidiary of
the Group, and secured by the underlying leasehold land and
buildings, and includes certain financial covenant requirements. As
of December 31, 2022, RMB126.1 million ($18.1 million) was utilized
from the fixed asset loan facility.
In May 2022, our subsidiary entered into a 12-month revolving
loan facility with HSBC in the amount of HK$390.0 million ($50.0
million) with an interest rate at HIBOR plus 0.5% per annum. This
revolving facility is guaranteed by us. As of December 31, 2022, no
amount was drawn from the revolving loan facility.
Our non-consolidated joint venture SHPL had no bank borrowings
outstanding as of December 31, 2022.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
The following table sets forth our contractual obligations as of
December 31, 2022. Our purchase obligations relate to property,
plant and equipment that are contracted for but not yet paid. Our
lease obligations primarily comprise future aggregate minimum lease
payments in respect of various factories, warehouses, offices and
other assets under non-cancellable lease agreements.
Payment Due by Period (in $'000)
-----------------------------------------------------------------
Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years
------ ---------------- --------- --------- -----------------
Bank borrowings 18,104 - 360 1,918 15,826
Interest on bank borrowings 4,294 318 1,273 1,200 1,503
Purchase obligations 22,130 20,323 1,807 - -
Lease obligations 10,122 4,498 4,149 1,360 115
------ ---------------- --------- --------- -----------------
54,650 25,139 7,589 4,478 17,444
====== ================ ========= ========= =================
SHPL
The following table sets forth the contractual obligations of
our non-consolidated joint venture SHPL as of December 31, 2022.
SHPL's purchase obligations comprise capital commitments for
property, plant and equipment contracted for but not yet paid.
SHPL's lease obligations primarily comprise future aggregate
minimum lease payments in respect of various offices under
non-cancellable lease agreements.
Payment Due by Period (in $'000)
----------------------------------------------------------------
Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years
----- ---------------- --------- --------- -----------------
Purchase obligations 1,307 1,307 - - -
Lease obligations 2,243 826 1,417 - -
----- ---------------- --------- --------- -----------------
3,550 2,133 1,417 - -
===== ================ ========= ========= =================
FOREIGN EXCHANGE RISK
A substantial portion of our revenues and expenses are
denominated in renminbi, and our consolidated financial statements
are presented in U.S. dollars. We do not believe that we currently
have any significant direct foreign exchange risk and have not used
any derivative financial instruments to hedge our exposure to such
risk. In general, our exposure to foreign exchange risks is
limited.
The value of the renminbi against the U.S. dollar and other
currencies may fluctuate and is affected by, among other things,
changes in China's political and economic conditions. The
conversion of renminbi into foreign currencies, including U.S.
dollars, has been based on rates set by the PBOC ([83]) . If we
decide to convert renminbi into U.S. dollars for the purpose of
making payments for dividends on our ordinary shares or ADSs or for
other business purposes, appreciation of the U.S. dollar against
the renminbi would have a negative effect on the U.S. dollar
amounts available to us. On the other hand, if we need to convert
U.S. dollars into renminbi for business purposes, e.g. capital
expenditures and working capital, appreciation of the renminbi
against the U.S. dollar would have a negative effect on the
renminbi amounts we would receive from the conversion. In addition,
for certain cash and bank balances deposited with banks in the PRC,
if we decide to convert them into foreign currencies, they are
subject to the rules and regulations of foreign exchange control
promulgated by the PRC government.
CREDIT RISK
Substantially all of our bank deposits are in major financial
institutions, which we believe are of high credit quality. We limit
the amount of credit exposure to any single financial institution.
We make periodic assessments of the recoverability of trade and
other receivables and amounts due from related parties. Our
historical experience in collection of receivables falls within the
recorded allowances, and we believe that we have made adequate
provision for uncollectible receivables.
INTEREST RATE RISK
We have no significant interest-bearing assets except for bank
deposits. Our exposure to changes in interest rates is mainly
attributable to our bank borrowings, which bear interest at
floating interest rates and expose us to cash flow interest rate
risk. We have not used any interest rate swaps to hedge our
exposure to interest rate risk. We have performed sensitivity
analysis for the effects on our results for the period from changes
in interest rates on floating rate borrowings. The sensitivity to
interest rates used is based on the market forecasts available at
the end of the reporting period and under the economic environments
in which we operate, with other variables held constant. According
to the analysis, the impact on our net loss of a 1.0% interest rate
shift would be a maximum increase/decrease of $0.1 million for the
year ended December 31, 2022.
OFF-BALANCE SHEET ARRANGEMENTS
We did not have during the years presented, and we do not
currently have, any material off-balance sheet arrangements.
CONTINGENT LIABILITIES
Other than as disclosed in note 15 to the full year financial
statements, the Group does not have any other significant
commitments or contingent liabilities.
GEARING RATIO
The gearing ratio of the Group, which was calculated by dividing
total interest-bearing loans by total equity, was 2.8% as of
December 31, 2022, an increase from 2.6% as of December 31, 2021.
The increase was primarily attributable to the decrease in equity
due to the increase in net loss during the year.
SIGNIFICANT INVESTMENTS HELD
Except for our investment in a non-consolidated joint venture
SHPL with a carrying value of $73.5 million including details below
and those as disclosed in note 11 to the full year financial
statements, we did not hold any other significant investments in
the equity of any other companies as of December 31, 2022.
Place of establishment and Nominal Value of Equity Interest
operations Registered Capital Attributable to the Group Principal activities
--------------------------- --------------------------- -------------------------- --------------------------
(in RMB'000)
PRC 229,000 50% Manufacture and
distribution of
prescription drug
products
Our own-brand prescription drugs business under our Other
Ventures is operated through SHPL. Dividends received from SHPL for
the year ended December 31, 2022 were $43.7 million.
FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS
Note 15 to the full year financial statements discloses our
planned expenditures on capital assets as of December 31, 2022. We
are building a new drug product facility in Shanghai, China, and
will make additional investments in capital assets accordingly.
MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES, ASSOCIATES
AND JOINT VENTURES
During the year ended December 31, 2022, we did not have any
other material acquisitions and disposals of subsidiaries,
associates and joint ventures.
PLEDGE OF ASSETS
Our 10-year fixed asset loan facility agreement with Bank of
China Limited is secured by the underlying leasehold land and
buildings. RMB126.1 million ($18.1 million) was utilized from the
fixed asset loan facility as of December 31, 2022.
INFLATION
In recent years, China has not experienced significant
inflation, and thus inflation has not had a material impact on our
results of operations. According to the National Bureau of
Statistics of China, the Consumer Price Index in China increased by
0.2%, 1.5% and 1.8% in 2020, 2021 and 2022, respectively. Although
we have not been materially affected by inflation in the past, we
can provide no assurance that we will not be affected in the future
by higher rates of inflation in China.
FINAL DIVID
The Board does not recommend any final dividend for the year
ended December 31, 2022.
OTHER INFORMATION
CORPORATE STRATEGY
The primary objective of the Company and its subsidiaries (the
"Group") is to become a leader in the discovery, development and
commercialization of targeted therapies and immunotherapies for the
treatment of cancer and immunological diseases. The strategy of the
Company is to leverage the highly specialized expertise of the drug
discovery division to develop and expand its drug candidate
portfolio for the global market, building on the first-mover
advantage in the development and launch of novel cancer drugs in
China, and engaging partners for late-stage development and
commercialization outside China. This is aligned with the Company's
culture of innovation and high engagement and empowerment with a
high focus on reward and recognition. The Chairman's Statement and
the Operations Review contain discussions and analyses of the
Group's opportunities, performance and the basis on which the Group
generates or preserves value over the longer term and the basis on
which the Group will execute its strategy for delivering the
objective of the Group. The Group is increasingly focusing on
sustainability and delivering business solutions that support
transition to net-zero carbon emissions. Further information on the
sustainability initiatives of the Group and its key relationships
with stakeholders can also be found in the standalone
sustainability report of the Group.
HUMAN RESOURCES
As at December 31, 2022, the Group employed approximately 2,030
(December 31, 2021: 1,760) full time staff members. Staff costs for
the year ended December 31, 2022, including directors' emoluments,
totaled $227.2 million (2021: $180.2 million).
The Group fully recognizes the importance of high-quality human
resources in sustaining market leadership. Salary and benefits are
kept at competitive levels, while individual performance is
rewarded within the general framework of the salary, bonus and
incentive system of the Group, which is reviewed annually.
Employees are provided with a wide range of benefits that include
medical coverage, provident funds and retirement plans, and
long-service awards. The Group stresses the importance of staff
development and provides training programs on an ongoing basis.
Employees are also encouraged to play an active role in community
care activities.
SUSTAINABILITY
As an innovative, commercial-stage biopharmaceutical company,
the Company embraces sustainability at the core of how it operates.
Over the past two decades and on an ongoing basis, the Company is
working hard to contribute to the enhancement of healthcare systems
by continuously providing quality and accessible drugs. As the
world adapted to the changes brought about by the COVID-19
pandemic, it has highlighted the importance of incorporating
sustainability factors into our strategy. The Company embarked on
its sustainability journey in 2020 by making voluntary disclosures
in its inaugural sustainability report to demonstrate its efforts,
and establishing a board level Sustainability Committee in 2021 to
support the Board of Directors (the "Board") in fulfilling their
responsibilities. The second sustainability report for 2021, with
enhanced disclosures, was published in May 2022 and the third
sustainability report for 2022 will be published alongside our 2022
Annual Report in due course.
Over the course of 2022, we have rolled out a number of
substantial sustainability initiatives, including renewing our
focus on sustainability material topics with the engagement of
stakeholders, establishing 11 short- to long-term sustainability
goals and targets, stepping up efforts in sustainability governance
by establishing a four-tier governance framework to facilitate
oversight and implementation of sustainability issues within the
Company, having sustainability KPIs on goals and targets
incorporated to management's performance and remunerations, and
conducting our first climate-related risk assessment. The Company
believes that all these efforts will guide it towards a more
sustainable future. Please refer to the upcoming 2022
Sustainability Report for further information on the sustainability
initiatives and their performance.
CLOSURE OF REGISTER OF MEMBERS
The register of members of the Company will be closed from
Tuesday, May 9, 2023 to Friday, May 12, 2023, both days inclusive,
during which period no transfer of shares will be effected, to
determine shareholders' entitlement to attend and vote at the 2023
Annual General Meeting (or at any adjournment or postponement
thereof). All share certificates with completed transfer forms,
either overleaf or separately, must be lodged with (a) the Hong
Kong Branch Share Registrar of the Company, Computershare Hong Kong
Investor Services Limited, at Rooms 1712-1716, 17th Floor, Hopewell
Centre, 183 Queen's Road East, Wanchai, Hong Kong or (b) the
Principal Share Registrar of the Company, Computershare Investor
Services (Jersey) Limited c/o Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol, BS99 6ZY, United Kingdom,
no later than 4:30 pm Hong Kong time on Monday, May 8, 2023.
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
During the year ended December 31, 2022, neither the Company nor
any of its subsidiaries has purchased, sold or redeemed any of the
listed securities of the Company.
COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
The Company strives to attain and maintain high standards of
corporate governance best suited to the needs and interests of the
Group as it believes that effective corporate governance framework
is fundamental to promoting and safeguarding interests of
shareholders and other stakeholders and enhancing shareholder
value. Accordingly, the Company has adopted and applied corporate
governance principles and practices that emphasize a quality Board,
effective risk management and internal control systems, stringent
disclosure practices, transparency and accountability as well as
effective communication and engagement with shareholders and other
stakeholders. It is, in addition, committed to continuously
enhancing these standards and practices and inculcating a robust
culture of compliance and ethical governance underlying the
business operations and practices across the Group.
The Company has complied throughout the year ended December 31,
2022 with all code provisions of the Hong Kong Corporate Governance
Code contained in Appendix 14 of the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited (the "Hong
Kong Listing Rules").
COMPLIANCE WITH THE SHARE DEALINGS CODE FOR SECURITIES
TRANSACTIONS BY DIRECTORS
The Board has adopted the Code on Dealings in Shares which is on
terms no less exacting than the required standard set out in the
Model Code for Securities Transactions by Directors of Listed
Issuers set out in Appendix 10 of the Hong Kong Listing Rules as
the protocol regulating Directors' dealings in securities of the
Company. In response to specific enquiries made, all Directors have
confirmed their compliance with the required standards set out in
such code regarding their securities transactions throughout their
tenure during the year ended December 31, 2022.
ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held on
Friday, May 12, 2023. Notice of the 2023 Annual General Meeting
will be published and issued to shareholders in due course.
USE OF NET PROCEEDS
On June 30, 2021, the Company issued 104,000,000 new ordinary
shares for total gross proceeds of approximately $534.7 million
from the listing and offering of the Company's ordinary shares on
HKEX.
On July 15, 2021, the over-allotment option was fully exercised
and the Company issued an aggregate of 15,600,000 ordinary shares
for total gross proceeds of approximately $80.2 million.
The intended use of total net proceeds of approximately $585.2
million from the offering and the over-allotment option for the
purposes and in the amounts (adjusted on pro rata basis based on
the actual net proceeds) as disclosed in the prospectus issued by
the Company dated June 18, 2021 is as below:
Unutilized Net Expected
Percentage of Actual Usage up Proceeds as of Timeline for
Total Net Approximate to December 31, December 31, Utilization of
Use of Proceeds Proceeds Amount 2022 2022 Proceeds (note)
------------------- ---------------- ---------------- ---------------- --------------- ---------------
(%) ($'millions) ($'millions) ($'millions)
Advance our
late-stage clinical
programs for
savolitinib,
surufatinib,
fruquintinib,
amdizalisib
and sovleplenib
through
registration trials
and potential NDA
submissions 50% 292.7 292.7 - Fully utilized
Support further
proof-of-concept
studies and fund
the continued
expansion of our
product portfolio
in cancer and
immunological
diseases through
internal research,
including the
development
cost of
early-clinical and
preclinical-stage
pipeline drug
candidates 10% 58.5 58.5 - Fully utilized
Further strengthen
our integrated
capabilities across
commercialization,
clinical and
regulatory
and manufacturing 20% 117.1 81.7 35.4 2023
Fund potential
global business
development and
strategic
acquisition
opportunities to
complement
our internal
research and
development
activities and
enhance our current
drug candidate
pipeline 15% 87.8 32.4 55.4 2023
Working capital,
expanding internal
capabilities
globally and in
China and general
corporate
purposes 5% 29.1 29.1 - Fully utilized
---------------- ---------------- ---------------- ---------------
100% 585.2 494.4 90.8
================ ================ ================ ===============
Note: There was no change in the intended use of net proceeds as
previously disclosed, and the Company plans to gradually utilize
the remaining net proceeds in accordance with such intended
purposes depending on actual market conditions and business needs,
which is expected to be substantially utilized by the end of year
2023.
AUDIT REPORT ON THE ANNUAL FINANCIAL STATEMENTS
The consolidated financial statements of the Company and its
subsidiary companies for the year ended December 31, 2022 prepared
in accordance with accounting principles generally accepted in the
U.S. have been audited by the Company's auditors,
PricewaterhouseCoopers. The consolidated financial statements of
the Company and its subsidiary companies for the year ended
December 31, 2022 have also been reviewed by the Audit Committee of
the Company.
IMPORTANT EVENTS AFTER THE REPORTING DATE
Save as disclosed above, no important events affecting the
Company occurred since December 31, 2022 and up to the date of this
announcement.
PUBLICATION OF FULL YEAR RESULTS AND ANNUAL REPORT
This full year results announcement is published on the websites
of HKEX ( www.hkexnews.hk ), the U.S. Securities and Exchange
Commission ( www.sec.gov/edgar ), the London Stock Exchange (
www.londonstockexchange.com ) and the Company ( www.hutch --
med.com ). The annual report of the Group for the year ended
December 31, 2022 will be published on the websites of HKEX and the
Company, and dispatched to the Company's shareholders in due
course.
CONSOLIDATED FINANCIAL STATEMENTS
HUTCHMED (CHINA) LIMITED
Consolidated Balance Sheets
(in US$'000, except share data)
December 31,
----------------------
Note 2022 2021
-------- ---------- ----------
Assets
Current assets
Cash and cash equivalents 5 313,278 377,542
Short-term investments 5 317,718 634,158
Accounts receivable 6 97,988 83,580
Other receivables, prepayments and deposits 7 54,214 81,041
Inventories 8 56,690 35,755
----------
Total current assets 839,888 1,212,076
Property, plant and equipment 9 75,947 41,275
Right-of-use assets 10 8,722 11,879
Deferred tax assets 24(ii) 15,366 9,401
Investments in equity investees 11 73,777 76,479
Other non-current assets 15,745 21,551
---------- ----------
Total assets 1,029,445 1,372,661
========== ==========
Liabilities and shareholders' equity
Current liabilities
Accounts payable 12 71,115 41,177
Other payables, accruals and advance receipts 13 264,621 210,839
Bank borrowings 14 - 26,905
Income tax payable 24(iii) 1,112 15,546
Other current liabilities 17,055 17,191
Total current liabilities 353,903 311,658
Lease liabilities 10 5,196 7,161
Deferred tax liabilities 24(ii) 2,710 2,765
Long-term bank borrowings 14 18,104 -
Other non-current liabilities 12,662 11,563
---------- ----------
Total liabilities 392,575 333,147
Commitments and contingencies 15
Company's shareholders' equity
Ordinary shares; $0.10 par value; 1,500,000,000 shares authorized;
864,775,340 and 864,530,850
shares issued at December 31, 2022 and 2021 respectively 16 86,478 86,453
Additional paid-in capital 1,497,273 1,505,196
Accumulated losses (971,481) (610,328)
Accumulated other comprehensive (loss)/income (1,903) 5,572
---------- ----------
Total Company's shareholders' equity 610,367 986,893
Non-controlling interests 26,503 52,621
---------- ----------
Total shareholders' equity 636,870 1,039,514
---------- ----------
Total liabilities and shareholders' equity 1,029,445 1,372,661
========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
HUTCHMED (CHINA) LIMITED
Consolidated Statements of Operations
(in US$'000, except share and per share data)
Year Ended December 31,
----------------------------------------
Note 2022 2021 2020
------ ------------ ------------ ------------
Revenues
Goods -third parties 314,329 266,199 203,606
* related parties 23(i) 5,293 4,256 5,484
Services -commercialization-third parties 41,275 27,428 3,734
* collaboration research and development
-third parties 23,741 18,995 9,771
* research and development
-related parties 23(i) 507 525 491
Other collaboration revenue
-royalties-third parties 26,310 15,064 4,890
* licensing-third parties 14,954 23,661 -
Total revenues 18 426,409 356,128 227,976
------------ ------------ ------------
Operating expenses
Costs of goods-third parties (268,698) (229,448) (178,828)
Costs of goods-related parties (3,616) (3,114) (3,671)
Costs of services-commercialization -third parties (38,789) (25,672) (6,020)
Research and development expenses 20 (386,893) (299,086) (174,776)
Selling expenses (43,933) (37,827) (11,334)
Administrative expenses (92,173) (89,298) (50,015)
------------ ------------ ------------
Total operating expenses (834,102) (684,445) (424,644)
------------ ------------ ------------
(407,693) (328,317) (196,668)
Gain on divestment of an equity investee 22 - 121,310 -
Other (expense)/income
Interest income 26 9,599 2,076 3,236
Other income 1,833 2,426 4,600
Interest expense 26 (652) (592) (787)
Other expense (13,509) (12,643) (115)
------------ ------------ ------------
Total other (expense)/income (2,729) (8,733) 6,934
------------ ------------ ------------
Loss before income taxes and equity in earnings of equity
investees (410,422) (215,740) (189,734)
Income tax benefit/(expense) 24(i) 283 (11,918) (4,829)
Equity in earnings of equity investees, net of tax 11 49,753 60,617 79,046
------------ ------------ ------------
Net loss (360,386) (167,041) (115,517)
Less: Net income attributable to non-controlling interests (449) (27,607) (10,213)
------------ ------------ ------------
Net loss attributable to the Company (360,835) (194,648) (125,730)
============ ============ ============
Losses per share attributable to the Company-basic and diluted
(US$ per share) 25 (0.43) (0.25) (0.18)
Number of shares used in per share calculation-basic and diluted 25 847,143,540 792,684,524 697,931,437
The accompanying notes are an integral part of these
consolidated financial statements.
HUTCHMED (CHINA) LIMITED
Consolidated Statements of Comprehensive Loss
(in US$'000)
Year Ended December 31,
----------------------------------
2022 2021 2020
---------- ---------- ----------
Net loss (360,386) (167,041) (115,517)
Other comprehensive (loss)/income
Foreign currency translation (loss)/gain (8,469) 2,964 9,530
---------- ---------- ----------
Total comprehensive loss (368,855) (164,077) (105,987)
Less: Comprehensive loss/(income) attributable to non-controlling interests 545 (28,029) (11,413)
---------- ---------- ----------
Total comprehensive loss attributable to the Company (368,310) (192,106) (117,400)
========== ========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
HUTCHMED (CHINA) LIMITED
Consolidated Statements of Changes in Shareholders' Equity
(in US$'000, except share data in '000)
Accumulated Total
Ordinary Ordinary Additional Other Company's Non- Total
Shares Shares Paid-in Accumulated Comprehensive Shareholders' controlling Shareholders'
Number Value Capital Losses (Loss)/Income Equity Interests Equity
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
As at January 1,
2020 666,906 66,691 514,904 (289,734) (3,849) 288,012 24,891 312,903
Net
(loss)/income - - - (125,730) - (125,730) 10,213 (115,517)
Issuance in
relation
to public
offering 23,669 2,366 115,975 - - 118,341 - 118,341
Issuances in
relation
to private
investment
in public
equity ("PIPE") 36,667 3,667 196,333 - - 200,000 - 200,000
Issuance costs - - (8,317) - - (8,317) - (8,317)
Issuances in
relation
to share option
exercises 480 48 545 - - 593 - 593
Share-based
compensation
Share options - - 8,727 - - 8,727 10 8,737
Long-term
incentive
plan ("LTIP") - - 7,203 - - 7,203 16 7,219
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
- - 15,930 - - 15,930 26 15,956
LTIP-treasury
shares
acquired and
held by
Trustee - - (12,904) - - (12,904) - (12,904)
Dividends
declared
to
non-controlling
shareholders of
subsidiaries - - - - - - (1,462) (1,462)
Purchase of
additional
interests in a
subsidiary
of an equity
investee
(Note 11) - - (52) (83) (4) (139) (35) (174)
Transfer between
reserves - - 44 (44) - - - -
Foreign currency
translation
adjustments - - - - 8,330 8,330 1,200 9,530
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
As at December
31
, 2020 727,722 72,772 822,458 (415,591) 4,477 484,116 34,833 518,949
========= ========= =========== ============ ============== ============== ============ ==============
Net
(loss)/income - - - (194,648) - (194,648) 27,607 (167,041)
Issuance in
relation
to public
offering 119,600 11,960 602,907 - - 614,867 - 614,867
Issuance in
relation
to PIPE 16,393 1,639 98,361 - - 100,000 - 100,000
Issuance costs - - (29,806) - - (29,806) - (29,806)
Issuances in
relation
to share option
exercises 816 82 2,370 - - 2,452 - 2,452
Share-based
compensation
Share options - - 16,339 - - 16,339 26 16,365
LTIP - - 19,808 - - 19,808 70 19,878
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
- - 36,147 - - 36,147 96 36,243
LTIP-treasury
shares
acquired and
held by
Trustee - - (27,309) - - (27,309) - (27,309)
Dividends
declared
to
non-controlling
shareholders of
subsidiaries - - - - - - (9,894) (9,894)
Transfer between
reserves - - 89 (89) - - - -
Divestment of
an equity
investee
(Note 22) - - (21) - (1,447) (1,468) (443) (1,911)
Foreign currency
translation
adjustments - - - - 2,542 2,542 422 2,964
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
As at December
31,
2021 864,531 86,453 1,505,196 (610,328) 5,572 986,893 52,621 1,039,514
========= ========= =========== ============ ============== ============== ============ ==============
Net
(loss)/income - - - (360,835) - (360,835) 449 (360,386)
Issuances in
relation
to share option
exercises 244 25 149 - - 174 - 174
Share-based
compensation
Share options - - 6,724 - - 6,724 12 6,736
LTIP - - 32,970 - - 32,970 15 32,985
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
- - 39,694 - - 39,694 27 39,721
LTIP-treasury
shares
acquired and
held by
Trustee - - (48,084) - - (48,084) - (48,084)
Dividends
declared
to
non-controlling
shareholders of
subsidiaries - - - - - - (25,600) (25,600)
Transfer between
reserves - - 318 (318) - - - -
Foreign currency
translation (7, 475
adjustments - - - - ) (7,475) (994) (8,469)
--------- --------- ----------- ------------ -------------- -------------- ------------ --------------
As at December
31,
2022 864,775 86,478 1,497,273 (971,481) (1,903) 610,367 26,503 636,870
========= ========= =========== ============ ============== ============== ============ ==============
The accompanying notes are an integral part of these
consolidated financial statements.
HUTCHMED (CHINA) LIMITED
Consolidated Statements of Cash Flows
(in US$'000)
Year Ended December 31,
Note 2022 2021 2020
-------- ------------ ------------ ------------
Net cash used in operating activities 27 (268,599) (204,223) (62,066)
------------ ------------ ------------
Investing activities
Purchases of property, plant and equipment (36,664) (16,401) (7,949)
Purchase of leasehold land - (355) (11,631)
Refund/(payment) of leasehold land deposit - 930 (2,326)
Deposits in short-term investments (1,202,013) (1,355,976) (732,908)
Proceeds from short-term investments 1,518,453 921,364 629,373
Purchase of a warrant 19 - (15,000) -
Dividend and proceeds received from divestment of
Hutchison Whampoa Guangzhou Baiyunshan
Chinese Medicine Company Limited ("HBYS") 22 16,488 159,118 -
Deposit received for divestment of other equity investee 11 324 - -
Net cash generated from/(used in) investing activities 296,588 (306,320) (125,441)
------------ ------------ ------------
Financing activities
Proceeds from issuances of ordinary shares 174 717,319 318,934
Purchases of treasury shares 17(ii) (48,084) (27,309) (12,904)
Dividends paid to non-controlling shareholders of
subsidiaries (25,600) (9,894) (1,462)
Repayment of loan to a non-controlling shareholder of a
subsidiary - (579) -
Proceeds from bank borrowings 17,753 - -
Repayment of bank borrowings (26,923) - -
Payment of issuance costs (83) (29,509) (8,134)
------------ ------------ ------------
Net cash (used in)/generated from financing activities (82,763) 650,028 296,434
------------ ------------ ------------
Net (decrease)/increase in cash and cash equivalents (54,774) 139,485 108,927
Effect of exchange rate changes on cash and cash
equivalents (9,490) 2,427 5,546
------------ ------------ ------------
(64,264) 141,912 114,473
Cash and cash equivalents
Cash and cash equivalents at beginning of year 377,542 235,630 121,157
------------ ------------ ------------
Cash and cash equivalents at end of year 313,278 377,542 235,630
============ ============ ============
Supplemental disclosure for cash flow information
Cash paid for interest 150 425 815
Cash paid for tax, net of refunds 24(iii) 18,891 5,014 5,940
Supplemental disclosure for non-cash activities
Increase in accrued capital expenditures 9,618 8,607 298
Vesting of treasury shares for LTIP 17(ii) 12,034 1,450 4,828
The accompanying notes are an integral part of these
consolidated financial statements.
HUTCHMED (CHINA) LIMITED
Notes to the Consolidated Financial Statements
1. Organization and Nature of Business
HUTCHMED (China) Limited (the "Company") and its subsidiaries
(together the "Group") are principally engaged in researching,
developing, manufacturing and marketing pharmaceutical products.
The Group and its equity investees have research and development
facilities and manufacturing plants in the People's Republic of
China (the "PRC") and sell their products mainly in the PRC,
including Hong Kong and Macau. In addition, the Group has
established international operations in the United States of
America (the "U.S.") and Europe.
The Company's ordinary shares are listed on the Main Board of
The Stock Exchange of Hong Kong Limited ("HKEX") and the AIM market
of the London Stock Exchange, and its American depositary shares
("ADS") are traded on the Nasdaq Global Select Market.
Liquidity
As at December 31, 2022, the Group had accumulated losses of
US$971,481,000 primarily due to its spending in drug research and
development activities. The Group regularly monitors current and
expected liquidity requirements to ensure that it maintains
sufficient cash balances and adequate credit facilities to meet its
liquidity requirements in the short and long term. As at December
31, 2022, the Group had cash and cash equivalents of
US$313,278,000, short-term investments of US$317,718,000 and
unutilized bank borrowing facilities of US$140,289,000. Short-term
investments comprised of bank deposits maturing over three months.
The Group's operating plan includes the continued receipt of
dividends from an equity investee. Dividends received for the years
ended December 31, 2022, 2021 and 2020 were US$43,718,000,
US$49,872,000 and US$86,708,000 respectively.
Based on the Group's operating plan, the existing cash and cash
equivalents, short-term investments and unutilized bank borrowing
facilities are considered to be sufficient to meet the cash
requirements to fund planned operations and other commitments for
at least the next twelve months from the issuance date of the
consolidated financial statements (the look-forward period
used).
2. Particulars of Principal Subsidiaries and Equity Investee
Equity interest attributable to the Group
---------------- -----------------------------------------------
December 31,
Place of
establishment Principal
Name and operations 2022 2021 activities
--------------------- ----------------- ----------------------- ---------------------- -------------------
Subsidiaries
HUTCHMED Limited PRC 99.75 % 99.75 % Research,
development,
manufacture and
commercialization
of pharmaceutical
products
HUTCHMED U.S. 99.75 % 99.75 % Provision of
International professional,
Corporation scientific and
technical support
services
Hutchison Whampoa PRC 50.87 % 50.87 % Provision of sales,
Sinopharm distribution and
Pharmaceuticals marketing services
(Shanghai) Company to pharmaceutical
Limited ("HSPL") manufacturers
Hutchison Healthcare PRC 100 % 100 % Manufacture and
Limited distribution of
healthcare products
Hutchison Hain Hong Kong 50 % 50 % Wholesale and
Organic (Hong Kong) trading of
Limited ("HHOHK") healthcare and
(note) consumer products
HUTCHMED Science Hong Kong 100 % 100 % Wholesale and
Nutrition Limited trading of
healthcare and
consumer products
Equity investee
Shanghai Hutchison PRC 50 % 50 % Manufacture and
Pharmaceuticals distribution of
Limited ("SHPL") prescription drug
products
Note: HHOHK is regarded as a subsidiary of the Company, as while
both its shareholders have equal representation at the board, in
the event of a deadlock, the Group has a casting vote and is
therefore able to unilaterally control the financial and operating
policies of HHOHK.
3. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements reflect the
accounts of the Company and all of its subsidiaries in which a
controlling interest is maintained. All inter-company balances and
transactions have been eliminated in consolidation. The
consolidated financial statements have been prepared in conformity
with generally accepted accounting principles in the U.S. ("U.S.
GAAP").
Use of Estimates
The preparation of consolidated financial statements in
conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting
period.
Foreign Currency Translation
The Company's presentation currency and functional currency is
the U.S. dollar ("US$"). The financial statements of its
subsidiaries with a functional currency other than the US$ have
been translated into the Company's presentation currency. All
assets and liabilities of the subsidiaries are translated using
year-end exchange rates and revenues and expenses are translated at
average exchange rates for the year. Translation adjustments are
reflected in accumulated other comprehensive (loss)/income in
shareholders' equity.
Net foreign currency exchange losses of US$5,704,000 and net
foreign currency exchange gains of US$1,671,000 and US$3,265,000
were recorded in other expense and income in the consolidated
statements of operations for the years ended December 31, 2022,
2021 and 2020 respectively.
Foreign Currency Risk
The Group's operating transactions and its assets and
liabilities in the PRC are mainly denominated in Renminbi ("RMB"),
which is not freely convertible into foreign currencies. The
Group's cash and cash equivalents denominated in RMB are subject to
government controls. The value of the RMB is subject to
fluctuations from central government policy changes and
international economic and political developments that affect the
supply and demand of RMB in the foreign exchange market. In the
PRC, certain foreign exchange transactions are required by law to
be transacted only by authorized financial institutions at exchange
rates set by the People's Bank of China (the "PBOC"). Remittances
in currencies other than RMB by the Group in the PRC must be
processed through the PBOC or other PRC foreign exchange regulatory
bodies which require certain supporting documentation in order to
complete the remittance.
Allowance for Current Expected Credit Losses and Concentration
of Credit Risk
Financial instruments that potentially expose the Group to
credit risk consist primarily of cash and cash equivalents,
short-term investments, and financial assets not carried at fair
value including accounts receivable and other receivables.
The Group recognizes an allowance for current expected credit
losses ("CECLs") on financial assets not carried at fair value.
CECLs are calculated over the expected life of the financial assets
on an individual or a portfolio basis considering information
available about the counterparties' credit situation and
collectability of the specific cash flows, including information
about past events, current conditions and future forecasts.
The Group places substantially all of its cash and cash
equivalents and short-term investments in major financial
institutions, which management believes are of high credit quality.
The Group has a practice to limit the amount of credit exposure to
any particular financial institution. Additionally, the Group has
policies in place to ensure that sales are made to customers with
an appropriate credit history and the Group performs periodic
credit evaluations of its customers. Normally the Group does not
require collateral from trade debtors. The Group has not had any
material credit losses.
Cash and Cash Equivalents
The Group considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.
Cash and cash equivalents consist primarily of cash on hand and
bank deposits and are stated at cost, which approximates fair
value.
Short-term Investments
Short-term investments include deposits placed with banks with
original maturities of more than three months but less than one
year.
Accounts Receivable
Accounts receivable are stated at the amount management expects
to collect from customers based on their outstanding invoices. The
allowance for CECLs reflects the Group's current estimate of credit
losses expected to be incurred over the life of the receivables.
The Group considers various factors in establishing, monitoring,
and adjusting its allowance for CECLs including the aging of the
accounts and aging trends, the historical level of charge-offs, and
specific exposures related to particular customers. The Group also
monitors other risk factors and forward-looking information, such
as country risk, when determining credit limits for customers and
establishing adequate allowances for CECLs. Accounts receivable are
written off after all reasonable means to collect the full amount
(including litigation, where appropriate) have been exhausted.
Inventories
Inventories are stated at the lower of cost or net realizable
value. Cost is determined using the weighted average cost method.
The cost of finished goods comprises raw materials, direct labor,
other direct costs and related production overheads based on normal
operating capacity. Net realizable value is the estimated selling
price in the ordinary course of business, less applicable variable
selling expenses. A provision for excess and obsolete inventory
will be made based primarily on forecasts of product demand and
production requirements. The excess balance determined by this
analysis becomes the basis for excess inventory charge and the
written-down value of the inventory becomes its cost. Written-down
inventory is not written up if market conditions improve.
Property, Plant and Equipment
Property, plant and equipment consist of buildings, leasehold
improvements, plant and equipment, furniture and fixtures, other
equipment and motor vehicles. Property, plant and equipment are
stated at cost, net of accumulated depreciation. Depreciation is
computed using the straight-line method over the estimated useful
lives of the depreciable assets.
Buildings 20 years
Plant and equipment 5-10 years
Furniture and fixtures, other
equipment and motor vehicles 4-5 years
Leasehold improvements Shorter of (a) 5 years or (b) remaining term
of lease
Additions and improvements that extend the useful life of an
asset are capitalized. Repairs and maintenance costs are expensed
as incurred.
Impairment of Long-Lived Assets
The Group evaluates the recoverability of long-lived assets in
accordance with authoritative guidance on accounting for the
impairment or disposal of long-lived assets. The Group evaluates
long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying value of these assets may
not be recoverable. If indicators of impairment exist, the first
step of the impairment test is performed to assess if the carrying
value of the net assets exceeds the undiscounted cash flows of the
assets. If yes, the second step of the impairment test is performed
in order to determine if the carrying value of the net assets
exceeds the fair value. If yes, impairment is recognized for the
excess.
Investments in Equity Investees
Investments in equity investees over which the Group has
significant influence are accounted for using the equity method.
The Group evaluates equity method investments for impairment when
events or circumstances suggest that their carrying amounts may not
be recoverable. An impairment charge would be recognized in
earnings for a decline in value that is determined to be
other-than-temporary after assessing the severity and duration of
the impairment and the likelihood of recovery before disposal. The
investments are recorded at fair value only if impairment is
recognized.
Leasehold Land
Leasehold land represents fees paid to acquire the right to use
the land on which various plants and buildings are situated for a
specified period of time from the date the respective right was
granted and are stated at cost less accumulated amortization and
impairment loss, if any. Amortization is computed using the
straight-line basis over the lease period of 50 years.
Goodwill
Goodwill represents the excess of the purchase price plus fair
value of non-controlling interests over the fair value of
identifiable assets and liabilities acquired. Goodwill is not
amortized, but is tested for impairment at the reporting unit level
on at least an annual basis or when an event occurs or
circumstances change that would more likely than not reduce the
fair value of a reporting unit below its carrying amount. When
performing an evaluation of goodwill impairment, the Group has the
option to first assess qualitative factors, such as significant
events and changes to expectations and activities that may have
occurred since the last impairment evaluation, to determine if it
is more likely than not that goodwill might be impaired. If as a
result of the qualitative assessment, that it is more likely than
not that the fair value of the reporting unit is less than its
carrying amount, the quantitative fair value test is performed to
determine if the fair value of the reporting unit exceeds its
carrying value.
Other Intangible Assets
Other intangible assets with finite useful lives are carried at
cost less accumulated amortization and impairment loss, if any.
Amortization is computed using the straight-line basis over the
estimated useful lives of the assets.
Borrowings
Borrowings are recognized initially at fair value, net of debt
issuance costs incurred. Borrowings are subsequently stated at
amortized cost; any difference between the proceeds (net of debt
issuance costs) and the redemption value is recognized in the
consolidated statements of operations over the period of the
borrowings using the effective interest method.
Ordinary Shares
The Company's ordinary shares are stated at par value of US$0.10
per ordinary share. The difference between the consideration
received, net of issuance cost, and the par value is recorded in
additional paid-in capital.
Treasury Shares
The Group accounts for treasury shares under the cost method.
The treasury shares are purchased for the purpose of the LTIP and
held by a trustee appointed by the Group (the "Trustee") prior to
vesting.
Share-Based Compensation
Share options
The Group recognizes share-based compensation expense on share
options granted to employees and directors based on their estimated
grant date fair value using the Polynomial model. This Polynomial
pricing model uses various inputs to measure fair value, including
the market value of the Company's underlying ordinary shares at the
grant date, contractual terms, estimated volatility, risk-free
interest rates and expected dividend yields. The Group recognizes
share-based compensation expense in the consolidated statements of
operations on a graded vesting basis over the requisite service
period, and accounts for forfeitures as they occur.
Share options are classified as equity-settled awards.
Share-based compensation expense, when recognized, is charged to
the consolidated statements of operations with the corresponding
entry to additional paid-in capital.
LTIP
The Group recognizes the share-based compensation expense on the
LTIP awards based on a fixed or determinable monetary amount on a
straight-line basis for each annual tranche awarded over the
requisite period. For LTIP awards with performance targets, prior
to their determination date, the amount of LTIP awards that is
expected to vest takes into consideration the achievement of the
performance conditions and the extent to which the performance
conditions are likely to be met. Performance conditions vary by
awards, and may include targets for shareholder returns,
financings, revenues, net profit after taxes and the achievement of
clinical and regulatory milestones.
These LTIP awards are classified as liability-settled awards
before the determination date (i.e. the date when the achievement
of any performance conditions are known), as they settle in a
variable number of shares based on a determinable monetary amount,
which is determined upon the actual achievement of performance
targets. As the extent of achievement of the performance targets is
uncertain prior to the determination date, a probability based on
management's assessment of the achievement of the performance
targets has been assigned to calculate the amount to be recognized
as an expense over the requisite period.
After the determination date or if the LTIP awards have no
performance conditions, the LTIP awards are classified as
equity-settled awards. If the performance target is achieved, the
Group will pay the determined monetary amount to the Trustee to
purchase ordinary shares of the Company or the equivalent ADS. Any
cumulative compensation expense previously recognized as a
liability will be transferred to additional paid-in capital. If the
performance target is not achieved, no ordinary shares or ADS of
the Company will be purchased and the amount previously recorded in
the liability will be reversed and included in the consolidated
statements of operations.
Defined Contribution Plans
The Group's subsidiaries in the PRC participate in a
government-mandated multi-employer defined contribution plan
pursuant to which certain retirement, medical and other welfare
benefits are provided to employees. The relevant labor regulations
require the Group's subsidiaries in the PRC to pay the local labor
and social welfare authority's monthly contributions at a stated
contribution rate based on the monthly basic compensation of
qualified employees. The relevant local labor and social welfare
authorities are responsible for meeting all retirement benefits
obligations and the Group's subsidiaries in the PRC have no further
commitments beyond their monthly contributions. The contributions
to the plan are expensed as incurred.
The Group also makes payments to other defined contribution
plans for the benefit of employees employed by subsidiaries outside
the PRC. The defined contribution plans are generally funded by the
relevant companies and by payments from employees.
The Group's contributions to defined contribution plans for the
years ended December 31, 2022, 2021 and 2020 amounted to
US$11,795,000, US$7,181,000 and US$2,660,000 respectively.
Revenue Recognition
Revenue is measured based on consideration specified in a
contract with a customer, and excludes any sales incentives and
amounts collected on behalf of third parties. Taxes assessed by a
governmental authority that are both imposed on and concurrent with
a specific revenue-producing transaction, that are collected by the
Group from a customer, are also excluded from revenue. The Group
recognizes revenue when it satisfies a performance obligation by
transferring control over a good, service or license to a
customer.
(i) Goods and services
The Group principally generates revenue from (1) sales of goods,
which are the manufacture or purchase and distribution of
pharmaceutical products and other consumer health products, and (2)
provision of services, which are the provision of sales,
distribution and marketing services to pharmaceutical
manufacturers. The Group evaluates whether it is the principal or
agent for these contracts. Where the Group obtains control of the
goods for distribution, it is the principal (i.e. recognizes sales
of goods on a gross basis). Where the Group does not obtain control
of the goods for distribution, it is the agent (i.e. recognizes
provision of services on a net basis). Control is primarily
evidenced by taking physical possession and inventory risk of the
goods.
Revenue from sales of goods is recognized when the customer
takes possession of the goods. This usually occurs upon completed
delivery of the goods to the customer site. The amount of revenue
recognized is adjusted for expected sales incentives as stipulated
in the contract, which are generally issued to customers as direct
discounts at the point-of-sale or indirectly in the form of
rebates. Sales incentives are estimated using the expected value
method. Additionally, sales are generally made with a limited right
of return under certain conditions. Revenues are recorded net of
provisions for sales discounts and returns.
Revenue from provision of services is recognized when the
benefits of the services transfer to the customer over time, which
is based on the proportionate value of services rendered as
determined under the terms of the relevant contract. Additionally,
when the amounts that can be invoiced correspond directly with the
value to the customer for performance completed to date, the Group
recognizes revenue from provision of services based on amounts that
can be invoiced to the customer.
Deferred revenue is recognized if consideration is received in
advance of transferring control of the goods or rendering of
services. Accounts receivable is recognized if the Group has an
unconditional right to bill the customer, which is generally when
the customer takes possession of the goods or services are
rendered. Payment terms differ by subsidiary and customer, but
generally range from 45 to 180 days from the invoice date.
(ii) License and collaboration contracts
The Group's Oncology/Immunology reportable segment includes
revenue generated from license and collaboration contracts, which
generally contain multiple performance obligations including (1)
the license to the commercialization rights of a drug compound and
(2) the research and development services for each specified
treatment indication, which are accounted for separately if they
are distinct, i.e. if a product or service is separately
identifiable from other items in the arrangement and if a customer
can benefit from it on its own or with other resources that are
readily available to the customer.
The transaction price generally includes fixed and variable
consideration in the form of upfront payment, research and
development cost reimbursements, contingent milestone payments and
sales-based royalties. Contingent milestone payments are not
included in the transaction price until it becomes probable that a
significant reversal of revenue will not occur, which is generally
when the specified milestone is achieved. The allocation of the
transaction price to each performance obligation is based on the
relative standalone selling prices of each performance obligation
determined at the inception of the contract. The Group estimates
the standalone selling prices based on the income approach. Control
of the license to the drug compounds transfers at the inception
date of the collaboration agreements and consequently, amounts
allocated to this performance obligation are generally recognized
at a point in time. Conversely, research and development services
for each specified indication are performed over time and amounts
allocated to these performance obligations are generally recognized
over time using cost inputs as a measure of progress. The Group has
determined that research and development expenses provide an
appropriate depiction of measure of progress for the research and
development services. Changes to estimated cost inputs may result
in a cumulative catch-up adjustment. Royalty revenues are
recognized as future sales occur as they meet the requirements for
the sales-usage based royalty exception.
Deferred revenue is recognized if allocated consideration is
received in advance of the Group rendering research and development
services or earning royalties on future sales. Accounts receivable
is recognized based on the terms of the contract and when the Group
has an unconditional right to bill the customer, which is generally
when research and development services are rendered.
Research and Development Expenses
Research and development expenses include the following: (i)
research and development costs, which are expensed as incurred;
(ii) acquired in-process research and development ("IPR&D")
expenses, which include the initial costs of externally developed
IPR&D projects, acquired directly in a transaction other than a
business combination, that do not have an alternative future use;
and (iii) milestone payment obligations for externally developed
IPR&D projects incurred prior to regulatory approval of the
product in the in-licensed territory, which are accrued when the
event requiring payment of the milestone occurs (milestone payment
obligations incurred upon regulatory approval are recorded as other
intangible assets).
Collaborative Arrangements
The Group enters into collaborative arrangements with
collaboration partners that fall under the scope of Accounting
Standards Codification ("ASC") 808, Collaborative Arrangements
("ASC 808"). The Group records all expenditures for such
collaborative arrangements in research and development expenses as
incurred, including payments to third party vendors and
reimbursements to collaboration partners, if any. Reimbursements
from collaboration partners are recorded as reductions to research
and development expenses and accrued when they can be contractually
claimed.
Government Grants
Grants from governments are recognized at their fair values.
Government grants that are received in advance are deferred and
recognized in the consolidated statements of operations over the
period necessary to match them with the costs that they are
intended to compensate. Government grants in relation to the
achievement of stages of research and development projects are
recognized in the consolidated statements of operations when
amounts have been received and all attached conditions have been
met. Non-refundable grants received without any further obligations
or conditions attached are recognized immediately in the
consolidated statements of operations.
Leases
In an operating lease, a lessee obtains control of only the use
of the underlying asset, but not the underlying asset itself. An
operating lease is recognized as a right-of-use asset with a
corresponding liability at the date which the leased asset is
available for use by the Group. The Group recognizes an obligation
to make lease payments equal to the present value of the lease
payments over the lease term. The lease terms may include options
to extend or terminate the lease when it is reasonably certain that
the Group will exercise that option.
Lease liabilities include the net present value of the following
lease payments: (i) fixed payments; (ii) variable lease payments
that depend on an index or a rate; and (iii) payments of penalties
for terminating the lease if the lease term reflects the lessee
exercising that option, if any. Lease liabilities exclude the
following payments that are generally accounted for separately: (i)
non-lease components, such as maintenance and security service fees
and value added tax, and (ii) any payments that a lessee makes
before the lease commencement date. The lease payments are
discounted using the interest rate implicit in the lease or if that
rate cannot be determined, the lessee's incremental borrowing rate
being the rate that the lessee would have to pay to borrow the
funds in its currency and jurisdiction necessary to obtain an asset
of similar value, economic environment and terms and
conditions.
An asset representing the right to use the underlying asset
during the lease term is recognized that consists of the initial
measurement of the operating lease liability, any lease payments
made to the lessor at or before the commencement date less any
lease incentives received, any initial direct cost incurred by the
Group and any restoration costs.
After commencement of the operating lease, the Group recognizes
lease expenses on a straight-line basis over the lease term. The
right-of-use asset is subsequently measured at cost less
accumulated amortization and any impairment provision. The
amortization of the right-of-use asset represents the difference
between the straight-line lease expense and the accretion of
interest on the lease liability each period. The interest amount is
used to accrete the lease liability and to amortize the
right-of-use asset. There is no amount recorded as interest
expense.
Payments associated with short-term leases are recognized as
lease expenses on a straight-line basis over the period of the
leases.
Subleases of right-of-use assets are accounted for similar to
other leases. As an intermediate lessor, the Group separately
accounts for the head-lease and sublease unless it is relieved of
its primary obligation under the head-lease. Sublease income is
recorded on a gross basis separate from the head-lease expenses. If
the total remaining lease cost on the head-lease is more than the
anticipated sublease income for the lease term, this is an
indicator that the carrying amount of the right-of-use asset
associated with the head-lease may not be recoverable, and the
right-of-use asset will be assessed for impairment.
Income Taxes
The Group accounts for income taxes under the liability method.
Under the liability method, deferred income tax assets and
liabilities are determined based on the differences between the
financial reporting and income tax bases of assets and liabilities
and are measured using the income tax rates that will be in effect
when the differences are expected to reverse. A valuation allowance
is recorded when it is more likely than not that some of the net
deferred income tax asset will not be realized.
The Group accounts for an uncertain tax position in the
consolidated financial statements only if it is more likely than
not that the position is sustainable based on its technical merits
and consideration of the relevant tax authority's widely understood
administrative practices and precedents. If the recognition
threshold is met, the Group records the largest amount of tax
benefit that is greater than 50 percent likely to be realized upon
ultimate settlement.
The Group recognizes interest and penalties for income taxes, if
any, under income tax payable on its consolidated balance sheets
and under other expenses in its consolidated statements of
operations.
Losses per Share
Basic losses per share is computed by dividing net loss
attributable to the Company by the weighted average number of
outstanding ordinary shares in issue during the year. Weighted
average number of outstanding ordinary shares in issue excludes
treasury shares.
Diluted losses per share is computed by dividing net loss
attributable to the Company by the weighted average number of
outstanding ordinary shares in issue and dilutive ordinary share
equivalents outstanding during the year. Dilutive ordinary share
equivalents include ordinary shares and treasury shares issuable
upon the exercise or settlement of share-based awards or warrants
issued by the Company using the treasury stock method. The
computation of diluted losses per share does not assume conversion,
exercise, or contingent issuance of securities that would have an
anti-dilutive effect.
Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief executive officer who is
the Group's chief operating decision maker. The chief operating
decision maker reviews the Group's internal reporting in order to
assess performance and allocate resources.
Profit Appropriation and Statutory Reserves
The Group's subsidiaries and equity investees established in the
PRC are required to make appropriations to certain
non-distributable reserve funds.
In accordance with the relevant laws and regulations established
in the PRC, the Company's subsidiaries registered as wholly-owned
foreign enterprise have to make appropriations from their after-tax
profits (as determined under generally accepted accounting
principles in the PRC ("PRC GAAP") to reserve funds including
general reserve fund, enterprise expansion fund and staff bonus and
welfare fund. The appropriation to the general reserve fund must be
at least 10% of the after-tax profits calculated in accordance with
PRC GAAP. Appropriation is not required if the general reserve fund
has reached 50% of the registered capital of the company.
Appropriations to the enterprise expansion fund and staff bonus and
welfare fund are made at the respective company's discretion. For
the Group's equity investees, the amount of appropriations to these
funds are made at the discretion of their respective boards.
In addition, Chinese domestic companies must make appropriations
from their after-tax profits as determined under PRC GAAP to
non-distributable reserve funds including statutory surplus fund
and discretionary surplus fund. The appropriation to the statutory
surplus fund must be 10% of the after-tax profits as determined
under PRC GAAP. Appropriation is not required if the statutory
surplus fund has reached 50% of the registered capital of the
company. Appropriation to the discretionary surplus fund is made at
the respective company's discretion.
The use of the general reserve fund, enterprise expansion fund,
statutory surplus fund and discretionary surplus fund is restricted
to the offsetting of losses or increases to the registered capital
of the respective company. The staff bonus and welfare fund is a
liability in nature and is restricted to fund payments of special
bonus to employees and for the collective welfare of employees. All
these reserves are not permitted to be transferred to the company
as cash dividends, loans or advances, nor can they be distributed
except under liquidation.
4. Fair Value Disclosures
The following table presents the Group's financial instruments
by level within the fair value hierarchy under ASC 820, Fair Value
Measurement:
Fair Value Measurement Using
Level Level Level
1 2 3 Total
--------- ------- ------- -------
(in US$'000)
As at December 31, 2021
Warrant (Note 19) - 2,452 - 2,452
========== ======= ======= =======
Cash equivalents, short-term investments, accounts receivable,
other receivables, accounts payable and other payables are carried
at cost, which approximates fair value due to the short-term nature
of these financial instruments, and are therefore excluded from the
above table. Bank borrowings are floating rate instruments and
carried at amortized cost, which approximates fair values, and are
therefore excluded from the above table.
5. Cash and Cash Equivalents and Short-term Investments
December 31,
2022 2021
-------- ----------
(in US$'000)
Cash and Cash Equivalents
Cash at bank and on hand 178,326 104,620
Bank deposits maturing in three months or
less 134,952 272,922
-------- ----------
313,278 377,542
-------- ----------
Short-term Investments
Bank deposits maturing over three months
(note) 317,718 634,158
-------- ----------
630,996 1,011,700
======== ==========
Note: The maturities for short-term investments ranged from 91
to 99 days and 91 to 180 days for the years ended December 31, 2022
and 2021 respectively.
Certain cash and bank balances denominated in RMB, US$ and UK
Pound Sterling ("GBP") were deposited with banks in the PRC. The
conversion of these balances into foreign currencies is subject to
the rules and regulations of foreign exchange control promulgated
by the PRC government. Cash and cash equivalents and short-term
investments were denominated in the following currencies:
December 31,
2022 2021
-------- ----------
(in US$'000)
US$ 533,173 895,935
RMB 79,319 53,455
Hong Kong dollar ("HK$") 16,721 60,535
GBP 1,370 1,090
Euro 413 685
-------- ----------
630,996 1,011,700
======== ==========
6. Accounts Receivable
Accounts receivable from contracts with customers consisted of
the following:
December 31,
----------------
2022 2021
------- -------
(in US$'000)
Accounts receivable-third parties 94,531 82,434
Accounts receivable-related parties (Note
23(ii)) 3,517 1,166
Allowance for credit losses (60) (20)
------- -------
Accounts receivable, net 97,988 83,580
======= =======
Substantially all accounts receivable are denominated in RMB,
US$ and HK$ and are due within one year from the end of the
reporting periods. The carrying values of accounts receivable
approximate their fair values due to their short-term
maturities.
An aging analysis for accounts receivable-third parties based on
the relevant invoice dates is as follows:
December 31,
----------------
2022 2021
------- -------
(in US$'000)
Not later than 3 months 84,007 78,288
Between 3 months to 6 months 7,478 2,867
Between 6 months to 1 year 1,947 78
Later than 1 year 1,099 1,201
------- -------
Accounts receivable-third parties 94,531 82,434
======= =======
Movements on the allowance for credit losses:
2022 2021 2020
------ ----- -----
(in US$'000)
As at January 1 20 95 16
Increase in allowance for credit losses 150 16 95
Decrease in allowance due to subsequent
collection (107) (92) (18)
Exchange difference (3) 1 2
------ ----- -----
As at December 31 60 20 95
====== ===== =====
7. Other receivables, prepayments and deposits
Other receivables, prepayments and deposits consisted of the
following:
December 31,
----------------
2022 2021
------- -------
(in US$'000)
Dividend receivables (Note 22) 26,246 46,387
Prepayments 22,329 14,128
Value-added tax receivables 1,491 16,616
Deposits 1,214 1,255
Amounts due from related parties (Note 23(ii)) 998 1,149
Others 1,936 1,506
------- -------
54,214 81,041
======= =======
No allowance for credit losses has been made for other
receivables, prepayments and deposits for the years ended December
31, 2022 and 2021.
8. Inventories
Inventories, net of provision for excess and obsolete
inventories, consisted of the following:
December 31,
----------------
2022 2021
------- -------
(in US$'000)
Raw materials 27,392 15,837
Finished goods 29,298 19,918
------- -------
56,690 35,755
======= =======
9. Property, Plant and Equipment
Property, plant and equipment consisted of the following:
Furniture
and
fixtures,
other
equipment
Leasehold Plant and motor Construction
Buildings improvements and equipment vehicles in progress Total
--------- ------------- ------------- ------------ ------------ ---------
(in US$'000)
Cost
As at January
1,
2022 2,432 17,828 5,987 27,957 19,970 74,174
Additions - 171 541 4,945 40,625 46,282
Disposals - (1,105) (2) (529) - (1,636)
Transfers - 1,336 1,412 1,637 (4,385) -
Exchange
differences (199) (1,394) (484) (2,272) (1,660) (6,009)
--------- ------------- ------------- ------------ ------------ -----------
As at December
31, 2022 2,233 16,836 7,454 31,738 54,550 112,811
--------- ------------- ------------- ------------ ------------ -----------
Accumulated
depreciation
As at January
1,
2022 1,788 11,571 2,352 17,188 - 32,899
Depreciation 116 3,741 590 3,880 - 8,327
Disposals - (1,018) (2) (505) - (1,525)
Transfers - - (56) 56 - -
Exchange
differences (151) (1,012) (214) (1,460) - (2,837)
--------- ------------- ------------- ------------ ------------ -----------
As at December
31, 2022 1,753 13,282 2,670 19,159 - 36,864
--------- ------------- ------------- ------------ ------------ -----------
Net book value
As at December
31, 2022 480 3,554 4,784 12,579 54,550 75,947
========= ============= ============= ============ ============ ===========
Furniture
and
fixtures,
other
equipment
Leasehold Plant and motor Construction
Buildings improvements and equipment vehicles in progress Total
--------- ------------- ------------- ------------ ------------ ---------
(in US$'000)
Cost
As at January
1,
2021 2,372 16,346 5,643 23,040 3,050 50,451
Additions - 452 24 3,189 19,669 23,334
Disposals - (275) (19) (705) - (999)
Transfers - 916 197 1,849 (2,962) -
Exchange
differences 60 389 142 584 213 1,388
--------- ------------- ------------- ------------ ------------ ---------
As at December
31, 2021 2,432 17,828 5,987 27,957 19,970 74,174
--------- ------------- ------------- ------------ ------------ ---------
Accumulated
depreciation
As at January
1,
2021 1,626 8,652 1,747 14,256 - 26,281
Depreciation 120 2,904 574 3,244 - 6,842
Disposals - (223) (18) (688) - (929)
Exchange
differences 42 238 49 376 - 705
--------- ------------- ------------- ------------ ------------ ---------
As at December
31, 2021 1,788 11,571 2,352 17,188 - 32,899
--------- ------------- ------------- ------------ ------------ ---------
Net book value
As at December
31, 2021 644 6,257 3,635 10,769 19,970 41,275
========= ============= ============= ============ ============ =========
10. Leases
Leases consisted of the following:
December 31,
---------------
2022 2021
------ -------
(in US$'000)
Right-of-use assets
Offices 6,634 10,605
Factories 387 702
Warehouses (note) 1,500 281
Others 201 291
------ -------
Total right-of-use assets 8,722 11,879
====== =======
Lease liabilities-current 3,708 4,917
Lease liabilities-non-current 5,196 7,161
------ -------
Total lease liabilities 8,904 12,078
====== =======
Note: Includes US$1.5 million right-of-use asset for warehouses
in Suzhou that is leased through June 2026 in which the contract
has a termination option with 3-month advance notice. The
termination option was not recognized as part of the right-of-use
asset and lease liability as it is uncertain that the Group will
exercise such option.
Lease activities are summarized as follows:
Year Ended December
31,
----------------------
2022 2021
---------- ----------
(in US$'000)
Lease expenses:
Short-term leases with lease terms equal or less
than 12 months 134 106
Leases with lease terms greater than 12 months 5,238 4,306
---------- ----------
5,372 4,412
========== ==========
Cash paid on lease liabilities 5,212 4,954
========== ==========
Non-cash: Lease liabilities recognized from obtaining
right-of-use assets 2,689 7,665
========== ==========
Non-cash: Lease liabilities changed in relation
to modifications and terminations (499) (33)
========== ==========
Lease contracts are typically within a period of 1 to 8 years.
The weighted average remaining lease term and the weighted average
discount rate as at December 31, 2022 was 3.24 years and 3.04%
respectively. The weighted average remaining lease term and the
weighted average discount rate as at December 31, 2021 was 3.38
years and 3.33% respectively.
Future lease payments are as follows:
December
31,
2022
-------------
(in US$'000)
Lease payments:
Not later than 1 year 3,908
Between 1 to 2 years 2,471
Between 2 to 3 years 1,177
Between 3 to 4 years 911
Between 4 to 5 years 680
Later than 5 years 115
-------------
Total lease payments 9,262
Less: Discount factor (358)
-------------
Total lease liabilities 8,904
=============
11. Investments in Equity Investees
Investments in equity investees consisted of the following:
December 31,
----------------
2022 2021
------- -------
(in US$'000)
SHPL 73,461 75,999
Other 316 480
------- -------
73,777 76,479
======= =======
The equity investees are private companies and there are no
quoted market prices available for their shares.
Summarized financial information for the significant equity
investees SHPL and HBYS (sold in 2021), is as follows:
(i) Summarized balance sheets
SHPL
--------------------
December 31,
--------------------
2022 2021
--------- ---------
(in US$'000)
Current assets 214,267 190,260
Non-current assets 80,062 91,605
Current liabilities (147,952) (128,993)
Non-current liabilities (4,944) (7,131)
--------- ---------
Net assets 141,433 145,741
========= =========
(ii) Summarized statements of operations
SHPL HBYS(note (a))
---------------------------- --------------------
Year Ended December 31,
--------------------------------------------------
2021 (note
2022 2021 2020 (b)) 2020
-------- -------- -------- ---------- --------
(in US$'000)
Revenue 370,600 332,648 276,354 209,528 232,368
======== ======== ======== ========== ========
Gross profit 281,113 255,089 204,191 111,066 116,804
======== ======== ======== ========== ========
Interest income 980 1,216 975 205 271
======== ======== ======== ========== ========
Finance cost - - - - (5)
======== ======== ======== ========== ========
Profit before taxation 116,454 105,325 77,837 36,715 107,715
Income tax expense (note
(c)) (16,738) (15,896) (10,833) (4,840) (16,494)
-------- -------- -------- ---------- --------
Net income (note(d)) 99,716 89,429 67,004 31,875 91,221
Non-controlling interests - - - (36) 62
-------- -------- -------- ---------- --------
Net income attributable
to the shareholders of equity
investee 99,716 89,429 67,004 31,839 91,283
======== ======== ======== ========== ========
Notes:
(a) In 2020, HBYS entered into an agreement with the government
to return the land use right for a plot of land in Guangzhou to the
government and recognized land compensation of RMB569.2 million
(approximately US$86.1 million). In June 2021, HBYS received a
completion confirmation from the government and became entitled to
a land compensation bonus of RMB110.3 million (approximately
US$17.0 million) and recorded a gain before tax of RMB106.8 million
(approximately US$16.4 million) after deducting costs of RMB3.5
million (approximately US$0.6 million).
(b) The summarized statement of operations for HBYS for the year
ended December 31, 2021 includes the period when HBYS was the
Group's equity investee from January 1, 2021 to September 28, 2021,
the completion date of the divestment. The Group has accounted for
the investment in HBYS under the equity method up to September 28,
2021.
(c) The main entity within the SHPL group has been granted the
High and New Technology Enterprise ("HNTE") status. Accordingly,
the entity was eligible to use a preferential income tax rate of
15% for the years ended December 31, 2022, 2021 and 2020.
(d) Net income is before elimination of unrealized profits on
transactions with the Group. The amounts eliminated were
approximately US$110,000, US$36,000 and nil for the years ended
December 31, 2022, 2021 and 2020 respectively.
For the years ended December 31, 2022, 2021 and 2020, other
equity investee had net income of approximately US$10,000 and
US$41,000 and net losses of approximately US$194,000 respectively.
In August 2022, the Group entered into an agreement with a third
party (the "Buyer") to sell its entire investment in other equity
investee for cash consideration of RMB2.2 million (approximately
US$324,000) with closing subject to regulatory approval in the
PRC.
(iii) Reconciliation of summarized financial information
Reconciliation of the summarized financial information presented
to the carrying amount of investments in equity investees is as
follows:
SHPL HBYS
---------------------------- -------------------
2022 2021 2020 2021 2020
-------- -------- -------- --------- --------
(in US$'000)
Opening net assets after non-controlling interests as at
January 1 145,741 152,714 146,759 119,424 44,541
Net income attributable to the shareholders of equity
investee 99,716 89,429 67,004 31,839 91,283
Purchase of additional interests in a subsidiary of an
equity investee (note) - - - - (347)
Dividends declared (87,436) (99,744) (72,179) (106,159) (20,756)
Other comprehensive (loss)/income (16,588) 3,342 11,130 1,387 4,703
-------- -------- -------- --------- --------
Closing net assets after non-controlling interests as at
December 31 141,433 145,741 152,714 46,491 119,424
======== ======== ======== ========= ========
Group's share of net assets 70,717 72,871 76,357 23,246 59,712
Goodwill 2,872 3,128 3,051 - -
Elimination of unrealized profits on downstream sales (128) - - - -
Divestment (Note 22) - - - (23,246) -
Carrying amount of investments as at December 31 73,461 75,999 79,408 - 59,712
======== ======== ======== ========= ========
Note: During the year ended December 31, 2020, HBYS acquired an
additional 30% interest in a subsidiary and after the acquisition,
it became a wholly owned subsidiary of HBYS.
SHPL had the following capital commitments:
December 31,
2022
-------------
(in US$'000)
Property, plant and equipment
Contracted but not provided for 1,307
=============
12. Accounts Payable
December 31,
----------------
2022 2021
------- -------
(in US$'000)
Accounts payable-third parties 68,193 39,115
Accounts payable-non-controlling shareholders of subsidiaries (Note 23(iv)) 2,922 2,062
------- -------
71,115 41,177
======= =======
Substantially all accounts payable are denominated in RMB and
US$ and due within one year from the end of the reporting period.
The carrying values of accounts payable approximate their fair
values due to their short-term maturities.
An aging analysis based on the relevant invoice dates is as
follows:
December 31,
----------------
2022 2021
------- -------
(in US$'000)
Not later than 3 months 60,553 35,615
Between 3 months to 6 months 7,216 3,705
Between 6 months to 1 year 2,137 588
Later than 1 year 1,209 1,269
------- -------
71,115 41,177
======= =======
13. Other Payables, Accruals and Advance Receipts
Other payables, accruals and advance receipts consisted of the
following:
December 31,
------------------
2022 2021
-------- --------
(in US$'000)
Accrued research and development expenses 156,134 116,134
Accrued salaries and benefits 42,442 41,786
Accrued capital expenditures 21,390 11,343
Accrued administrative and other general expenses 14,491 15,836
Accrued selling and marketing expenses 11,564 8,412
Deposits 3,616 2,111
Amounts due to related parties (Note 23(ii)) 2,101 1,915
Deferred government grants 673 314
Others 12,210 12,988
-------- --------
264,621 210,839
======== ========
14. Bank Borrowings
Bank borrowings consisted of the following:
December 31,
----------------
2022 2021
------- -------
(in US$'000)
Current - 26,905
Non-current 18,104 -
======= =======
The weighted average interest rate for outstanding bank
borrowings for the years ended December 31, 2022 and 2021 was 1.73%
per annum and 1.08% per annum respectively. The carrying amounts of
the Group's outstanding bank borrowings as at December 31, 2022 and
2021 were denominated in RMB and HK$ respectively.
(i) 3--year term loan and revolving loan facilities and 1-year
revolving loan facility
In May 2019, the Group through its subsidiary, entered into a
facility agreement with a bank for the provision of unsecured
credit facilities in the aggregate amount of HK$400,000,000
(US$51,282,000). The 3-year credit facilities included (i) a
HK$210,000,000 (US$26,923,000) term loan facility and (ii) a
HK$190,000,000 (US$24,359,000) revolving loan facility, both with
an interest rate at the Hong Kong Interbank Offered Rate ("HIBOR")
plus 0.85% per annum, and an upfront fee of HK$819,000 (US$105,000)
on the term loan. These credit facilities were guaranteed by the
Company. The term loan was drawn in October 2019 and was repaid in
May 2022. The revolving loan facility also expired in May 2022.
In May 2022, the Group through its subsidiary, entered into a
1-year revolving loan facility with the bank in the amount of
HK$390,000,000 (US$50,000,000) with an interest rate at HIBOR plus
0.5% per annum. This credit facility is guaranteed by the Company.
As at December 31, 2022, no amount was drawn from the revolving
loan facility.
(ii) 10--year fixed asset loan facility
In October 2021, a subsidiary entered into a 10-year fixed asset
loan facility agreement with a bank for the provision of a secured
credit facility in the amount of RMB754,880,000 (US$108,393,000)
with an annual interest rate at the 5-year China Loan Prime Rate
less 0.8% (which was supplemented in June 2022) and interest
payments commencing upon completion of the underlying construction
in progress. This credit facility is guaranteed by the immediate
holding company of the subsidiary and secured by the underlying
leasehold land and buildings. As at December 31, 2022 and 2021,
RMB126,083,000 (US$18,104,000) and nil were utilized from the fixed
asset loan facility respectively, of which RMB769,000 (US$110,000)
and nil were related to capitalized interest respectively.
(iii) 2--year revolving loan facility
In August 2020, the Group through its subsidiary, entered into a
2-year revolving loan facility with a bank in the amount of
HK$117,000,000 (US$15,000,000) with an interest rate at HIBOR plus
4.5% per annum. This credit facility was guaranteed by the Company.
The revolving loan facility expired in August 2022.
The Group's bank borrowings are repayable as from the dates
indicated as follows:
December 31,
----------------
2022 2021
------- -------
(in US$'000)
Not later than 1 year - 26,923
Between 1 to 3 years 360 -
Between 3 to 4 years 839 -
Between 4 to 5 years 1,079 -
Later than 5 years 15,826 -
18,104 26,923
======= =======
As at December 31, 2022 and 2021, the Group had unutilized bank
borrowing facilities of US$140,289,000 and US$157,430,000
respectively.
15. Commitments and Contingencies
The Group had the following capital commitments:
December
31, 2022
-------------
(in US$'000)
Property, plant and equipment
Contracted but not provided for 22,130
=============
The Group does not have any other significant commitments or
contingencies.
16. Ordinary Shares
As at December 31, 2022, the Company is authorized to issue
1,500,000,000 ordinary shares.
On April 14, 2021, the Company issued 16,393,445 ordinary shares
to a third party for gross proceeds of US$100.0 million through a
PIPE. Issuance costs totaled US$0.1 million.
On June 30, 2021 and July 15, 2021, the Company issued an
aggregate of 119,600,000 ordinary shares in a public offering on
the HKEX with over-allotment option exercised in full for aggregate
gross proceeds of US$614.9 million. Issuance costs totaled US$29.7
million.
Each ordinary share is entitled to one vote. The holders of
ordinary shares are also entitled to receive dividends whenever
funds are legally available and when declared by the Board of
Directors of the Company.
17. Share-based Compensation
(i) Share--based Compensation of the Company
The Company conditionally adopted a share option scheme on June
4, 2005 (as amended on March 21, 2007) and such scheme has a term
of 10 years. It expired in 2016 and no further share options can be
granted. Another share option scheme was conditionally adopted on
April 24, 2015 (as amended on April 27, 2020) (the "Hutchmed Share
Option Scheme"). Pursuant to the Hutchmed Share Option Scheme, the
Board of Directors of the Company may, at its discretion, offer any
employees and directors (including Executive and Non-executive
Directors but excluding Independent Non-executive Directors) of the
Company, holding companies of the Company and any of their
subsidiaries or affiliates, and subsidiaries or affiliates of the
Company share options to subscribe for shares of the Company.
As at December 31, 2022, the aggregate number of shares issuable
under the Hutchmed Share Option Scheme was 48,611,458 ordinary
shares and the aggregate number of shares issuable under the prior
share option scheme which expired in 2016 was 660,570 ordinary
shares. The Company will issue new shares to satisfy share option
exercises. Additionally, the number of shares authorized but
unissued was 635,224,660 ordinary shares.
Share options granted are generally subject to a four-year
vesting schedule, depending on the nature and the purpose of the
grant. Share options subject to the four-year vesting schedule, in
general, vest 25% upon the first anniversary of the vesting
commencement date as defined in the grant letter, and 25% every
subsequent year. However, certain share option grants may have a
different vesting schedule as approved by the Board of Directors of
the Company. No outstanding share options will be exercisable or
subject to vesting after the expiry of a maximum of eight to ten
years from the date of grant.
A summary of the Company's share option activity and related
information is as follows:
Weighted average
Weighted average remaining Aggregate intrinsic
Number of share exercise price in contractual life value
options US$ per share (years) (in US$'000)
--------------------- -------------------- --------------------- ---------------------
Outstanding at
January 1, 2020 19,432,560 4.48 6.67 24,316
Granted 15,437,080 4.66
Exercised (480,780) 1.23
Cancelled (4,486,200) 5.02
Expired (741,670) 6.46
---------------------
Outstanding at
December 31, 2020 29,160,990 4.49 7.21 53,990
=====================
Granted 10,174,840 5.96
Exercised (815,190) 3.01
Cancelled (1,287,650) 5.50
Expired (42,400) 5.52
---------------------
Outstanding at
December 31, 2021 37,190,590 4.88 7.04 82,377
=====================
Granted (note) 7,680,820 2.26
Exercised (244,490) 1.98
Cancelled (3,849,905) 5.19
Expired (1,255,620) 5.66
---------------------
Outstanding at
December 31, 2022 39,521,395 4.34 6.55 11,525
=====================
Vested and
exercisable at
December 31, 2021 16,077,770 4.24 4.91 46,491
Vested and
exercisable at
December 31, 2022 21,113,285 4.57 4.80 6,288
Note: Includes 861,220 share options (represented by 172,244
ADS) granted to an executive director in May 2022 where the number
of share options exercisable is subject to a performance target
based on a market condition covering the 3-year period from 2022 to
2024 which has been reflected in estimating the grant date fair
value. The grant date fair value of such awards is US$0.24 per
share using the Polynomial model. Vesting of such award will occur
in March 2025.
In estimating the fair value of share options granted, the
following assumptions were used in the Polynomial model for awards
granted in the periods indicated:
Year Ended December 31,
2022 2021 2020
Weighted average grant date fair value of share options (in US$ per share) 0.85 2.24 1.76
Significant inputs into the valuation model (weighted average):
Exercise price (in US$ per share) 2.26 5.96 4.66
Share price at effective date of grant (in US$ per share) 2.22 5.91 4.66
Expected volatility (note (a)) 46.7% 41.1% 42.6%
Risk-free interest rate (note (b)) 2.98% 1.62% 0.59%
Contractual life of share options (in years) 10 10 10
Expected dividend yield (note (c)) 0% 0% 0%
Notes:
(a) The Company calculated its expected volatility with
reference to the historical volatility prior to the issuances of
share options.
(b) For share options exercisable into ADS, the risk-free
interest rates reference the U.S. Treasury yield curves because the
Company's ADS are currently listed on the NASDAQ and denominated in
US$. For share options exercisable into ordinary shares, the
risk-free interest rates reference the sovereign yield of the
United Kingdom because the Company's ordinary shares are currently
listed on AIM and denominated in GBP.
(c) The Company has not declared or paid any dividends and does
not currently expect to do so prior to the exercise of the granted
share options, and therefore uses an expected dividend yield of
zero in the Polynomial model.
The Company will issue new shares to satisfy share option
exercises. The following table summarizes the Company's share
option exercises:
Year Ended December 31,
2022 2021 2020
---------
(in US$'000)
Cash received from share option exercises 174 2,452 593
Total intrinsic value of share option exercises 92 2,999 2,475
The Group recognizes compensation expense on a graded vesting
approach over the requisite service period. The following table
presents share-based compensation expense included in the Group's
consolidated statements of operations:
Year Ended December 31,
2022 2021 2020
--------
(in US$'000)
Research and development expenses 4,803 8,460 4,061
Selling and administrative expenses 1,803 7,783 4,586
Cost of revenues 130 122 90
--------
6,736 16,365 8,737
========
As at December 31, 2022, the total unrecognized compensation
cost was US$10,907,000, and will be recognized on a graded vesting
approach over the weighted average remaining service period of 2.63
years.
(ii) LTIP
The Company grants awards under the LTIP to participating
directors and employees, giving them a conditional right to receive
ordinary shares of the Company or the equivalent ADS (collectively
the "Awarded Shares") to be purchased by the Trustee up to a cash
amount. Vesting will depend upon continued employment of the award
holder with the Group and will otherwise be at the discretion of
the Board of Directors of the Company. Additionally, some awards
are subject to change based on annual performance targets prior to
their determination date.
LTIP awards prior to the determination date
Performance targets vary by award, and may include targets for
shareholder returns, financings, revenues, net profit after taxes
and the achievement of clinical and regulatory milestones. As the
extent of achievement of the performance targets is uncertain prior
to the determination date, a probability based on management's
assessment on the achievement of the performance target has been
assigned to calculate the amount to be recognized as an expense
over the requisite period with a corresponding entry to
liability.
LTIP awards after the determination date
Upon the determination date, the Company will pay a determined
monetary amount, up to the maximum cash amount based on the actual
achievement of the performance target specified in the award, to
the Trustee to purchase the Awarded Shares. Any cumulative
compensation expense previously recognized as a liability will be
transferred to additional paid-in capital. If the performance
target is not achieved, no Awarded Shares of the Company will be
purchased and the amount previously recorded in the liability will
be reversed through share-based compensation expense.
Granted awards under the LTIP are as follows:
Maximum cash amount Covered Performance target
Grant date (in US$ millions) financial years determination date
April 20, 2020 5.3 2019 note (a)
April 20, 2020 37.4 2020 note (b)
April 20, 2020 1.9 note (c) note (c)
April 20, 2020 0.2 note (d) note (d)
August 12, 2020 2.1 2020 note (b)
August 12, 2020 0.3 note (c) note (c)
March 26, 2021 57.3 2021 note (b)
September 1, 2021 7.3 2021 note (b)
September 1, 2021 0.5 note (c) note (c)
October 20, 2021 1.7 note (c) note (c)
December 14, 2021 0.1 note (c) note (c)
December 14, 2021 0.1 note (d) note (d)
May 23, 2022 60.4 2022 note (b)
September 13, 2022 3.8 2022 note (b)
September 13, 2022 1.7 note (c) note (c)
Notes:
(a) This award does not stipulate performance targets and
vesting occurs two business days after the announcement of the
Group's annual results for the financial year falling two years
after the covered financial year to which the LTIP award
relates.
(b) The annual performance target determination date is the date
of the announcement of the Group's annual results for the covered
financial year and vesting occurs two business days after the
announcement of the Group's annual results for the financial year
falling two years after the covered financial year to which the
LTIP award relates.
(c) This award does not stipulate performance targets and is
subject to a vesting schedule of 25% on each of the first, second,
third and fourth anniversaries of the date of grant.
(d) This award does not stipulate performance targets and will
be vested on the first anniversary of the date of grant.
The Trustee has been set up solely for the purpose of purchasing
and holding the Awarded Shares during the vesting period on behalf
of the Company using funds provided by the Company. On the
determination date, if any, the Company will determine the cash
amount, based on the actual achievement of each annual performance
target, for the Trustee to purchase the Awarded Shares. The Awarded
Shares will then be held by the Trustee until they are vested.
The Trustee's assets include treasury shares and funds for
additional treasury shares, trustee fees and expenses. The number
of treasury shares (in the form of ordinary shares or ADS of the
Company) held by the Trustee were as follows:
Number of
treasury Cost
shares (in US$'000)
As at January 1, 2020 941,310 6,079
Purchased 3,281,920 12,904
Vested (712,555) (4,828)
As at December 31, 2020 3,510,675 14,155
Purchased 4,907,045 27,309
Vested (278,545) (1,450)
As at December 31, 2021 8,139,175 40,014
Purchased 14,028,465 48,084
Vested (2,566,265) (12,034)
As at December 31, 2022 19,601,375 76,064
Based on the estimated achievement of performance conditions for
2022 financial year LTIP awards, the determined monetary amount was
US$17,429,000 which is recognized to share-based compensation
expense over the requisite vesting period to March 2025.
For the years ended December 31, 2022, 2021 and 2020,
US$19,031,000, US$6,618,000 and US$7,038,000 of the LTIP awards
were forfeited respectively based on the determined or estimated
monetary amount as at the forfeiture date.
The following table presents the share-based compensation
expenses recognized under the LTIP awards:
Year Ended December 31,
2022 2021 2020
--------
(in US$'000)
Research and development expenses 16,101 16,880 7,252
Selling and administrative expenses 7,376 8,451 3,552
Cost of revenues 373 294 101
23,850 25,625 10,905
Recorded with a corresponding credit to:
Liability 6,216 14,263 7,778
Additional paid-in capital 17,634 11,362 3,127
--------
23,850 25,625 10,905
========
For the years ended December 31, 2022, 2021 and 2020,
US$15,351,000, US$8,516,000 and US$4,092,000 were reclassified from
liability to additional paid-in capital respectively upon LTIP
awards reaching the determination date. As at December 31, 2022 and
2021, US$3,701,000 and US$12,836,000 were recorded as liabilities
respectively for LTIP awards prior to the determination date.
As at December 31, 2022, the total unrecognized compensation
cost was approximately US$34,668,000, which considers expected
performance targets and the amounts expected to vest, and will be
recognized over the requisite periods.
18. Revenues
The following table presents disaggregated revenue, with sales
of goods recognized at a point-in-time and provision of services
recognized over time:
Year Ended December 31, 2022
Oncology/Immunology Other Ventures Total
--------------------
(in US$'000)
Goods-Marketed Products 57,057 - 57,057
Goods-Distribution - 262,565 262,565
Services-Commercialization-Marketed
Products 41,275 - 41,275
* Collaboration Research and Development 23,741 - 23,741
* Research and Development 507 - 507
Royalties 26,310 - 26,310
Licensing 14,954 - 14,954
--------------------
163,844 262,565 426,409
Third parties 163,337 257,272 420,609
Related parties (Note 23(i)) 507 5,293 5,800
--------------------
163,844 262,565 426,409
Year Ended December 31, 2021
Oncology/Immunology Other Ventures Total
--------------------
(in US$'000)
Goods-Marketed Products 33,937 - 33,937
Goods-Distribution - 236,518 236,518
Services-Commercialization-Marketed
Products 27,428 - 27,428
* Collaboration Research and Development 18,995 - 18,995
* Research and Development 525 - 525
Royalties 15,064 - 15,064
Licensing 23,661 - 23,661
--------------------
119,610 236,518 356,128
Third parties 119,085 232,262 351,347
Related parties (Note 23(i)) 525 4,256 4,781
--------------------
119,610 236,518 356,128
Year Ended December 31, 2020
Oncology/Immunology Other Ventures Total
(in US$'000)
Goods-Marketed Products 11,329 - 11,329
Goods-Distribution - 197,761 197,761
Services-Commercialization-Marketed
Products 3,734 - 3,734
* Collaboration Research and Development 9,771 - 9,771
* Research and Development 491 - 491
Royalties 4,890 - 4,890
30,215 197,761 227,976
Third parties 29,724 192,277 222,001
Related parties (Note 23(i)) 491 5,484 5,975
30,215 197,761 227,976
The following table presents liability balances from contracts
with customers:
December 31,
2022 2021
(in US$'000)
Deferred revenue
Current-Oncology/Immunology segment (note (a)) 11,817 11,078
Current-Other Ventures segment (note (b)) 1,530 1,196
13,347 12,274
Non-current-Oncology/Immunology segment (note (a)) 190 878
Total deferred revenue (note (c) and (d)) 13,537 13,152
Notes:
(a) Oncology/Immunology segment deferred revenue relates to
invoiced amounts for royalties where the customer has not yet
completed the in-market sale, unamortized upfront and milestone
payments and advance consideration received for cost reimbursements
which are attributed to research and development services that have
not yet been rendered as at the reporting date.
(b) Other Ventures segment deferred revenue relates to payments
in advance from customers for goods that have not been transferred
and services that have not been rendered to the customer as at the
reporting date.
(c) Estimated deferred revenue to be recognized over time as
from the date indicated is as follows:
December 31,
2022 2021
(in US$'000)
Not later than 1 year 13,347 12,274
Between 1 to 2 years 150 476
Between 2 to 3 years 40 255
Between 3 to 4 years - 147
13,537 13,152
(d) As at January 1, 2022, deferred revenue was US$13.2 million,
of which US$11.8 million was recognized during the year ended
December 31, 2022.
License and collaboration agreement with Eli Lilly
On October 8, 2013, the Group entered into a licensing,
co-development and commercialization agreement in China with Eli
Lilly and Company ("Lilly") relating to Elunate ("Lilly
Agreement"), also known as fruquintinib, a targeted oncology
therapy for the treatment of various types of solid tumors. Under
the terms of the Lilly Agreement, the Group is entitled to receive
a series of payments up to US$86.5 million, including upfront
payments and development and regulatory approval milestones.
Development costs after the first development milestone are shared
between the Group and Lilly. Elunate was successfully
commercialized in China in November 2018, and the Group receives
tiered royalties in the range of 15% to 20% on all sales in
China.
In December 2018, the Group entered into various amendments to
the Lilly Agreement (the "2018 Amendment"). Under the terms of the
2018 Amendment, the Group is entitled to determine and conduct
future life cycle indications ("LCI") development of Elunate in
China beyond the three initial indications specified in the Lilly
Agreement and will be responsible for all associated development
costs. In return, the Group will receive additional regulatory
approval milestones of US$20 million for each LCI approved, for up
to three LCI or US$60 million in aggregate, and will increase
tiered royalties to a range of 15% to 29% on all Elunate sales in
China upon the commercial launch of the first LCI. Additionally,
through the 2018 Amendment, Lilly has provided consent, and freedom
to operate, for the Group to enter into joint development
collaborations with certain third-party pharmaceutical companies to
explore combination treatments of Elunate and various immunotherapy
agents. The 2018 Amendment also provided the Group rights to
promote Elunate in provinces that represent 30% to 40% of the sales
of Elunate in China upon the occurrence of certain commercial
milestones by Lilly. Such rights were further amended below.
In July 2020, the Group entered into an amendment to the Lilly
Agreement (the "2020 Amendment") relating to the expansion of the
Group's role in the commercialization of Elunate across all of
China. Under the terms of the 2020 Amendment, the Group is
responsible for providing promotion and marketing services,
including the development and execution of all on-the-ground
medical detailing, promotion and local and regional marketing
activities, in return for service fees on sales of Elunate made by
Lilly. In October 2020, the Group commenced such promotion and
marketing services. In addition, development and regulatory
approval milestones for an initial indication under the Lilly
Agreement were increased by US$10 million in lieu of cost
reimbursement.
Upfront and cumulative milestone payments according to the Lilly
Agreement received up to December 31, 2022 are summarized as
follows:
(in US$'000)
Upfront payment 6,500
Development milestone payments achieved 40,000
The Lilly Agreement has the following performance obligations:
(1) the license for the commercialization rights to Elunate and (2)
the research and development services for the specified
indications. The transaction price includes the upfront payment,
research and development cost reimbursements, milestone payments
and sales-based royalties. Milestone payments were not included in
the transaction price until it became probable that a significant
reversal of revenue would not occur, which is generally when the
specified milestone is achieved. The allocation of the transaction
price to each performance obligation was based on the relative
standalone selling prices of each performance obligation determined
at the inception of the contract. Based on this estimation,
proportionate amounts of transaction price to be allocated to the
license to Elunate and the research and development services were
90% and 10% respectively. Control of the license to Elunate
transferred at the inception date of the agreement and
consequently, amounts allocated to this performance obligation were
recognized at inception. Conversely, research and development
services for each specified indication are performed over time and
amounts allocated are recognized over time using the prior and
estimated future development costs for Elunate as a measure of
progress. Royalties are recognized as future sales occur as they
meet the requirements for the sales-usage based royalty
exception.
The 2018 Amendment is a separate contract as it added distinct
research and development services for the LCIs to the Lilly
Agreement. The 2020 Amendment related to the promotion and
marketing services is a separate contract as it added distinct
services to the Lilly Agreement. Such promotion and marketing
services are recognized over time based on amounts that can be
invoiced to Lilly. The 2020 Amendment related to the additional
development and regulatory approval milestone amounts is a
modification as it only affected the transaction price of research
and development services for a specific indication under the Lilly
Agreement, and therefore, such additional milestone amounts will be
included in the transaction price accounted under the Lilly
Agreement once the specified milestones are achieved.
Revenue recognized under the Lilly Agreement and subsequent
amendments is as follows:
Year Ended December 31,
2022 2021 2020
-------
(in US$'000)
Goods-Marketed Products 14,407 15,792 11,329
Services-Commercialization-Marketed Products 41,275 27,428 3,734
* Collaboration Research and Development 8,054 4,491 1,991
Royalties 13,954 10,292 4,890
77,690 58,003 21,944
License and collaboration agreement with AstraZeneca
On December 21, 2011, the Group and AstraZeneca AB (publ) ("AZ")
entered into a global licensing, co-development, and
commercialization agreement for Orpathys ("AZ Agreement"), also
known as savolitinib, a novel targeted therapy and a highly
selective inhibitor of the c-Met receptor tyrosine kinase for the
treatment of cancer. Under the terms of the AZ Agreement, the Group
is entitled to receive a series of payments up to US$140 million,
including upfront payments and development and first-sale
milestones. Additionally, the AZ Agreement contains possible
significant future commercial sale milestones. Development costs
for Orpathys in China will be shared between the Group and AZ, with
the Group continuing to lead the development in China. AZ will lead
and pay for the development of Orpathys for the rest of the world.
Orpathys was successfully commercialized in China in July 2021, and
the Group receives fixed royalties of 30% based on all sales in
China. Should Orpathys be successfully commercialized outside
China, the Group would receive tiered royalties from 9% to 13% on
all sales outside of China.
In August 2016 (as amended in December 2020), the Group entered
into an amendment to the AZ Agreement whereby the Group shall pay
the first approximately US$50 million of phase III clinical trial
costs related to developing Orpathys for renal cell carcinoma
("RCC"), and remaining costs will be shared between the Group and
AZ. Subject to approval of Orpathys in RCC, the Group would receive
additional tiered royalties on all sales outside of China, with the
incremental royalty rates determined based on actual sharing of
development costs. In November 2021, the Group entered into an
additional amendment which revised the sharing between the Group
and AZ of development costs for Orpathys in China for non-small
cell lung cancer, as well as adding potential development
milestones.
Upfront and cumulative milestone payments according to the AZ
Agreement received up to December 31, 2022 are summarized as
follows:
(in US$'000)
Upfront payment 20,000
Development milestone payments achieved 40,000
First-sale milestone payment achieved 25,000
The AZ Agreement has the following performance obligations: (1)
the license for the commercialization rights to Orpathys and (2)
the research and development services for the specified
indications. The transaction price includes the upfront payment,
research and development cost reimbursements, milestone payments
and sales-based royalties. Milestone payments were not included in
the transaction price until it became probable that a significant
reversal of revenue would not occur, which is generally when the
specified milestone is achieved. The allocation of the transaction
price to each performance obligation was based on the relative
standalone selling prices of each performance obligation determined
at the inception of the contract. Based on this estimation,
proportionate amounts of transaction price to be allocated to the
license to Orpathys and the research and development services were
95% and 5% respectively. Control of the license to Orpathys
transferred at the inception date of the agreement and
consequently, amounts allocated to this performance obligation were
recognized at inception. Conversely, research and development
services for each specified indication are performed over time and
amounts allocated are recognized over time using the prior and
estimated future development costs for Orpathys as a measure of
progress.
Revenue recognized under the AZ Agreement and subsequent
amendments is as follows:
Year Ended December 31,
2022 2021 2020
------
(in US$'000)
Goods-Marketed Products 9,904 6,509 -
Services-Collaboration Research and Development 14,467 14,113 7,780
Royalties 12,356 4,772 -
Licensing 14,954 23,661 -
51,681 49,055 7,780
19. In-Licensing arrangement
On August 7, 2021, the Group and Epizyme, Inc. ("Epizyme")
entered into a license agreement (the "In-license Agreement") for
tazemetostat, a novel inhibitor of EZH2 that is approved by the
U.S. Food and Drug Administration for the treatment of certain
patients with epithelioid sarcoma and follicular lymphoma. The
Group will be responsible for the development and commercialization
of tazemetostat in the PRC, Hong Kong, Macau and Taiwan (the
"Territory") and also holds rights to manufacture tazemetostat for
the Territory. The Group also received a 4-year warrant,
exercisable up to August 7, 2025, to purchase up to 5,653,000
shares of Epizyme common stock for an exercise price of US$11.50
per share ("Warrant Exercise Price").
Under the terms of the In-license Agreement and warrant, the
Group paid Epizyme a US$25 million upfront payment and is obligated
for a series of success-based payments up to US$110 million in
development and regulatory milestones and up to US$175 million in
sales milestones. Success-based payments are recognized when the
related milestone is achieved. After tazemetostat is commercialized
in the Territory, the Group will incur tiered royalties based on
net sales. For the year ended December 31, 2022, US$5.0 million
development milestone was paid and expensed to research and
development expenses as in-process research and development.
The US$25 million upfront payment was first allocated to the
warrant for its initial fair value of US$15 million, and the
remainder was allocated to the rights to tazemetostat which were
expensed to research and development expense as in-process research
and development.
The warrant was recorded as a financial asset at fair value with
changes to fair value recognized to the consolidated statements of
operations. On August 12, 2022, a third party announced that it has
acquired all outstanding shares of Epizyme under a definitive
merger agreement. Consequently, the warrant was deemed expired
under the terms of the In-license Agreement and warrant. For the
years ended December 31, 2022 and 2021, fair value losses of US$2.5
million and US$12.5 million were recognized to other expense in the
consolidated statements of operations respectively.
20. Research and Development Expenses
Research and development expenses are summarized as follows:
Year Ended December 31,
2022 2021 2020
--------
(in US$'000)
Clinical trial related costs 255,935 190,051 105,869
Personnel compensation and related costs 119,306 91,639 63,542
Other research and development expenses 11,652 17,396 5,365
--------
386,893 299,086 174,776
========
The Group has entered into multiple collaborative arrangements
under ASC 808 to evaluate the combination of the Group's drug
compounds with the collaboration partners' drug compounds. For the
years ended December 31, 2022, 2021 and 2020, the Group has
incurred research and development expenses of US$14,654,000,
US$18,408,000 and US$8,291,000 respectively, related to such
collaborative arrangements.
21. Government Grants
Government grants in the Oncology/Immunology segment are
primarily given in support of the construction of a manufacturing
plant in Shanghai and R&D activities which are conditional upon
i) the Group spending a predetermined amount, regardless of success
or failure of the research and development projects and/or ii) the
achievement of certain stages of research and development projects
being approved by the relevant PRC government authority. They are
refundable to the government if the conditions, if any, are not
met. Government grants in the Other Ventures segment are primarily
given to promote local initiatives. These government grants may be
subject to ongoing reporting and monitoring by the government over
the period of the grant.
Government grants, which are deferred and recognized in the
consolidated statements of operations over the period necessary to
match them with the costs that they are intended to compensate, are
recognized in other payables, accruals and advance receipts (Note
13) and other non-current liabilities. For the years ended December
31, 2022, 2021 and 2020, the Group received government grants of
US$8,474,000, US$9,095,000 and US$4,724,000 respectively.
Government grants were recognized in the consolidated statements
of operations as follows:
Year Ended December 31,
2022 2021 2020
-------
(in US$'000)
Research and development expenses 4,556 15,515 1,607
Other income 1,434 318 539
5,990 15,833 2,146
22. Gain on divestment of an equity investee
In March 2021, the Group entered into a sale and purchase
agreement (the "SPA") with a third party to sell its entire
investment in HBYS with closing subject to regulatory approval in
the PRC. On September 28, 2021, the Group completed the divestment
for cash consideration of US$159.1 million.
On May 13, 2021 and September 23, 2021, HBYS had declared
dividends to shareholders of US$46.5 million and US$59.7 million
respectively which were related to prior year undistributed profits
and distributions of a land bonus payment. Based on the SPA, the
Group is entitled to a portion of such dividends and the third
party will settle these amounts, net of taxes, after HBYS completes
the distribution. As at December 31, 2022 and 2021, US$26.2 million
and US$46.4 million of dividend receivables, net of taxes, from the
third party was recorded respectively in other receivables,
prepayments and deposits (Note 7).
In addition, the Group and Hutchison Whampoa Enterprises
Limited, an affiliate of CK Hutchison Holdings Limited ("CK
Hutchison"), entered into a license agreement on June 15, 2021,
conditional upon the completion of the divestment, to grant a
continuing right to use the "Hutchison Whampoa" brand by HBYS for
10 years at HK$12 million (approximately US$1.5 million) per year
with aggregate amounts not to exceed HK$120 million (approximately
US$15.4 million). On September 28, 2021, the Group recorded the
present value of future branding liability payments of US$12.7
million. As at December 31, 2022 and 2021, US$1.5 million was
included in amounts due to related parties (Note 23(ii)) and US$8.7
million and US$9.8 million were included in other non-current
liabilities respectively.
The gain on divestment of an equity investee was recognized in
the consolidated statements of operations as follows:
Year Ended December
31,
2021
(in US$'000)
Proceeds 159,118
Dividend receivables-third party (Note 7) 46,387
205,505
Less: Group's share of net assets of HBYS (Note
11(iii)) (23,246)
Dividend receivables-HBYS (52,887)
Withholding tax liability on dividend receivables-HBYS 2,644
Branding liability (12,721)
Accumulated other comprehensive income and reserves 1,911
Transaction costs and others 104
Gain on divestment of an equity investee 121,310
Less: Capital gain tax (14,373)
Less: Gain on divestment of an equity investee attributable
to non-controlling interests (24,010)
Gain on divestment of an equity investee attributable
to the Group 82,927
23. Significant Transactions with Related Parties and
Non-Controlling Shareholders of Subsidiaries
The Group has the following significant transactions with
related parties and non-controlling shareholders of subsidiaries,
which were carried out in the normal course of business at terms
determined and agreed by the relevant parties:
(i) Transactions with related parties:
Year Ended December 31,
2022 2021 2020
(in US$'000)
Sales to:
Indirect subsidiaries of CK Hutchison 3,610 4,256 5,484
An equity investee 1,683 - -
5,293 4,256 5,484
Revenue from research and development services from:
An equity investee 507 525 491
Purchases from:
Equity investees 4,231 3,770 3,347
Rendering of marketing services from:
Indirect subsidiaries of CK Hutchison 227 350 332
An equity investee 127 - -
354 350 332
Rendering of management services from:
An indirect subsidiary of CK Hutchison 980 971 955
Entered brand license agreement with:
An indirect subsidiary of CK Hutchison (note (a)) - 12,721 -
(ii) Balances with related parties included in:
December 31,
2022 2021
(in US$'000)
Accounts receivable-related parties
Indirect subsidiaries of CK Hutchison (note (b)) 1,319 1,166
An equity investee (note (b)) 2,198 -
3,517 1,166
Other receivables, prepayments and deposits
An equity investee (note (b)) 998 1,149
Other payables, accruals and advance receipts
Indirect subsidiaries of CK Hutchison (note (c) and (e)) 1,953 1,915
An equity investee (note (b) and (d)) 148 -
2,101 1,915
Other non-current liabilities
An equity investee (note (d)) 755 736
An indirect subsidiary of CK Hutchison (note (e)) 8,716 9,766
9,471 10,502
Notes:
(a) The branding rights for HBYS from an indirect subsidiary of
CK Hutchison were recognized in the consolidated statements of
operations through the gain on divestment of an equity investee
(Note 22). For the years ended December 31, 2022 and 2021, the
Group paid US$1,538,000 for each of the two years.
(b) Balances with related parties are unsecured, repayable on
demand and interest-free. The carrying values of balances with
related parties approximate their fair values due to their
short-term maturities.
(c) Amounts due to indirect subsidiaries of CK Hutchison are
unsecured, repayable on demand and interest-bearing if not settled
within one month.
(d) Other deferred income represents amounts recognized from
granting of commercial, promotion and marketing rights.
(e) As at December 31, 2022 and 2021, a branding liability
payable of US$1,538,000 was included in amounts due to related
parties under other payables, accruals and advance receipts. As at
December 31, 2022 and 2021, US$8,716,000 and US$9,766,000 of the
branding liability payable was included in other non-current
liabilities.
(iii) Transactions with non--controlling shareholders of
subsidiaries:
Year Ended December 31,
2022 2021 2020
(in US$'000)
Sales 47,611 41,974 36,500
Purchases 7,936 10,660 13,936
Dividends declared 25,600 9,894 1,462
(iv) Balances with non--controlling shareholders of subsidiaries
included in:
December 31,
2022 2021
(in US$'000)
Accounts receivable 11,139 8,436
Accounts payable 2,922 2,062
24. Income Taxes
(i) Income tax (benefit)/expense
Year Ended December 31,
2022 2021 2020
------
(in US$'000)
Current tax
HK (note (a)) 301 310 457
PRC (note (b) and (c)) 2,580 15,909 872
U.S. and others (note (d)) 399 417 219
------
Total current tax 3,280 16,636 1,548
Deferred income tax (benefit)/expense (3,563) (4,718) 3,281
------
Income tax (benefit)/expense (283) 11,918 4,829
Notes:
(a) The Company, three subsidiaries incorporated in the British
Virgin Islands and its Hong Kong subsidiaries are subject to Hong
Kong profits tax. Under the Hong Kong two-tiered profits tax rates
regime, the first HK$2.0 million (US$0.3 million) of assessable
profits of qualifying corporations will be taxed at 8.25%, with the
remaining assessable profits taxed at 16.5%. Hong Kong profits tax
has been provided for at the relevant rates on the estimated
assessable profits less estimated available tax losses, if any, of
these entities as applicable.
(b) Taxation in the PRC has been provided for at the applicable
rate on the estimated assessable profits less estimated available
tax losses, if any, in each entity. Under the PRC Enterprise Income
Tax Law (the "EIT Law"), the standard enterprise income tax rate is
25%. In addition, the EIT Law provides for a preferential tax rate
of 15% for companies which qualify as HNTE. HUTCHMED Limited and
its wholly-owned subsidiary HUTCHMED (Suzhou) Limited qualify as a
HNTE up to December 31, 2022 and 2023 respectively.
Pursuant to the EIT law, a 10% withholding tax is levied on
dividends paid by PRC companies to their foreign investors. A lower
withholding tax rate of 5% is applicable under the China-HK Tax
Arrangement if direct foreign investors with at least 25% equity
interest in the PRC companies are Hong Kong tax residents, and meet
the conditions or requirements pursuant to the relevant PRC tax
regulations regarding beneficial ownership. Since the equity
holders of the equity investees of the Company are Hong Kong
incorporated companies and Hong Kong tax residents, and meet the
aforesaid conditions or requirements, the Company has used 5% to
provide for deferred tax liabilities on retained earnings which are
anticipated to be distributed. As at December 31, 2022, 2021 and
2020, the amounts accrued in deferred tax liabilities relating to
withholding tax on dividends were determined on the basis that 100%
of the distributable reserves of the equity investees operating in
the PRC will be distributed as dividends.
Pursuant to PRC Bulletin on Issues of Enterprise Income Tax and
Indirect Transfers of Assets by Non-PRC Resident Enterprises, an
indirect transfer of a PRC resident enterprise by a non-PRC
resident enterprise, via the transfer of an offshore intermediate
holding company, shall be subject to PRC withholding tax under
certain conditions.
(c) Current tax in the PRC for the year ended December 31, 2021
includes US$14.4 million arising from the indirect disposal of HBYS
(Note 22), calculated at 10% of the excess of the disposal proceeds
over the cost of acquiring the equity investment in HBYS.
(d) The Company's subsidiary in the U.S. with operations
primarily in New Jersey is subject to U.S. taxes, primarily federal
and state taxes, which have been provided for at approximately 21%
(federal) and 0% to 11.5% (state tax) on the estimated assessable
profit over the reporting years. Certain income receivable by the
Company is subject to U.S. withholding tax of 30%. Two of the
Group's subsidiaries are subject to corporate tax in the UK and EU
countries at 19% and 15% to 25%, respectively, on the estimated
assessable profits in relation to their presence in these
countries.
The reconciliation of the Group's reported income tax expense to
the theoretical tax amount that would arise using the tax rates of
the Company against the Group's loss before income taxes and equity
in earnings of equity investees is as follows:
Year Ended December 31,
2022 2021 2020
(in US$'000)
Loss before income taxes and equity in earnings of equity investees (410,422) (215,740) (189,734)
Tax calculated at the statutory tax rate of the Company (67,720) (35,597) (31,306)
Tax effects of:
Different tax rates applicable in different jurisdictions 6,316 136 4,025
Tax valuation allowance 93,243 63,975 46,321
Preferential tax rate difference (171) (148) (154)
Preferential tax deduction and credits (40,791) (29,838) (18,814)
Expenses not deductible for tax purposes 8,886 8,684 3,476
Withholding tax on undistributed earnings of PRC entities 2,492 3,153 3,962
Others (2,538) 1,553 (2,681)
Income tax (benefit)/expense (283) 11,918 4,829
(ii) Deferred tax assets and liabilities
The significant components of deferred tax assets and
liabilities are as follows:
December 31,
2022 2021
(in US$'000)
Deferred tax assets
Cumulative tax losses 264,751 186,832
Others 15,254 12,269
Total deferred tax assets 280,005 199,101
Less: Valuation allowance (264,639) (189,700)
Deferred tax assets 15,366 9,401
Deferred tax liabilities
Undistributed earnings from PRC entities 2,686 2,720
Others 24 45
Deferred tax liabilities 2,710 2,765
The movements in deferred tax assets and liabilities are as
follows:
2022 2021 2020
(in US$'000)
As at January 1 6,636 (3,548) (2,343)
Utilization of previously recognized withholding tax on undistributed earnings 2,186 5,148 2,323
(Charged)/Credited to the consolidated statements of operations
Withholding tax on undistributed earnings of PRC entities (2,492) (3,153) (3,962)
Deferred tax on amortization of intangible assets 19 19 18
Deferred tax on temporary differences, tax loss carried forward and research tax
credits 6,036 7,852 663
Divestment of an equity investee - 370 -
Exchange differences 271 (52) (247)
As at December 31 12,656 6,636 (3,548)
The deferred tax assets and liabilities are offset when there is
a legally enforceable right to set off and when the deferred income
taxes relate to the same fiscal authority.
The cumulative tax losses can be carried forward against future
taxable income and will expire in the following years:
December 31,
2022 2021
(in US$'000)
No expiry date 71,325 60,450
2022 - 200
2023 - -
2024 3,763 4,099
2025 36,098 39,321
2026 48,150 52,452
2027 61,808 67,217
2028 107,297 117,376
2029 175,853 191,554
2030 243,918 265,696
2031 389,761 432,278
2032 610,800 -
1,748,773 1,230,643
The Company believes that it is more likely than not that future
operations outside the U.S. will not generate sufficient taxable
income to realize the benefit of the deferred tax assets. Certain
of the Company's subsidiaries have had sustained tax losses, which
will expire within five years if not utilized in the case of PRC
subsidiaries (ten years for HNTEs), and which will not be utilized
in the case of Hong Kong subsidiaries as they do not generate
taxable profits. Accordingly, a valuation allowance has been
recorded against the relevant deferred tax assets arising from the
tax losses.
A U.S. subsidiary of the Company has approximately US$3.9
million and US$1.2 million U.S. Federal and New Jersey state
research tax credits which will expire between 2041 and 2042
(Federal) and 2028 and 2029 (New Jersey) respectively, if not
utilized.
The table below summarizes changes in the deferred tax valuation
allowance:
2022 2021 2020
(in US$'000)
As at January 1 189,700 122,378 69,399
Charged to consolidated statements of operations 93,243 63,975 46,321
Utilization of previously unrecognized tax losses (1) (186) (114)
Write-off of tax losses (125) - -
Others - (9) -
Exchange differences (18,178) 3,542 6,772
As at December 31 264,639 189,700 122,378
As at December 31, 2022, 2021 and 2020, the Group did not have
any material unrecognized uncertain tax positions.
(iii) Income tax payable
2022 2021 2020
(in US$'000)
As at January 1 15,546 1,120 1,828
Current tax 3,280 16,636 1,548
Withholding tax upon dividend declaration from PRC entities 2,186 5,148 2,323
Tax paid (note) (18,891) (5,014) (5,940)
Reclassification from non-current withholding tax - - 812
Reclassification (from)/to prepaid tax (241) 25 485
Divestment of an equity investee (Note 22) - (2,644) -
Exchange difference (768) 275 64
As at December 31 1,112 15,546 1,120
Note: The amount for 2022 includes US$14.4 million capital gain
tax paid for gain on divestment of HBYS (Note 22). The amount for
2020 is net of the PRC Enterprise Income Tax refund of US$0.4
million received by HSPL.
25. Losses Per Share
(i) Basic losses per share
Basic losses per share is calculated by dividing the net loss
attributable to the Company by the weighted average number of
outstanding ordinary shares in issue during the year.
Year Ended December 31,
2022 2021 2020
Weighted average number of outstanding ordinary shares in issue 847,143,540 792,684,524 697,931,437
Net loss attributable to the Company (US$'000) (360,835) (194,648) (125,730)
Losses per share attributable to the Company (US$ per share) (0.43) (0.25) (0.18)
(ii) Diluted losses per share
Diluted losses per share is calculated by dividing net loss
attributable to the Company by the weighted average number of
outstanding ordinary shares in issue and dilutive ordinary share
equivalents outstanding during the year. Dilutive ordinary share
equivalents include shares issuable upon the exercise or settlement
of share options, LTIP awards and warrants issued by the Company
using the treasury stock method.
For the years ended December 31, 2022, 2021 and 2020, the share
options, LTIP awards and warrants issued by the Company were not
included in the calculation of diluted losses per share because of
their anti-dilutive effect. Therefore, diluted losses per share
were equal to basic losses per share for the years ended December
31, 2022, 2021 and 2020.
26. Segment Reporting
The Group's operating segments are as follows:
(i) Oncology/Immunology: focuses on discovering, developing, and
commercializing targeted therapies and immunotherapies for the
treatment of cancer and immunological diseases. Oncology/Immunology
is further segregated into two core business areas:
(a) R&D: comprises research and development activities
covering drug discovery, development, manufacturing and regulatory
functions as well as administrative activities to support research
and development operations; and
(b) Marketed Products: comprises the sales, marketing,
manufacture and distribution of drugs developed from research and
development activities.
(ii) Other Ventures: comprises other commercial businesses which
include the sales, marketing, manufacture and distribution of other
prescription drugs and consumer health products.
The performance of the reportable segments is assessed based on
segment net (loss)/income attributable to the Company.
The segment information is as follows:
Year Ended December 31, 2022
Oncology/Immunology
Marketed Other
R&D Products Ventures
U.S.
and
PRC Others Subtotal PRC Subtotal PRC Unallocated Total
(in US$'000)
Revenue from
external
customers 39,202 - 39,202 124,642 163,844 262,565 - 426,409
Interest income 674 4 678 - 678 272 8,649 9,599
Interest expense - - - - - - (652) (652)
Equity in earnings
of equity
investees,
net of tax 5 - 5 - 5 49,748 - 49,753
Income tax
(expense)/benefit (552) 6,053 5,501 (631) 4,870 (1,345) (3,242) 283
Net (loss)/income
attributable
to the Company (215,834) (186,945) (402,779) 17,367 (385,412) 54,604 (30,027) (360,835)
Depreciation/
amortization (7,576) (484) (8,060) - (8,060) (299) (305) (8,664)
Additions to
non-current
assets (other
than financial
instruments
and deferred
tax assets) 47,563 725 48,288 - 48,288 664 21 48,973
December 31, 2022
Oncology/Immunology
Marketed Other
R&D Products Ventures
U.S.
and
PRC Others Subtotal PRC Subtotal PRC Unallocated Total
(in US$'000)
Total assets 221,337 30,281 251,618 45,984 297,602 235,500 496,343 1,029,445
Property, plant
and equipment 72,775 2,103 74,878 - 74,878 735 334 75,947
Right-of-use
assets 3,350 3,167 6,517 - 6,517 1,308 897 8,722
Leasehold land 11,830 - 11,830 - 11,830 - - 11,830
Goodwill - - - - - 3,137 - 3,137
Other intangible
asset - - - - - 85 - 85
Investments
in equity investees 316 - 316 - 316 73,461 - 73,777
Year Ended December 31, 2021
Oncology/Immunology
Marketed Other
R&D Products Ventures
U.S.
and
PRC Others Subtotal PRC Subtotal PRC Unallocated Total
(in US$'000)
Revenue from
external
customers 43,181 - 43,181 76,429 119,610 236,518 - 356,128
Interest income 809 3 812 - 812 282 982 2,076
Interest expense - - - - - - (592) (592)
Equity in earnings
of equity
investees,
net of tax 20 - 20 - 20 60,597 - 60,617
Income tax
benefit/(expense) 22 7,160 7,182 (1,320) 5,862 (14,573) (3,207) (11,918)
Net (loss)/income
attributable
to the Company (143,528) (152,235) (295,763) 4,032 (291,731) 142,890 (45,807) (194,648)
Depreciation/
amortization (6,436) (197) (6,633) - (6,633) (318) (239) (7,190)
Additions to
non-current
assets (other
than financial
instruments
and deferred
tax assets) 25,295 4,321 29,616 - 29,616 1,056 327 30,999
December 31, 2021
Oncology/Immunology
Marketed Other
R&D Products Ventures
U.S.
and
PRC Others Subtotal PRC Subtotal PRC Unallocated Total
(in US$'000)
Total assets 166,802 19,870 186,672 35,978 222,650 225,898 924,113 1,372,661
Property, plant
and equipment 38,049 1,862 39,911 - 39,911 746 618 41,275
Right-of-use
assets 4,798 3,768 8,566 - 8,566 1,827 1,486 11,879
Leasehold land 13,169 - 13,169 - 13,169 - - 13,169
Goodwill - - - - - 3,380 - 3,380
Other intangible
asset - - - - - 163 - 163
Investments
in equity investees 480 - 480 - 480 75,999 - 76,479
Year Ended December 31, 2020
Oncology/Immunology
Marketed Other
R&D Products Ventures
U.S.
PRC and Others Subtotal PRC Subtotal PRC Unallocated Total
(in US$'000)
Revenue from
external
customers 10,262 - 10,262 19,953 30,215 197,761 - 227,976
Interest income 461 - 461 - 461 167 2,608 3,236
Interest expense - - - - - - (787) (787)
Equity in earnings
of equity
investees,
net of tax (97) - (97) - (97) 79,143 - 79,046
Income tax
(expense)/benefit (402) 642 240 (167) 73 (824) (4,078) (4,829)
Net (loss)/income
attributable (182, (125,
to the Company (120,096) (62,683) 779 ) 7,282 (175,497) 72,785 (23,018) 730)
Depreciation/
amortization (5,458) (119) (5,577) - (5,577) (292) (192) (6,061)
Additions to
non-current
assets (other
than financial
instruments
and deferred
tax assets) 22,574 754 23,328 - 23,328 817 1,090 25,235
Revenue from external customers is after elimination of
inter-segment sales. Sales between segments are carried out at
mutually agreed terms. The amounts eliminated attributable to sales
between PRC and U.S. and others under Oncology/Immunology segment
were US$55,433,000, US$46,891,000, and US$19,230,000 for the years
ended December 31, 2022, 2021, and 2020 respectively.
A summary of customers which accounted for over 10% of the
Group's revenue for the years ended December 31, 2022, 2021 and
2020 is as follows:
Year Ended December 31,
2022 2021 2020
(in US$'000)
Customer A 75,606 56,082 (note)
Customer B 51,681 49,055 (note)
Customer C 47,611 41,974 36,500
Customer D (note) (note) 25,993
Note: Customer did not account for over 10% of the Group's
revenue during the year.
Customer A and B are included in Oncology/Immunology and
Customer C and D are primarily included in Other Ventures.
Unallocated expenses mainly represent corporate expenses which
include corporate employee benefit expenses and the relevant
share-based compensation expenses. Unallocated assets mainly
comprise cash and cash equivalents and short-term investments.
27. Note to Consolidated Statements of Cash Flows
Reconciliation of net loss for the year to net cash used in
operating activities:
Year Ended December 31,
2022 2021 2020
(in US$'000)
Net loss (360,386) (167,041) (115,517)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 8,664 7,190 6,061
Amortization of finance costs 18 44 43
Loss on disposals of property, plant and equipment 111 70 85
Provision for excess and obsolete inventories 293 (23) 65
Provision for credit losses, net 43 (76) 77
Share-based compensation expense-share options 6,736 16,365 8,737
Share-based compensation expense-LTIP 23,850 25,625 10,905
Equity in earnings of equity investees, net of tax (49,753) (60,617) (79,046)
Dividends received from SHPL and HBYS 43,718 49,872 86,708
Impairment of investment in other equity investee 130 - -
Changes in right-of-use assets 2,721 (3,727) (2,197)
Fair value losses on warrant 2,452 12,548 -
Gain from divestment of HBYS - (121,310) -
Unrealized currency translation loss/(gain) 13,274 (2,505) (6,149)
Changes in income tax balances (19,174) 6,904 (1,111)
Changes in working capital
Accounts receivable (14,451) (35,634) (4,693)
Other receivables, prepayments and deposits 12,072 (5,758) (9,602)
Inventories (21,213) (16,002) (3,623)
Accounts payable 29,938 9,565 7,651
Other payables, accruals and advance receipts 52,629 66,224 37,472
Lease liabilities (2,701) 3,079 2,258
Deferred revenue 386 11,071 (158)
Other 2,044 (87) (32)
Total changes in working capital 58,704 32,458 29,273
Net cash used in operating activities (268,599) (204,223) (62,066)
28. Litigation
From time to time, the Group may become involved in litigation
relating to claims arising from the ordinary course of business.
The Group believes that there are currently no claims or actions
pending against the Group, the ultimate disposition of which could
have a material adverse effect on the Group's financial position,
results of operations or cash flows. However, litigation is subject
to inherent uncertainties and the Group's view of these matters may
change in the future. When an unfavorable outcome occurs, there
exists the possibility of a material adverse impact on the Group's
financial position, results of operations or cash flows for the
periods in which the unfavorable outcome occurs, and potentially in
future periods.
On May 17, 2019, Luye Pharma Hong Kong Ltd. ("Luye") issued a
notice to the Group purporting to terminate a distribution
agreement that granted the Group exclusive commercial rights to
Seroquel in the PRC for failure to meet a pre-specified target. The
Group disagrees with this assertion and believes that Luye have no
basis for termination. As a result, the Group commenced legal
proceedings in 2019 in order to seek damages. On October 21, 2021
(and a decision on costs and interest in December 2021), the Group
was awarded an amount of RMB253.2 million (equivalent to US$36.4
million) with interest of 5.5% per annum from the date of the award
until payment and recovery of costs of approximately US$2.2 million
(collectively the "Award"). On June 27, 2022, Luye provided the
Group a bank guarantee of up to RMB286.0 million to cover the Award
amounts, pending the outcome of an application by Luye to the High
Court of Hong Kong to set aside the Award. On July 26, 2022, Luye's
application to set aside the Award was dismissed by the High Court
with costs awarded in favor of the Group. On October 7, 2022, Luye
filed a Notice of Appeal to the Court of Appeal regarding the
dismissal and the notice was accepted on November 8, 2022. A Court
of Appeal hearing date has been set for June 2023. The legal
proceedings are ongoing, no Award amounts have been received as at
the issuance date of these consolidated financial statements and no
Award amounts have been recognized and no adjustment has been made
to Seroquel-related balances as at December 31, 2022. Such
Seroquel-related balances include accounts receivable, long-term
prepayment, accounts payable and other payables of US$1.1 million,
US$0.5 million, US$0.9 million and US$1.2 million respectively.
29. Restricted Net Assets
Relevant PRC laws and regulations permit payments of dividends
by the Company's subsidiaries in the PRC only out of their retained
earnings, if any, as determined in accordance with PRC accounting
standards and regulations. In addition, the Company's subsidiaries
in the PRC are required to make certain appropriations of net
after-tax profits or increases in net assets to the statutory
surplus fund prior to payment of any dividends. In addition,
registered share capital and capital reserve accounts are
restricted from withdrawal in the PRC, up to the amount of net
assets held in each subsidiary. As a result of these and other
restrictions under PRC laws and regulations, the Company's
subsidiaries in the PRC are restricted in their ability to transfer
their net assets to the Group in terms of cash dividends, loans or
advances, with restricted portions amounting to US$0.1 million and
US$0.1 million as at December 31, 2022 and 2021 respectively, which
excludes the Company's subsidiaries with a shareholders' deficit.
Even though the Group currently does not require any such
dividends, loans or advances from the PRC subsidiaries, for working
capital and other funding purposes, the Group may in the future
require additional cash resources from the Company's subsidiaries
in the PRC due to changes in business conditions, to fund future
acquisitions and development, or merely to declare and pay
dividends to make distributions to shareholders.
In addition, the Group has certain investments in equity
investees in the PRC, where the Group's equity in undistributed
earnings amounted to US$53.7 million and US$54.4 million as at
December 31, 2022 and 2021 respectively.
30. Subsequent Events
The Group evaluated subsequent events through February 28, 2023,
which is the date when the consolidated financial statements were
issued.
On January 23, 2023, the Group and Takeda Pharmaceuticals
International AG ("Takeda") entered into an exclusive out-licensing
agreement (the "Agreement") to further the global development,
commercialization and manufacturing of Fruquintinib outside
Mainland China, Hong Kong and Macau. The Group will receive up to
US$1,130.0 million from Takeda, including upfront payments of
US$400.0 million upon closing of the Agreement, as well as
potential regulatory, development and commercial sales milestone
payments, plus royalties on net sales.
31. Additional Information: Company Balance Sheets (Parent
Company Only)
December 31,
Note 2022 2021
(in US$'000)
Assets
Current assets
Cash and cash equivalents 7,892 979
Short-term investments - 55,128
Other receivables, prepayments and deposits 947 934
Total current assets 8,839 57,041
Investments in subsidiaries 726,430 972,831
Total assets 735,269 1,029,872
Liabilities and shareholders' equity
Current liabilities
Other payables, accruals and advance receipts 124,178 42,952
Income tax payable 16 16
Total current liabilities 124,194 42,968
Other non-current liabilities 708 11
Total liabilities 124,902 42,979
Commitments and contingencies 15
Company's shareholders' equity
Ordinary shares; $0.10 par value; 1,500,000,000
shares authorized; 864,775,340 and 864,530,850
shares issued at December 31, 2022 and 2021
respectively 16 86,478 86,453
Additional paid-in capital 1,497,273 1,505,196
Accumulated losses (971,481) (610,328)
Accumulated other comprehensive (loss)/income (1,903) 5,572
Total Company's shareholders' equity 610,367 986,893
Total liabilities and shareholders' equity 735,269 1,029,872
32. Dividends
No dividend has been declared or paid by the Company since its
incorporation.
33. Directors' Remuneration
Directors' remuneration disclosed pursuant to the Listing Rules,
Section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies
Ordinance and Part 2 of the Companies (Disclosure of Information
about Benefits of Directors) Regulation, is as follows:
Year Ended December 31,
2022 2021 2020
(in US$'000)
Fees: 683 883 848
Other remuneration
Salaries, allowances and benefits in kind 1,173 1,160 1,093
Pension contributions 98 93 89
Performance related bonuses 1,587 2,245 2,005
Share-based compensation expenses (note) 2,036 5,553 3,336
4,894 9,051 6,523
5,577 9,934 7,371
Note: During the years ended December 31, 2022, 2021 and 2020,
certain directors were granted share options and LTIP awards in
respect of their services to the Group under the share option
schemes and LTIP of the Company, further details of which are set
out in Note 17. The share-based compensation expenses were
recognized in the consolidated statements of operations during the
years ended December 31, 2022, 2021 and 2020.
(i) Independent non-executive directors
The fees paid to independent non-executive directors were as
follows:
Year Ended December 31,
2022 2021 2020
(in US$'000)
Paul Carter 117 117 117
Karen Ferrante 103 103 103
Graeme Jack 111 111 104
Tony Mok 103 99 84
434 430 408
The share-based compensation expenses of the independent
non-executive directors were as follows:
Year Ended December 31,
2022 2021 2020
(in US$'000)
Paul Carter 139 91 73
Karen Ferrante 139 91 73
Graeme Jack 139 91 73
Tony Mok 139 91 73
556 364 292
There were no other remunerations payable to independent
non-executive directors during the years ended December 31, 2022,
2021 and 2020.
(ii) Executive directors and non-executive directors
Year Ended December 31, 2022
Salaries,
allowances and Pension Performance Share-based
Fees benefits in kind contributions related bonuses compensation Total
(in US$'000)
Executive
directors
Simon To 85 - - - 139 224
Wei-guo Su 75 706 64 1,127 1,650 3,622
Johnny Cheng 75 340 29 442 732 1,618
Christian Hogg
(note) 14 127 5 18 (1,319) (1,155)
249 1,173 98 1,587 1,202 4,309
Non-executive
directors
Dan Eldar - - - - 139 139
Edith Shih - - - - 139 139
- - - - 278 278
249 1,173 98 1,587 1,480 4,587
Year Ended December 31, 2021
Salaries,
allowances and Pension Performance Share-based
Fees benefits in kind contributions related bonuses compensation Total
(in US$'000)
Executive
directors
Simon To 85 - - - 92 177
Wei-guo Su 75 412 35 835 1,934 3,291
Johnny Cheng 72 328 28 410 733 1,571
Christian Hogg
(note) 77 420 30 1,000 2,246 3,773
309 1,160 93 2,245 5,005 8,812
Non-executive
directors
Dan Eldar 70 - - - 92 162
Edith Shih 74 - - - 92 166
144 - - - 184 328
453 1,160 93 2,245 5,189 9,140
Year Ended December 31, 2020
Salaries,
allowances and Pension Performance Share-based
Fees benefits in kind contributions related bonuses compensation Total
(in US$'000)
Executive
directors
Simon To 80 - - - 73 153
Wei-guo Su 75 362 32 736 1,472 2,677
Johnny Cheng 70 320 27 372 341 1,130
Christian Hogg
(note) 75 411 30 897 1,012 2,425
300 1,093 89 2,005 2,898 6,385
Non-executive
directors
Dan Eldar 70 - - - 73 143
Edith Shih 70 - - - 73 143
140 - - - 146 286
440 1,093 89 2,005 3,044 6,671
Note: Mr Christian Hogg retired as executive director on March
4, 2022.
34. Five Highest-Paid Employees
The five highest-paid employees during years ended December 31,
2022, 2021 and 2020 included the following number of directors and
non-directors:
Year Ended December 31,
2022 2021 2020
Directors 2 3 3
Non-directors 3 2 2
5 5 5
Details of the remuneration for the years ended December 31,
2022, 2021 and 2020 of the five highest-paid employees who are
non-directors (the "Non-director Individuals") were as follows:
Year Ended December 31,
2022 2021 2020
(in US$'000)
Salaries, allowances and benefits in kind 1,497 859 715
Pension contributions 51 52 48
Performance related bonuses 1,759 802 735
Share-based compensation expenses (note) 2,001 1,465 1,104
5,308 3,178 2,602
Note: During the years ended December 31, 2022, 2021 and 2020,
the Non-director Individuals were granted share options and LTIP
awards in respect of their services to the Group under the share
option schemes and LTIP of the Company, further details of which
are set out in Note 17. The share-based compensation expenses were
recognized in the consolidated statements of operations during the
years ended December 31, 2022, 2021 and 2020.
The number of Non-director Individuals whose remuneration fell
within the following bands is as follows:
Year Ended December 31,
2022 2021 2020
HK$10,000,000 to HK$10,500,000 - - 2
HK$12,000,000 to HK$12,500,000 2 1 -
HK$12,500,000 to HK$13,000,000 - 1 -
HK$16,500,000 to HK$17,000,000 1 - -
3 2 2
During the years ended December 31, 2022, 2021 and 2020, no
remuneration was paid by the Group to any directors or Non-director
Individuals as an inducement to join the Group or as compensation
for loss of office. Additionally, none of the directors or
Non-director Individuals have waived any remuneration during the
years ended December 31, 2022, 2021 and 2020.
35. Reconciliation between U.S. GAAP and International Financial
Reporting Standards
These consolidated financial statements are prepared in
accordance with U.S. GAAP, which differ in certain respects from
International Financial Reporting Standards ("IFRS"). The effects
of material differences prepared under U.S. GAAP and IFRS are as
follows:
(i) Reconciliation of consolidated statements of operations
Year Ended December 31, 2022
IFRS adjustments
Amounts as Divestment
reported Lease Issuance Capitalization of an equity
under amortization costs of rights investee Amounts under
U.S. GAAP (note (a)) (note (b)) (note (c)) (note (d)) IFRS
(in US$'000)
Costs of
goods-third
parties (268,698) 57 - - - (268,641)
Research and
development
expenses (386,893) 31 - 5,000 - (381,862)
Selling expenses (43,933) 49 - - - (43,884)
Administrative
expenses (92,173) 182 - - - (91,991)
Total operating
expenses (834,102) 319 - 5,000 - (828,783)
Interest expense (652) (322) - - - (974)
Other expense (13,509) 12 - - - (13,497)
Total other
(expense)/income (2,729) (310) - - - (3,039)
Loss before
income taxes and
equity in
earnings of
equity investees (410,422) 9 - 5,000 - (405,413)
Equity in
earnings of
equity
investees, net
of tax 49,753 (16) - - - 49,737
Net loss (360,386) (7) - 5,000 - (355,393)
Less: Net income
attributable to
non-controlling
interests (449) (5) - - - (454)
Net loss
attributable to
the Company (360,835) (12) - 5,000 - (355,847)
Year Ended December 31, 2021
IFRS adjustments
Amounts as Divestment
reported Lease Issuance Capitalization of an equity
under amortization costs of rights investee Amounts under
U.S. GAAP (note (a)) (note (b)) (note (c)) (note (d)) IFRS
(in US$'000)
Costs of
goods-third
parties (229,448) 40 - - - (229,408)
Research and
development
expenses (299,086) 23 - 11,111 - (287,952)
Selling expenses (37,827) 53 - - - (37,774)
Administrative
expenses (89,298) 161 (163) - - (89,300)
Total operating
expenses (684,445) 277 (163) 11,111 - (673,220)
Gain on divestment
of an equity
investee 121,310 - - - 11,266 132,576
Interest expense (592) (400) - - - (992)
Other expense (12,643) 9 - - - (12,634)
Total other
(expense)/income (8,733) (391) - - - (9,124)
Loss before income
taxes and equity
in earnings of
equity investees (215,740) (114) (163) 11,111 11,266 (193,640)
Income tax
benefit/(expense) (11,918) - - - 370 (11,548)
Equity in earnings
of equity
investees, net of
tax 60,617 (1) - - (11,636) 48,980
Net loss (167,041) (115) (163) 11,111 - (156,208)
Less: Net income
attributable to
non-controlling
interests (27,607) (2) - (27) - (27,636)
Net loss
attributable to
the Company (194,648) (117) (163) 11,084 - (183,844)
Year Ended December 31, 2020
IFRS adjustments
Amounts as Divestment
reported Lease Issuance Capitalization of an equity
under amortization costs of rights investee Amounts under
U.S. GAAP (note (a)) (note (b)) (note (c)) (note (d)) IFRS
(in US$'000)
Costs of
goods-third
parties (178,828) 29 - - - (178,799)
Research and
development
expenses (174,776) 18 - - - (174,758)
Selling expenses (11,334) 51 - - - (11,283)
Administrative
expenses (50,015) 132 860 - - (49,023)
Total operating
expenses (424,644) 230 860 - - (423,554)
Interest expense (787) (237) - - - (1,024)
Other expense (115) 15 - - - (100)
Total other
(expense)/income 6,934 (222) - - - 6,712
Loss before
income taxes and
equity in
earnings of
equity investees (189,734) 8 860 - - (188,866)
Equity in
earnings of
equity
investees, net
of tax 79,046 4 - - - 79,050
Net loss (115,517) 12 860 - - (114,645)
Less: Net income
attributable to
non-controlling
interests (10,213) 17 - - - (10,196)
Net loss
attributable to
the Company (125,730) 29 860 - - (124,841)
(ii) Reconciliation of consolidated balance sheets
December 31, 2022
IFRS adjustments
Amounts Divestment
as of an
reported Lease Issuance Capitalization equity LTIP Amounts
under amortization costs of rights investee classification under
U.S. GAAP (note (a)) (note (b)) (note (c)) (note (d)) (note (e)) IFRS
(in US$'000)
Right-of-use
assets 8,722 (233) - - - - 8,489
Investments in
equity
investees 73,777 (37) - - - - 73,740
Other
non-current
assets 15,745 - - 15,370 - - 31,115
Total assets 1,029,445 (270) - 15,370 - - 1,044,545
Other payables,
accruals and
advance
receipts 264,621 - - - - (3,701) 260,920
Total current
liabilities 353,903 - - - - (3,701) 350,202
Total
liabilities 392,575 - - - - (3,701) 388,874
Additional
paid-in capital 1,497,273 - (697) - - 3,701 1,500,277
Accumulated
losses (971,481) (246) 697 16,084 - - (954,946)
Accumulated
other
comprehensive
(loss)/income (1,903) 8 - (739) - - (2,634)
Total Company's
shareholders'
equity 610,367 (238) - 15,345 - 3,701 629,175
Non-controlling
interests 26,503 (32) - 25 - - 26,496
Total
shareholders'
equity 636,870 (270) - 15,370 - 3,701 655,671
December 31, 2021
IFRS adjustments
Amounts Divestment
as of an
reported Lease Issuance Capitalization equity LTIP Amounts
under amortization costs of rights investee classification under
U.S. GAAP (note (a)) (note (b)) (note (c)) (note (d)) (note (e)) IFRS
(in US$'000)
Right-of-use
assets 11,879 (257) - - - - 11,622
Investments in
equity
investees 76,479 (24) - - - - 76,455
Other
non-current
assets 21,551 - - 11,296 - - 32,847
Total assets 1,372,661 (281) - 11,296 - - 1,383,676
Other payables,
accruals and
advance
receipts 210,839 - - - - (12,836) 198,003
Total current
liabilities 311,658 - - - - (12,836) 298,822
Total
liabilities 333,147 - - - - (12,836) 320,311
Additional
paid-in capital 1,505,196 - (697) - - 12,836 1,517,335
Accumulated
losses (610,328) (233) 697 11,084 - - (598,780)
Accumulated
other
comprehensive
(loss)/income 5,572 (7) - 185 - - 5,750
Total Company's
shareholders'
equity 986,893 (240) - 11,269 - 12,836 1,010,758
Non-controlling
interests 52,621 (41) - 27 - - 52,607
Total
shareholders'
equity 1,039,514 (281) - 11,296 - 12,836 1,063,365
Notes:
(a) Lease amortization
Under U.S. GAAP, for operating leases, the amortization of
right-of-use assets and the interest expense element of lease
liabilities are recorded together as lease expenses, which results
in a straight-line recognition effect in the consolidated
statements of operations.
Under IFRS, all leases are accounted for like finance leases
where right-of-use assets are generally depreciated on a
straight-line basis while lease liabilities are measured under the
effective interest method, which results in higher expenses at the
beginning of the lease term and lower expenses near the end of the
lease term.
(b) Issuance costs
Under U.S. GAAP and IFRS, there are differences in the criteria
for capitalization of issuance costs incurred in the offering of
equity securities.
(c) Capitalization of development and commercial rights
Under U.S. GAAP, the acquired development and commercial rights
do not meet the capitalization criteria as further development is
needed as of the acquisition date and there is no alternative
future use. Such rights are considered as in-process research and
development and were expensed to research and development
expense.
Under IFRS, the acquired development and commercial rights were
capitalized to intangible assets. The recognition criterion is
always assumed to be met as the price already reflects the
probability that future economic benefits will flow to the
Group.
(d) Divestment of HBYS
Under U.S. GAAP, an equity method investment to be divested that
does not qualify for discontinued operations reporting would not
qualify for held-for-sale classification. The investment in HBYS
was not presented as a discontinued operation or as an asset
classified as held-for-sale after the signing of the SPA in March
2021 and therefore, it was accounted for under the equity method
until closing on September 28, 2021.
Under IFRS, an equity method investment may be classified as
held-for-sale even if the discontinued operations criteria are not
met. The investment in HBYS was not presented as a discontinued
operation but was classified as held-for-sale and therefore equity
method accounting was discontinued in March 2021 on the initial
classification as held-for-sale. Accordingly, the reconciliation
includes a classification difference in the consolidated statement
of operations between gain on divestment of an equity investee,
equity earnings of equity investees, net of tax and income tax
expense.
(e) LTIP classification
Under U.S. GAAP, LTIP awards with performance conditions are
classified as liability-settled awards prior to the determination
date as they settle in a variable number of shares based on a
determinable monetary amount, which is determined upon the actual
achievement of performance targets. After the determination date,
the LTIP awards are reclassified as equity-settled awards.
Under IFRS, LTIP awards are classified as equity-settled awards,
both prior to and after the determination date, as they are
ultimately settled in ordinary shares or the equivalent ADS of the
Company instead of cash.
([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(R) ), AstraZeneca (ORPATHYS(R) ) and HUTCHMED
(ELUNATE(R) , SULANDA(R) and TAZVERIK(R) ).
([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]) PI3K = 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.
([53]) NHSA = China National Healthcare Security
Administration.
([54]) NET = Neuroendocrine tumor.
([55]) CSCO = Chinese Society of Clinical Oncology.
([56]) EGFRm+ = Epidermal growth factor receptor mutated.
([57]) TKI = Tyrosine kinase inhibitor.
([58]) FISH5+ = MET amplification as detected by FISH with MET
copy number >= 5 and/or MET: CEP signal ratio >= 2.
([59]) IHC50+ = MET overexpression as detected by IHC with 3+ in
>= 50% tumor cells.
([60]) FISH10+ = MET amplification as detected by FISH with MET
copy number >= 10.
([61]) IHC90+ = MET overexpression as detected by IHC with 3+ in
>= 90% tumor cells.
([62]) TN = Triple negative.
([63]) HR+ = Hormone receptor positive.
([64]) Her2- = Human epidermal growth factor receptor 2
negative.
([65]) MSS = Microsatellite Stable.
([66]) epNET = extra-pancreatic neuroendocrine tumor.
([67]) pNET= pancreatic neuroendocrine tumor.
([68]) NEC = Neuroendocrine carcinoma.
([69]) NEN = Neuroendocrine neoplasms.
([70]) IO = Immuno-oncology.
([71]) SCLC = Small cell lung cancer.
([72]) ASH = American Society of Hematology.
([73]) NHL = Non-Hodgkin's Lymphoma.
([74]) CLL = Chronic lymphocytic leukemia.
([75]) SLL = Small lymphocytic lymphoma.
([76]) API = Active pharmaceutical ingredient.
([77]) Hutchison Sinopharm = Hutchison Whampoa Sinopharm
Pharmaceuticals (Shanghai) Company Limited.
([78]) Luye = Luye Pharma Hong Kong Ltd.
([79]) SXBX = She Xiang Bao Xin.
([80]) HSBC = The Hongkong and Shanghai Banking Corporation
Limited.
([81]) HIBOR = Hong Kong Interbank Offered Rate.
([82]) Deutsche Bank AG = Deutsche Bank AG, Hong Kong
Branch.
([83]) PBOC = People's Bank of China.
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END
FR NKFBPOBKKPBB
(END) Dow Jones Newswires
February 28, 2023 03:30 ET (08:30 GMT)
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