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Announcements & Press Releases, Group | 2 Aug 2016

Chi-Med Reports Interim Results for the Six Months Ended June 30, 2016, Provides 2016 Financial Guidance and Updates Shareholders on Key Clinical Programs

  • Group revenue up 27% to $104.5 million (H1 2015: $82.5m) and net income attributable to Chi‑Med of $0.5 million (H1 2015: $15.9m), reflecting a sharp increase in clinical investment.


  • Innovation Platform Seven drug candidates in 25 clinical trials (H1 2015: 17) including four pivotal Phase III studies (H1 2015: 1). Planning to publish proof-of-concept or pivotal trial data on four drug candidates at scientific meetings through Q1 2017.


  • Commercial Platform – Total consolidated sales up 48% to $82.3 million (H1 2015: $55.6m); Total sales of non-consolidated joint ventures up 9% to $249.6 million (H1 2015: $229.8m); Total net income attributable to Chi-Med from our Commercial Platform up 12% to $22.1 million (H1 2015: $19.8m). Significant property-related payment expected to come in H2 2016.


  • Completed Nasdaq listing, raising net proceeds of $95.9 million. Available cash resources of $197.5 million at Group level as of June 30, 2016, which includes cash and cash equivalents, short-term investments and unutilized bank facilities.


  • Post-period Event: Amendment of collaboration with AstraZeneca AB (publ) (“AstraZeneca”) – Chi-Med investing $50 million, mainly over three years, to accelerate savolitinib global development in return for 5% point increase in tiered royalty range.


UK Analysts Meeting and Webcast Scheduled Today at 9:00 a.m. BST U.S. Conference Call Scheduled Today at 9:00 a.m. EDT

London: Tuesday, August 2, 2016: Chi-Med (AIM/NASDAQ: HCM), the China-based biopharmaceutical company focused on discovering and developing targeted therapies for oncology and immunological diseases for the global market, today announces its unaudited financial results for the six months ended June 30, 2016.

Simon To, Chairman of Chi-Med, said:  “Chi-Med has once again made very considerable progress at both the operating and strategic levels.

All aspects of our Innovation Platform’s risk-balanced, innovative drug pipeline have moved forward, including progress in aligning with U.S. and European regulatory authorities in end-of-Phase II meetings on savolitinib and completing enrollment of our first Phase III study on fruquintinib. We have also made great progress in the clinic on sulfatinib, epitinib, HMPL-523, HMPL-689 and theliatinib, all of which are also potential global first-in-class or best-in-class drug candidates.

Once again, our Commercial Platform has generated increased cash flows helping fund our Innovation Platform activities as well as providing a first-class marketing and distribution channel in China for our drug candidates, if they are approved. Our partnerships with major global pharmaceutical companies, created when the global scope of our drug candidates began to emerge, continue to allow us to broaden development plans and represent important global marketing and distribution resources. In the first half, we completed our Nasdaq listing, which broadened our exposure to U.S. specialist investors and strengthened our cash position.

The progress of our drug pipeline and strong cash position, resulting from our increased commercial profits and recent Nasdaq listing, have enabled us to renegotiate our collaboration agreement with AstraZeneca to take a greater share in the potential long-term economic value of savolitinib in return for increasing our investment in savolitinib’s development. We believe this benefits both Chi-Med and AstraZeneca as it allows us to accelerate and broaden savolitinib’s late-stage development in multiple oncology indications.

Our pragmatic approach to finance and risk management has enabled us to build our drug pipeline over a dozen years. We now have multiple shots at success with four pivotal studies underway today, and three more likely to initiate by H1 2017, on a diversified group of drug candidates. The results of these pivotal studies will emerge during 2017-2019, and we believe that if they prove successful, substantial benefits can be created for patients and shareholders alike. Consequently, we view the future with great confidence.”


Our consolidated financial results are reported under U.S. generally accepted accounting principles (“U.S. GAAP”) and in U.S. dollar currency unless otherwise stated. We also conduct our business through three non-consolidated joint ventures, which are accounted for under the equity accounting method as non-consolidated entities in our consolidated financial statements. Within this announcement, we refer to certain financial results reported by such non-consolidated joint ventures, which are based on figures reported in their respective consolidated financial statements prepared pursuant to International Financial Reporting Standards (as issued by the International Accounting Standards Board). Unless otherwise indicated, references to “subsidiaries” refer to our consolidated subsidiaries and joint ventures (excluding non-consolidated joint ventures).

Group Results

  • Consolidated revenue up 27% to $104.5 million (H1 2015: $82.5m).
  • Net income attributable to Chi-Med of $0.5 million (H1 2015: $15.9m).
  • Strengthened cash position: Available cash resources of $197.5 million as of June 30, 2016 (December 31, 2015: $38.8m) at the Chi-Med Group level, including cash and cash equivalents, short-term investments and unutilized banking facilities. Increase in cash primarily reflects $95.9 million net proceeds of our March 2016 Nasdaq listing.

Innovation Platform – a broad, risk-balanced, global oncology/immunology pipeline.

  • Consolidated revenue of $22.3 million (H1 2015: $26.9m) and net loss attributable to Chi-Med of $13.7 million (H1 2015: net income $2.0m) driven by $36.0 million (H1 2015: $24.9m) spending mainly for 25 clinical trials, four of which are pivotal Phase III studies on fruquintinib and sulfatinib, as well as the continued expansion of our scientific team, which now includes over 310 scientists and staff.
  • Amendment yesterday to our collaboration with AstraZeneca under which Chi-Med has agreed to provide up to $50 million for the joint-development costs of savolitinib in return for a 5 percentage point increase in the tiered royalty rates payable on savolitinib sales across all indications in all markets outside of China.

Commercial Platform – a deeply established, cash-generative, pharmaceutical business in China – a commercialization framework for our Innovation Platform candidate drugs.

  • Total consolidated sales up 48% to $82.3 million (H1 2015: $55.6m) mainly resulting from solid progress on Seroquel®.
  • Total sales of non-consolidated joint ventures up 9% to $249.6 million (H1 2015: $229.8m) due primarily to continued expansion of coronary artery disease prescription drug business.
  • Total net income attributable to Chi-Med from our Commercial Platform up 12% to $22.1 million (H1 2015: $19.8m).
  • Solid performance despite the weakening of the Chinese renminbi (“RMB”) over the last year which reduced both our top- and bottom-line growth rates, during the first half of 2016, by -6% in U.S. dollar terms.
  • Expect to receive about $70 million second installment of the total approximately $114 million land compensation and subsidies from the Shanghai government, leading to an estimated one-time gain to the Chi-Med Group of over $35 million in Q4 2016.

2016 FINANCIAL GUIDANCE: We provide full year 2016 financial guidance, as detailed below:

Group Level:

  • Consolidated revenue: $190-205 million
  • Administrative, interest and income tax expenses: $16-18 million
  • Net income attributable to Chi-Med: $0-5 million

 Innovation Platform:

  • Consolidated revenue: $35-40 million
  • Research & development expenses: $80-85 million

Commercial Platform:

  • Sales (consolidated): $155-165 million
  • Sales of non-consolidated joint ventures: $430-440 million
  • One-time gain associated with property-related payments: $35-37 million
  • Net income attributable to Chi-Med: $63-66 million


Innovation Platform:  Multiple opportunities for success: four pivotal Phase III studies underway and three more fully funded and expected to begin by H1 2017. Each is expected to read-out over the next three years.

  • Savolitinib: Potential global first-in-class mesenchymal epithelial transition factor (“c-Met”) inhibitor currently in 12 main clinical studies worldwide in multiple tumor types including kidney, lung and gastric cancers as a monotherapy and in combination with other targeted and immunotherapy agents:
  1. Kidney cancer:
    Completed end-of-Phase II meetings with U.S. Food & Drug Administration (“FDA”) and European Medicines Agency (“EMA”); alignment on plans for global savolitinib monotherapy Phase III study in c-Met-driven papillary renal cell carcinoma (“PRCC”) patients.
    b.Initiated global Phase Ib dose finding study of savolitinib in combination with anti-programmed death-1 receptor ligand (“PD-L1”) antibody, durvalumab, in clear cell renal cell carcinoma (“ccRCC”) patients.
  2. Non-small cell lung cancer (“NSCLC”):
    a. Initiated global Phase IIb study of savolitinib in combination with Tagrisso® (osimertinib) in second-line NSCLC patients with epidermal growth factor receptor (“EGFR”) mutations who have failed first-line EGFR tyrosine kinase inhibitor (“TKI”) therapy and harbor c-Met gene amplification. This triggered a $10 million milestone from AstraZeneca to Chi-Med in June 2016.
    b. Initiated or continued four further Phase Ib/II studies in first-, second- and third-line NSCLC patients, including (i) as a monotherapy in NSCLC patients with c-Met mutations that result in Exon 14 skipping; (ii) as a monotherapy in pulmonary sarcomatoid carcinoma (“PSC”) patients with mutations that result in Exon 14 skipping; (iii) as a combination therapy with Iressa® (gefitinib) in NSCLC patients with EGFR mutations and who have failed first-line EGFR TKI therapy; and (iv) as a combination therapy with Tagrisso® in third-line NSCLC patients who have failed Tagrisso®  
  3. Gastric Cancer:
    a. Proof-of-concept studies of savolitinib as a monotherapy in gastric cancer patients with c-Met gene amplification are ongoing in South Korea and China; promising response data, was published by Dr. Jeeyun Lee of Samsung Medical Center in April 2016 at the American Association of Cancer Research meeting.
    b. A Phase Ib dose finding study of savolitinib in combination with Taxotere® (docetaxel) in gastric cancer patients with c-Met over-expression is ongoing in South Korea.
  • Fruquintinib: Potential global best-in-class selective inhibitor of vascular endothelial growth factor receptor 1/2/3 (“VEGFR”):
  1. Colorectal cancer (third-line or above): Completed enrollment of a Phase III study, named FRESCO, to test fruquintinib as a monotherapy among third-line metastatic colorectal cancer patients in China; top-line Phase III data expected to be reported in early 2017; plan to submit the China NDA, subject to positive FRESCO outcome, by mid-2017;
  2. NSCLC (third-line): Began enrolling a Phase III study, named FALUCA, to test fruquintinib in third-line NSCLC patients in China, in late 2015 – now over 30 clinical centers are operational; expect to complete enrollment in H1 2017; top-line Phase III data expected to be reported in late 2017; plan to submit China NDA, subject to positive FALUCA outcome, during H1 2018.
  3. Gastric cancer (second-line): Completed dose finding stage of fruquintinib Phase Ib study in combination with Taxol® (paclitaxel). Continue to enroll patients in Phase Ib expansion stage.
  4. NSCLC (first-line): Planning underway to start Phase Ib dose finding study of fruquintinib in combination with Iressa® in first-line EGFR-mutant NSCLC patients in China in late 2016.
  5. Production facility in Suzhou, China, operational and ready to support fruquintinib’s potential commercial launch.
  • Sulfatinib: Selective inhibitor of VEGFR/fibroblast growth factor receptor 1 (“FGFR1”) with strong efficacy in neuroendocrine tumors (“NET”) – enrolling two pivotal Phase III studies:
  1. NET (first-line):
    a. Completed enrollment of a Phase II study of sulfatinib in 81 broad-spectrum NET patients in China; median Progression Free Survival (“PFS”) not yet reached; now enrolling two Phase III studies, named SANET-p (in pancreatic NET patients) and SANET-ep (in extra-pancreatic NET patients), with primary endpoint median PFS; Phase III top-line data expected in 2018.
    b. Initiated U.S. Phase I dose confirmation study in Caucasian patients – currently in 200mg cohort and closing in on China 300mg Phase III dose; expected to complete in H2 2016.
  2. Thyroid cancer: Initiated Phase II proof-of-concept study in patients with locally advanced or metastatic radioactive iodine-refractory differentiated thyroid cancer or medullary thyroid cancer in China.
  3. Biliary tract cancer: Planning underway to start a Phase II study in China in late 2016.
  • HMPL-523: Potential global first-in-class spleen tyrosine kinase (“Syk”) inhibitor – major potential in immunology and oncology:
  1. Hematological cancer: Granted China FDA Phase I to Phase III clinical trial application clearance in H1 2016 – target to start China Phase I dose escalation in patients with hematologic malignancies in H2 2016; Australia Phase I dose escalation currently in second dose cohort (200mg) and expected to complete in H1 2017; U.S. hematological malignancy Investigational New Drug (“IND”) application submitted in June 2016.
  2. Immunology: Australia Phase I study completed with no evidence of the hypertension/gastrointestinal toxicities encountered by the first-generation Syk inhibitor (fostamatinib); U.S. immunology IND application submitted in H1 2016 – U.S. FDA feedback received, now preparing to submit additional data; planning global rheumatoid arthritis Phase II study for 2017.
  • Epitinib: Highly differentiated inhibitor of the EGFR designed for optimal blood-brain barrier penetration:
  1. NSCLC with brain metastasis: Phase Ib study in NSCLC patients with brain metastasis ongoing; granted China FDA Phase II/III clinical trial application clearance granted in July 2016; target to initiate pivotal registration study in H1 2017.
  2. Glioblastoma: Planning underway to start a Phase II study in glioblastoma, a primary brain cancer with EGFR gene amplification, in early 2017.
  • HMPL-689: Potential global best-in-class, highly selective phosphoinositide 3-kinase delta (“PI3Kδ”) inhibitor, which is over five times more potent than Zydelig® (idelalisib):
    Hematological cancer: Initiated Phase I study in healthy volunteers in Australia in H1 2016, now in fifth cohort and expected to complete Phase I dose escalation in H2 2016; plan to start Phase I dose escalation in patients with hematologic malignancies in Australia in H1 2017.
  • Theliatinib: EGFR inhibitor, over five times more potent than Tarceva® (erlotinib), with potential in patients with solid tumors presenting EGFR gene amplification:
    Esophageal cancer/Head and Neck:  Phase I dose escalation study ongoing in China; target to start Phase Ib proof-of-concept studies by the end of 2016.

Commercial Platform:  Continued strong growth in cash flow and profit – representing a solid and stable financial base that underpins a significant portion of Chi-Med’s current market value.

  • Prescription Drugs business performing very well – consolidated sales up 49% to $67.6 million (H1 2015: $45.4m); and total sales of non-consolidated Prescription Drugs joint venture up 22% to $18 million (H1 2015: $103.9m).
    1.  She Xiang Bao Xin (“SXBX”) pill – our most important commercial product, is a prescription vasodilator proprietary to our joint venture: Accounted for approximately 12% of China’s over $1.5 billion botanical coronary artery disease prescription drug market, full patent protection through 2029; H1 2016 sales up 16% to $110.1 million (H1 2015: $94.9m); SXBX pill represents 87% of the sales of SHPL, our joint venture, which contributed 91% of our $16.3 million (H1 2015: $12.1m) consolidated Prescription Drugs operating profit in H1 2016.
    2. Seroquel® – prescription antipsychotic under exclusive commercial license from AstraZeneca within China: Accounted for approximately 5% of China’s antipsychotic prescription drug and 46% of the generic quetiapine market; Seroquel® is the only extended release (“XR”) quetiapine formulation approved in China; H1 2016 sales up 282% to $17.2 million (H1 2015: $4.5m); 2016 is the first full year of Seroquel® commercialization under Chi-Med.
  • Substantially completed move to new factory in Shanghai, almost tripling the manufacturing capacity of our Prescription Drugs joint venture. Triggering about $114 million total cash compensation and subsidies for the surrender of its land-use rights for its old factory site.
  • Consumer Health business stable despite over-the-counter (“OTC”) drug capacity constraints – consolidated sales up 44% to $14.6 million (H1 2015: $10.1m); and total sales of non-consolidated Consumer Health joint venture down 2% to $17 million (H1 2015: $125.9m). Sales in our OTC drug joint venture were down marginally due to tight manufacturing capacity resulting from the move to new factory in Bozhou, Anhui province; despite this, our OTC drug joint venture’s portfolio of mature, market leading products, contributed 99% of our $8.6 million (H1 2015: $10.1m) consolidated Consumer Health operating profit in H1 2016.

EXPECTED MAJOR NEAR-TERM CATALYSTS:  We target to publish data on four drug candidates in five Phase Ib-III studies before the end of Q1 2017, including:

  • Savolitinib Phase II data in PRCC patients;
  • Epitinib Phase Ib data in NSCLC patients with brain metastasis;
  • Fruquintinib Phase II data in third-line NSCLC patients;
  • Sulfatinib Phase II data in pancreatic and extra-pancreatic NET patients; and
  • Fruquintinib Phase III top-line data in third-line or above colorectal cancer

We target to initiate pivotal registration trials on two further drug candidates before the end of H1 2017, including:

  • Savolitinib Phase III in c-Met-driven PRCC patients;
  • Epitinib Phase II/III in first-line patients with EGFR-mutant NSCLC patients with brain metastasis; and
  • Savolitinib Phase III in combination with Tagrisso® in second-line NSCLC (T790M-/c-Met+)

POST PERIOD EVENT:  Amendment of Co-Development Agreement with AstraZeneca on Savolitinib global development plan:

In order to accelerate savolitinib’s global development, as announced yesterday, Chi-Med and AstraZeneca agreed to amend the 2011 global licensing, co-development and commercialization agreement regarding savolitinib. Under the amendment, Chi-Med will contribute up to $50 million, spread primarily over three years, to the joint-development costs of the global pivotal Phase III study in c-Met-driven PRCC. Subject to approval in the PRCC indication, Chi-Med will receive a 5 percentage point increase in the global (excluding China) tiered royalty rate payable on savolitinib sales across all indications, thereby increasing the tiered royalty to 14% to 18%. After total aggregate sales of savolitinib have reached $5 billion, the royalty will step down over a two year period, to an ongoing royalty rate of 10.5% to 14.5%. All other provisions of the 2011 Agreement will remain unchanged.

Conference Call and Webcast Information:

An analyst presentation and webcast will be held today at 9:00 a.m. BST (4:00 p.m. HKT) at Citigate Dewe Rogerson, Third Floor, 3 London Wall Buildings, London, EC2M 5SY. Investors may participate in the call or access a live video webcast of the call via the Company’s website at A conference call for U.S. investors will also be held today at 9:00 a.m. EDT. To participate in the US call, please dial +1-212-999-6659. For all dial-in numbers please use conference ID “Chi-Med”.


Investor Inquiries


Christian Hogg, CEO

+852 2121 8200

International Media Inquiries


Anthony Carlisle, Citigate Dewe Rogerson

+44 7973 611 888 (Mobile)

U.S. Based Media Inquiries


Brad Miles, BMC Communications

+1 (917) 570 7340 (Mobile)

Susan Duffy, BMC Communications

+1 (917) 499 8887 (Mobile)

Investor Relations


Brian Korb, The Trout Group

+1 (917) 653 5122 (mobile)

David Dible, Citigate Dewe Rogerson

+44 7967 566 919 (Mobile)

Panmure Gordon (UK) Limited


Richard Gray / Andrew Potts

+44 (20) 7886 2500


About Chi-Med

Chi-Med is an innovative China-based biopharmaceutical company which researches, develops, manufactures and sells pharmaceuticals and healthcare products. Its Innovation Platform, Hutchison MediPharma Limited, focuses on discovering and developing innovative therapeutics in oncology and autoimmune diseases for the global market. Its Commercial Platform manufactures, markets, and distributes prescription drugs and consumer health products in China.

Chi-Med is majority owned by the multinational conglomerate CK Hutchison Holdings Limited (“CK Hutchison”) (SEHK: 0001). For more information, please visit:


Unless the context requires otherwise, references in this announcement to the “Group,” the “Company,” “Chi-Med,” “Chi-Med Group,” “we,” “us” and “our” refer to Chi-Med and its consolidated subsidiaries and joint ventures unless otherwise stated or indicated by context.

Forward-Looking Statements

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,” “believe,” “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, or that any approvals which are obtained will be obtained at any particular time, or that any such drug candidates will achieve any particular revenue levels. In particular, management’s expectations could be affected by, among other things: unexpected regulatory actions or delays or government regulation generally; the uncertainties inherent in research and development, including the inability to meet our key study assumptions regarding enrollment rates, timing and availability of subjects meeting a study’s inclusion and exclusion criteria and funding requirements, changes to clinical protocols, unexpected adverse events or safety, quality or manufacturing issues; the inability of a drug candidate to meet the primary or secondary endpoint of a study; the inability of a drug candidate to obtain regulatory approval in different jurisdictions or gain commercial acceptance after obtaining regulatory approval; 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 and uncertainties regarding future global exchange rates. For further discussion of these and other risks, see Chi-Med’s filings with the U.S. Securities and Exchange Commission and on AIM. Chi-Med 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 we obtained from industry publications and reports generated by third-party market research firms, including Frost & Sullivan, an independent market research firm, and publicly available data. All patient population, market size and market share estimates are based on Frost & Sullivan research, unless otherwise noted. Although we believe that the publications, reports and surveys are reliable, we have not independently verified the 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.

(For additional information, please see the attached PDFs)