The launch of its first self-funded American clinical trial and the appointment of a US medical officer indicates that Hutchison China Meditech (HCM) has set its sights firmly on stateside expansion. Until now, the biotech specialist has relied on its partnerships with AstraZeneca and Eli Lilly for growth outside of its home market, but now – with its first drug launch getting ever nearer – management is ready to enter the world’s biggest healthcare market alone.
That is ambitious, particularly considering Chi-Med's costs are already spiralling upwards. In the first half of 2018, operating losses more than tripled to $53.7m (£41m), largely due to a big uptick in research and development (R&D). Without any revenues (yet) from its novel medicines, Chi-Med is reliant on its commercial healthcare arm, where total income of $26.9m was nowhere near enough to absorb the 144 per cent increase in clinical trial expenditure, which hit to $40.2m.
But rising R&D costs can be seen as a sign of the increased maturity in Chi-Med’s pipeline – the group currently has four pivotal clinical trials and has filed one drug with Chinese regulators. The second six months of the year will be crucial for Chi-Med. That’s when the group will (hopefully) receive regulatory approval for cancer drug Fruquintinib, which will be its first commercial launch.
| HUTCHISON CHINA MEDITECH (HCM) | ||||
| ORD PRICE: | 5,060p | MARKET VALUE: | £3.36bn | |
| TOUCH: | 5020-5100p | 12-MONTH HIGH / LOW: | 5,920p | 3,375p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 649ȼ | NET CASH: | $322m* | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (p) |
| 2017 | 127 | -16.7 | 3.0 | nil |
| 2018 | 102 | -50.5 | -49.0 | nil |
| % change | -19 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes short-term investments of £247m £1=$1.31 | ||||
