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HUTCHMED Takes Bold Step: Sells 45% of Shanghai Hutchison Pharmaceuticals to Boost Cancer Research
HUTCHMED divests 45% of Shanghai Hutchison Pharmaceuticals to fund R&D, focusing on innovative cancer therapies.
Key Highlights from the Divestment
HUTCHMED has revealed plans to sell its 45% stake in Shanghai Hutchison Pharmaceuticals Limited for roughly $608 million. This decision aligns with the company’s strategic focus on core operations and advancing groundbreaking cancer therapies. The proceeds from the sale will be reinvested into HUTCHMED’s research and development efforts, particularly its innovative antibody-targeted therapy conjugates, which are expected to start clinical trials by late 2025. Executives at HUTCHMED are optimistic about the future of their R&D initiatives, built from nearly two decades of oncology research. Despite the divestment, HUTCHMED will maintain a 5% stake in SHPL and anticipates a significant financial gain from this transaction. The deal is projected to finalize by the end of Q1 2025, pending necessary shareholder and regulatory approvals.
Advantages of the Move
- Successful divestment of 45% stake in Shanghai Hutchison Pharmaceuticals for about $608 million, allowing focus on innovative medicines.
- The proceeds will bolster HUTCHMED’s R&D pipeline, specifically its next-generation antibody-targeted therapy programs arriving in clinical trials in 2025.
- An expected gain of about $477 million before taxes from the sale could enhance HUTCHMED’s financial standing.
- This move continues HUTCHMED’s commitment to improving profitability and fostering value as stated in its November 2022 strategy.
Possible Drawbacks
- Divesting from SHPL, which reported a consolidated net income of $47.4 million in 2023, introduces the risk of losing substantial revenue from a stable business.
- The shift to focusing on a proprietary R&D program carries inherent risks and uncertainties in developing and marketing new therapies.
- HUTCHMED is required to guarantee that SHPL achieves at least 5% net profit growth annually, which may create financial pressures during this transitional phase.
Frequently Asked Questions
What is HUTCHMED’s recent divestment announcement about?
HUTCHMED announced it will sell a 45% stake in Shanghai Hutchison Pharmaceuticals for approximately $608 million to concentrate on core medicines.
When will HUTCHMED’s first antibody-targeted therapy candidates enter trials?
The first candidates from HUTCHMED’s antibody-targeted therapy conjugate platform are expected to enter clinical trials in the second half of 2025.
How much did HUTCHMED gain from the divestment?
HUTCHMED anticipates a gain of around $477 million before taxes from the sale of its equity interest in SHPL.
What are HUTCHMED’s primary areas of focus after this transaction?
Post-transaction, HUTCHMED will prioritize research into new therapies for cancers and immunological disorders using innovative methods.
What will happen to the proceeds from the divestment?
The proceeds will be reinvested to develop HUTCHMED’s internal pipeline and support its core strategies and R&D advancements.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
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Full Release
— HUTCHMED continues to implement its strategy from November 2022 to create value and prioritize innovative medicines for patients globally —
— Proceeds from the divestment will support HUTCHMED’s pipeline and core innovative medicines business —
— Focused R&D investment will include HUTCHMED’s proprietary antibody-targeted therapy conjugate platform, with initial candidates expected to enter clinical trials in late 2025 —
HONG KONG and SHANGHAI and FLORHAM PARK, N.J., Jan. 01, 2025 (GLOBE NEWSWIRE) — HUTCHMED (China) Limited (“
HUTCHMED
”) (Nasdaq/AIM:HCM; HKEX:13) announces that it has entered into two agreements to divest its 45% equity interest in Shanghai Hutchison Pharmaceuticals Limited (“SHPL”) for approximately US$608 million (RMB4,478 million) in cash, to GP Health Service Capital Co., Ltd (“GP Health Service Capital”) and Shanghai Pharmaceuticals Holding Co., Ltd. (“Shanghai Pharma”) (HKEX:02607; SSE:601607). HUTCHMED has been exploring opportunities to monetize the underlying value of SHPL, a non-core, non-consolidated joint venture. These transactions would allow HUTCHMED to focus on its core business of discovering, developing, and commercializing novel therapies for the treatment of cancers and immunological diseases, including advancing its next-generation antibody-targeted-therapy conjugate programs.
HUTCHMED will host a brief update call on Tuesday, January 7, 2025. Further details will be provided at
www.hutch-med.com/event
in due course.
SHPL predominantly manufactures, sells, and distributes its own-brand prescription medicines in China, focusing on cardiovascular diseases. Established in 2001, SHPL is a 50:50 joint venture between HUTCHMED and Shanghai Pharma. In 2023, the consolidated net income attributable to HUTCHMED from SHPL was $47.4 million. HUTCHMED does not account for revenue from SHPL in its financials.
HUTCHMED plans to utilize the proceeds from these transactions to enhance its internal pipeline and advance its core business strategy. This strategy includes developing its next-generation antibody drug conjugate (ADC) platform, leveraging HUTCHMED’s extensive expertise in oncology and successful small molecule targeted therapies. These antibody-targeted therapy conjugates (ATTCs) combine antibodies with targeted therapeutics, providing dual mechanisms to tackle cancer. Pre-clinical studies have shown significant anti-tumor activity following a single administration, demonstrating increased efficacy compared to individual therapies while improving tolerability. HUTCHMED targets moving the first ATTCs into clinical trials in late 2025.
“This divestment of our stake in SHPL exemplifies HUTCHMED’s commitment to its 2022 strategy, aiming to accelerate profitability and center our focus on core operations. Over the years, SHPL has been a solid performer, delivering over $370 million in dividends to HUTCHMED,”
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HUTCHMED Finalizes Equity Sale to Boost Future Growth
Confidence in Continued Growth
“We are confident that it continues to have promising future growth prospects,” said Dr. Dan Eldar, Chairman and Non-executive Director of HUTCHMED. He added that the company is committed to leveraging over 20 years of deep research focused on oncogenic drivers of disease to develop optimized therapies via its unique ATTC platform.
Details of the Transactions
GP Health Service Capital, a private equity firm based in China, has recently entered into an acquisition agreement with HUTCHMED and Shanghai Pharma. Prior to these transactions, each held a 50% equity interest in Shanghai Hutchison Pharmaceuticals Limited (SHPL). Under the new terms, GP Health Service Capital will acquire a 35% interest in SHPL from HUTCHMED for roughly US$473 million in cash, while Shanghai Pharma will purchase a 10% stake for about US$135 million, resulting in a 60% equity total. GP Health Service Capital also retains the right to designate a third party to acquire up to a 10% equity interest in SHPL. Following these transactions, HUTCHMED will maintain a 5% interest in SHPL.
Expected Financial Gains
HUTCHMED anticipates recording a gain of around US$477 million before taxation from this placement, though the actual amount is subject to audit. The cash proceeds will face withholding tax deductions, determined prior to the closing of these deals. Additionally, HUTCHMED will have a three-year transition phase during which it will propose SHPL’s General Manager and guarantee GP Health Service Capital a minimum net profit growth of approximately 5% per year, capping total compensation at around US$95 million.
Extraordinary General Meeting Expected
HUTCHMED plans to hold an Extraordinary General Meeting (EGM) for its shareholders to discuss and potentially approve the proposed transactions. The closing of these deals is expected by the end of the first quarter of 2025, contingent on various conditions, including regulatory approvals and shareholder consent.
Focus on Research and Development
Dr. Weiguo Su, HUTCHMED’s CEO and Chief Scientific Officer, emphasized the company’s focus on its strong in-house R&D platform, particularly new ATTC programs that could significantly impact cancer treatment. This divestment is projected to facilitate further investment and concentration on core scientific initiatives.
Ongoing Innovation in Therapy
HUTCHMED aims to create innovative, highly selective drug candidates that minimize off-target effects. This dedicated strategy positions the company to address complex oncogenic pathways effectively. Unlike traditional antibody-drug conjugates (ADCs), HUTCHMED believes that its antibody-targeted therapies can synergize with existing treatment standards, potentially overcoming chemotherapy resistance and avoiding toxicity associated with cytotoxin administration. This commitment stems from HUTCHMED’s extensive history with patients who have genetic drivers that benefit less from conventional ADC treatments.
Currency Considerations
All dollar figures (US$) mentioned for the transactions are for illustrative purposes and are calculated based on an assumed exchange rate of US$1:RMB7.36. All cash considerations will be presented in Renminbi (RMB).
About HUTCHMED
HUTCHMED (Nasdaq/AIM: HCM; HKEX: 13) is a biopharmaceutical company specializing in developing targeted therapies and immunotherapies for cancer and immunological diseases. The firm has successfully marketed its first three medicines in China, with one also approved in the US, Europe, and Japan. For more information, visit www.hutch-med.com or follow on LinkedIn.
About Shanghai Pharma
Shanghai Pharma ( www.sphchina.com ) is a leading national pharmaceutical company in China, renowned for its robust production and distribution capabilities. Its shares are listed on both the Shanghai Stock Exchange (stock code: 601607) and the Hong Kong Stock Exchange (stock code: 02607).
About GP Health Service Capital
GP Health Service Capital is a PRC-licensed fund management company engaged in medical and health investments, mergers, and acquisitions. Its largest shareholder is GP Capital.
Forward-Looking Statements
This announcement includes forward-looking statements under the “safe harbor” provisions of the US Private Securities Litigation Reform Act of 1995. Such statements detail HUTCHMED’s expectations for future events, including anticipated proceeds, intended use, expected closing dates, and prospects of its R&D programs. These statements carry inherent risks and uncertainties, including conditions the parties must meet for closing, regulatory approvals, and the ongoing validity of preclinical and clinical data.
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Key Insights on Expectations and Risks
HUTCHMED’s statements about future performance include terms like “will,” indicating its forward-looking views. These aren’t guarantees; actual results may vary significantly.
Expected outcomes may not come to fruition due to various risks. HUTCHMED emphasizes that safety, effectiveness, and regulatory approvals can impact projections. These forward-looking statements are based on assumptions that management believes to be reasonable but may not hold true.
Readers and current and potential investors should be cautious about relying on these predictions. They represent views as of the date released and are subject to change. For a more in-depth analysis of factors influencing these forecasts, refer to HUTCHMED’s filings with the US Securities and Exchange Commission, The Stock Exchange of Hong Kong Limited, and on AIM. HUTCHMED does not have an obligation to revise these statements with new information or changing circumstances.
Important Info Alert
This announcement contains important information as defined in Article 7 of Regulation (EU) No 596/2014, now part of retained EU law post-Brexit.
CONTACTS
| Investor Enquiries |
+852 2121 8200 / ir@hutch-med.com |
| Media Enquiries | |
| FTI Consulting – | +44 20 3727 1030 / HUTCHMED@fticonsulting.com |
| Ben Atwell / Alex Shaw | +44 7771 913 902 (Mobile) / +44 7779 545 055 (Mobile) |
| Brunswick – Zhou Yi | +852 9783 6894 (Mobile) / HUTCHMED@brunswickgroup.com |
| Panmure Liberum | Nominated Advisor and Joint Broker |
| Atholl Tweedie / Freddy Crossley / Rupert Dearden | +44 20 7886 2500 |
| HSBC | Joint Broker |
| Simon Alexander / Alina Vaskina / Arnav Kapoor | +44 20 7991 8888 |
| Cavendish | Joint Broker |
| Geoff Nash / Nigel Birks | +44 20 7220 0500 |
This article was originally published on Quiver News. To read the complete story, visit their website.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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