REG - Hutchmed China Ltd - US$608m Divestment of Non-Core Joint Venture

HUTCHMED (China)Announcement

02/01/2025 07:00

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RNS Number : 8195R  Hutchmed (China) Limited  02 January 2025

HUTCHMED Announces US$608 million Divestment of Non-Core Joint Venture

 

- HUTCHMED continues to deliver on its strategy outlined in November 2022 to
create value, prioritize its portfolio and bring innovative medicines to
patients globally -

- Divestment proceeds to advance HUTCHMED's pipeline and core innovative
medicines business -

- Focused R&D investment includes HUTCHMED's proprietary antibody-targeted
therapy conjugate platform, with first candidates expected to enter clinical
trials in the second half of 2025 -

 

Hong Kong, Shanghai & Florham Park, NJ - Thursday, January 2, 2025:
HUTCHMED (China) Limited ("HUTCHMED (https://www.hutch-med.com/) ")
(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 short update call on Tuesday, January 7, 2025. Details
will be available at www.hutch-med.com/event
(https://www.hutch-med.com/event/) in due course.

 

SHPL primarily manufactures, sells and distributes its own-brand prescription
medicines in China, predominantly for cardiovascular diseases. SHPL is a 50:50
joint venture established between HUTCHMED and Shanghai Pharma in 2001. In
2023, the consolidated net income attributable to HUTCHMED from SHPL was
US$47.4 million. HUTCHMED does not consolidate revenue from SHPL.

 

HUTCHMED plans to invest the proceeds from these transactions to further
develop its internal pipeline and drive its core business strategy forward.
This pipeline and strategy includes its next-generation antibody drug
conjugate ("ADC") platform, which builds on HUTCHMED's extensive knowledge
from pursuing oncological pathways and proven expertise in small molecule
targeted therapeutics. By combining antibodies with targeted therapeutics
instead of cytotoxins, these antibody-targeted therapy conjugates ("ATTCs")
offer dual mechanisms for addressing a target. Pre-clinical research has shown
robust anti-tumor activity with durable response following a single
administration, and stronger anti-tumor activity compared to administration
with the individual antibody and targeted therapy components, improving
tolerability associated with targeted therapy. HUTCHMED plans to move the
first of these ATTCs into clinical trials in the second half of 2025.

 

"This transaction to divest most of our holding in SHPL is another example of
HUTCHMED delivering on the strategy outlined in 2022, accelerating our path to
profitability and focusing on core operations. SHPL is a well-established
business, having delivered over US$370 million in dividends to HUTCHMED
throughout the years, and we are confident that it continues to have promising
future growth prospects," said Dr Dan Eldar, Chairman and Non-executive
Director of HUTCHMED. "We are focused on capitalizing on our two decades of
deep research into oncogenic drivers of disease and discovering and developing
highly optimized therapies, through our unique ATTC platform."

 

GP Health Service Capital is a China-based private-equity firm with no prior
interest in SHPL. Prior to the transactions, HUTCHMED and Shanghai Pharma each
holds a 50% equity interest in SHPL. Under the terms of the agreements, GP
Health Service Capital has agreed to acquire a 35% equity interest in SHPL
from HUTCHMED for approximately US$473 million in cash, and Shanghai Pharma
has agreed to acquire a 10% equity interest from HUTCHMED for approximately
US$135 million in cash and will hold a total of 60% equity interest in SHPL
after the transactions. Out of its 35%, GP Health Service Capital retains the
right to designate a third party investment fund to acquire up to a 10% equity
interest in SHPL. HUTCHMED will retain a 5% equity interest in SHPL after the
transactions.

 

HUTCHMED expects to record a gain on disposal of approximately US$477 million
before taxation. The actual gain to be recorded is subject to review and
audit. The proceeds are subject to deduction of withholding tax, which will be
determined before Closing. There will be a three-year transition period in
which HUTCHMED will propose the General Manager of SHPL, and will guarantee to
GP Health Service Capital a minimum net profit growth of SHPL of at least
approximately 5% annually, subject to total compensation not exceeding
approximately US$95 million. Further details are contained in the HUTCHMED
announcement entitled "Major Transaction in Relation to the Disposal of 45%
Equity Interest in Shanghai Hutchison Pharmaceuticals Limited".

 

HUTCHMED expects to convene an Extraordinary General Meeting (EGM) for its
shareholders to consider and, if thought fit, to approve the transactions. The
transactions are expected to close by the end of the first quarter of 2025,
conditional upon the satisfaction (or, where applicable, waiver) of certain
conditions including approval by HUTCHMED shareholders and regulatory
approvals. Closing of both transactions are also conditional upon the
simultaneous closing of each other.

 

Dr Weiguo Su, Chief Executive Officer and Chief Scientific Officer of
HUTCHMED, said: "We continue to invest in our prolific in-house R&D
platform, including our new ATTC programs that we believe have significant
potential impact on the treatment of cancers. This divestment brings us
additional resources and further focus."

 

"Our continual approach to engineer our own innovative, highly selective drug
candidates has delivered several medicines with enhanced selectivity and
limited off-target activity, allowing sustained target inhibition and
flexibility for use as part of combination therapies. We also gained
substantial knowledge of these oncogenic pathways, and the issues involved in
addressing them. In contrast to traditional cytotoxin-based ADCs, we believe
that our antibody-targeted therapy synergistic approach may also be combinable
with immunotherapy- or chemotherapy-based frontline standards of care, could
overcome chemotherapy resistance, and could avoid cytotoxin-related toxicities
that limit long-term administration. This platform also maximizes on our long
history of addressing patients with genetic drivers, who benefit less from
traditional ADC therapies."

 

All transaction-related figures stated in US dollars (US$) are included for
illustrative purposes only, and are based on an assumed exchange rate of
US$1:RMB7.36. All cash considerations will be denominated in Renminbi (RMB).

 

About HUTCHMED

HUTCHMED (Nasdaq/AIM:HCM; HKEX:13) is an innovative, commercial‑stage,
biopharmaceutical company. It is committed to the discovery and global
development and commercialization of targeted therapies and immunotherapies
for the treatment of cancer and immunological diseases. Since inception it has
focused on bringing drug candidates from in‑house discovery to patients
around the world, with its first three medicines marketed in China, the first
of which is also approved in the US, Europe and Japan. For more information,
please visit: www.hutch-med.com (http://www.hutch-med.com) or follow us on
LinkedIn (https://www.linkedin.com/company/hutchmed/) .

 

About Shanghai Pharma

Shanghai Pharma (www.sphchina.com (https://www.sphchina.com/) ) is a national
integrated pharmaceutical company in the PRC that has leading positions in
both pharmaceutical production and distribution markets. Shanghai Pharma's
business mainly covers two segments, namely, pharmaceutical industry and
pharmaceutical business. The A shares and H shares of Shanghai Pharma are
listed on the Shanghai Stock Exchange (stock code:601607) and the Hong Kong
Stock Exchange (stock code:02607), respectively.

 

About GP Health Service Capital

GP Health Service Capital is a professional fund management company committed
to industrial investment, mergers and acquisitions and integrations in the
medical and health field. Its largest shareholder is GP Capital. It is
incorporated under the laws of the PRC with limited liability.

 

Forward‑Looking Statements

This announcement contains forward‑looking statements within the meaning of
the "safe harbor" provisions of the US Private Securities Litigation Reform
Act of 1995. These forward‑looking statements reflect HUTCHMED's current
expectations regarding future events, including, without limitation,
statements concerning: HUTCHMED's future plans and prospects, its expectations
as to the anticipated amount of proceeds, the intended use of proceeds, the
anticipated closing date of the proposed transactions, and the therapeutic
potential and clinical development of its R&D programs as well as the
safety, efficacy, tolerability, scalability or combinability of all candidates
under such programs. Forward‑looking statements involve risks and
uncertainties. Such risks and uncertainties include, among other things,
assumptions regarding the amount and timely receipt of the considerations,
satisfaction of the conditions precedent to the consummation of the proposed
transactions (including the ability of the parties to secure regulatory
approvals on the terms expected, at all or in a timely manner), the ability of
the parties to complete the proposed transaction, the continued sufficiency of
preclinical and clinical data to support development and approval of the
R&D programs in China, in the United States and in other jurisdictions,
their potential to gain clinical trial approvals from regulatory authorities,
the safety profile of the R&D programs, HUTCHMED ability to fund,
implement and complete its further clinical development and commercialization
plans for the R&D programs, the timing of these events; actions of
regulatory agencies, which may affect the initiation, timing and progress of
clinical trials or the regulatory pathway for the ATTC programs; and
HUTCHMED's ability to successfully develop and commercialize the R&D
programs. In addition, when or if used herein, the words and phrases "aims,"
"anticipates," "believes," "continue," "estimates," "expects," "intends,"
"may," "on track," "predicts," "plans," "potential," "promising," "should,"
"to be," "will," and similar expressions and their variants, as they relate to
HUTCHMED may identify forward-looking statements. Forward-looking statements
are neither historical facts nor assurances of future performance. Although
HUTCHMED believes the expectations reflected in such forward-looking
statements are reasonable, HUTCHMED can give no assurance that such
expectations will prove to be correct. Readers are cautioned that actual
results, levels of activity, safety, performance or events and circumstances
could differ materially from those expressed or implied HUTCHMED's
forward-looking statements due to a variety of risks and uncertainties, which
include, without limitation, assumptions regarding the safety, efficacy,
supply, continued regulatory approval of these therapeutics, and in some cases
connected to the risks of the use of other drug products as combination
therapeutics. Forward-looking statements are neither historical facts nor
assurances of future performance. Existing and prospective investors are
cautioned not to place undue reliance on these forward‑looking statements,
which speak only as of the date on which they were made and are based on
management's assumptions and estimates as of such date. For further discussion
of these and other risks, see HUTCHMED's filings with the US Securities and
Exchange Commission, The Stock Exchange of Hong Kong Limited and on AIM.
HUTCHMED undertakes no obligation to update or revise the information
contained in this announcement, whether as a result of new information, future
events or circumstances or otherwise.

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).

 

CONTACTS
 Investor Enquiries                                   +852 2121 8200 / ir@hutch-med.com (mailto:ir@hutch-med.com)

 Media Enquiries
 FTI Consulting -                                     +44 20 3727 1030 / HUTCHMED@fticonsulting.com
                                                      (mailto: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
                                                      (mailto: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

 

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