HutchMed soars on debut after $536m Hong Kong offering

The company, which already trades in the US and London, sold 104 million new shares for HK$40.10 apiece, according to a filing. Cornerstone investors covered 61% of the offering. They included The Carlyle Group, Canada Pension Plan Investment Board (CPPIB), General Atlantic, HBM Healthcare Investments, and China International Capital Corporation (CICC).

The stock opened at HK$51.40 on June 30 and reached as high as HK$85.80 before closing at HK$60.30. This gives HutchMed a market capitalization of HK$52.1 billion. The company’s London-listed shares closed at GBP572.00, a gain of 20.4%, while its US stock rose 18.2% to $39.27.

HutchMed, which was originally called Chi-Med, filed for a Hong Kong listing in 2019 but ended up pulling the offering as markets wavered against a backdrop of protests in the territory. General Atlantic and CPPIB each invested $100 million in 2020 via private placements in the US and Baring Private Equity Asia committed the same amount earlier this year.

Founded in 2000, HutchMed claims to be the first global-focused novel drug discovery company to emerge from China. It has a staff of more than 1,300, including an in-house scientific team of approximately 680 across China, the US, Europe, and Australia, as well as 520 people in China marketing its oncology treatments. The company is in the process of building a US commercial team.

HutchMed has three advanced, in-house discovered oncology drugs. In 2018, it became the first biotech company to bring a novel oncology drug – Fruquintinib, or Elunate, which restricts the development of blood vessels that support tumor growth – from discovery through launch in China. Surufatinib, or Sulanda, which targets neuroendocrine tumors commonly found in the intestine, followed suit, while lung cancer treatment Savolitinib is undergoing final regulatory reviews.

The goal is to roll out Savolitinib in China as early as mid-2021. Surufatinib is targeting a commercial launch in the US in late 2021 or early 2022. If approved, it will become the second novel oncology drug developed by a China-based biotech company to enter the US, the prospectus states.

HutchMed’s pipeline features a further seven oncology drug candidates in an earlier stage of development in China. The company also collaborates with several global pharmaceutical companies. Eli Lilly is the local partner for Fruquintinib in China – HutchMed retains the global ex-China rights – and AstraZeneca will perform the same role with Savolitinib.

HutchMed's largest shareholder, with 38.48%, is a subsidiary of Hong Kong conglomerate CK Hutchison Holdings. The company came into being when Hutchison Whampoa – as it was then known – approached ex-Pfizer executive Samantha Du about leading a pharmaceutical start-up in Shanghai. Du served as CEO of Hutchison MediPharma, HutchMed's R&D unit, building up a pipeline of oncology and auto-immune drugs.

"I was young and bold," Du told AVCJ in a 2016 interview. "What I found in China at that time - in 2001 - was basically there was no concept about innovative drugs. But developing new drugs was my passion. I felt that I could use my knowledge to create a drug development firm based in China but with a global vision."

After HutchMed went public in London in 2006, Du felt ready for a new challenge and took charge of China healthcare investments in Sequoia Capital. She then launched Zai Lab with a view to licensing pre-clinical findings from Western countries and developing drugs in China. Zai Lab went public in the US in 2017, a year after HutchMed's US offering.

HutchMed posted $227.9 million in revenue for 2020, up from $204.9 million the previous year. Over the same period, the company’s net loss widened from $103.7 million to $115.5 million.

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• Topics
• Greater China
• IPO
• Healthcare
• China
• The Carlyle Group
• Canada Pension Plan Investment Board (CPPIB)
• General Atlantic
• Baring Private Equity Asia
• CICC
• Pharmaceuticals