TIDMHCM
RNS Number : 0886L
Hutchison China Meditech Limited
20 December 2018
Chi-Med Announces Amendment to the 2013 License &
Collaboration Agreement on Fruquintinib with Eli Lilly and
Company
- Chi-Med acquires right to determine & conduct all future
life cycle indication development of fruquintinib monotherapy as
well as innovative combinations in China -
- Chi-Med to assume all development costs of life cycle
indications in China in return for an increase in both milestone
and royalty payments from Lilly -
- Chi-Med acquires potential future co-promotion rights for
fruquintinib in China -
London: Thursday, December 20, 2018: Hutchison China MediTech
Limited ("Chi-Med") (AIM/Nasdaq: HCM) today announces certain
amendments ("2018 Amendment") to the 2013 License and Collaboration
Agreement ("2013 Agreement") on fruquintinib with Lilly Shanghai an
affiliate of Eli Lilly and Company ("Lilly"). The 2018 Amendment
covers adjustments in the respective roles and responsibilities of
Chi-Med and Lilly, in China, for the development and
commercialization of fruquintinib in the areas of future life cycle
planning and development, collaborations for co-development of
fruquintinib with other third-party anti-cancer agents as well as
promotion and distribution rights of fruquintinib.
"Through this amendment, Chi-Med is stepping forward to take on
greater responsibility in return for a broader role and a larger
share of the future economic interest on fruquintinib," commented
Simon To, Chairman of Chi-Med. "Lilly has been and will continue to
be a most important partner for Chi-Med in bringing fruquintinib to
as broad a patient population as possible and we share a common
goal to maximize the commercial success of fruquintinib in China."
He added, "The recent approval and launch of fruquintinib for
colorectal cancer in China is an important first step on this
journey."
Fruquintinib Life Cycle Indications ("LCI"):
Under the terms of the 2013 Agreement, decision making on LCI
development beyond the initial indications of third-line colorectal
cancer ("CRC"), third-line non-small cell lung cancer ("NSCLC") and
second-line gastric cancer was controlled by Lilly. The majority of
development costs for LCIs were to be paid by Lilly, with the
minority by Chi-Med.
The 2018 Amendment now gives Chi-Med all planning, execution and
decision making responsibilities for LCI development on
fruquintinib in China. Chi-Med will pay all of the costs associated
with fruquintinib LCI development in China. In return for this
investment of capital and resources, Lilly will pay Chi-Med a $20
million milestone upon approval of each fruquintinib LCI in China,
for up to three LCIs, totaling up to $60 million in LCI approval
milestone payments. Furthermore, upon the launch of the first LCI,
the tiered royalty structure, payable by Lilly to Chi-Med on total
molecule sales in China, has been raised from the range of 15-20%
in the 2013 Agreement to a new level of 15-29% under the 2018
Amendment.
China commercial - Co-Promotion rights:
Under the terms of the 2013 Agreement, Lilly held full
commercialization rights to fruquintinib in China.
The 2018 Amendment provides Chi-Med the right to promote
fruquintinib in provinces that represent 30% of the sales of
fruquintinib in China ("Chi-Med Territory") upon the occurrence of
certain commercial milestones. The Chi-Med Territory will expand to
provinces that represent 40% of the sales of fruquintinib in China
subject to additional criteria being met. Lilly will pay Chi-Med a
fee for service to conduct all promotional activities in the
Chi-Med Territory.
Immunotherapy collaborations:
Lilly has provided consent, and freedom to operate, for Chi-Med
to enter into joint development collaborations with certain
third-party pharmaceutical companies to explore combination
treatments of fruquintinib and various immunotherapy agents. The
first such collaborations with Innovent Biologics (Suzhou) Co. Ltd.
("Innovent") and Genor Biopharma Co. Ltd. ("Genor") will explore
the combination of fruquintinib and their respective programmed
cell death protein-1 ("PD-1") antibodies, sintilimab (IBI308) and
genolimzumab (GB226), in several solid tumor settings.
FINANCIAL GUIDANCE:
Our updated guidance for 2018, compared to the most recent
guidance in our 2018 Interim Results announcement for the period
ended June 30, 2018 dated July 27, 2018, includes a $12 million
increase in expected full year Innovation Platform R&D expense
to $142-152 million. This increase reflects the 2018 Amendment of
the fruquintinib collaboration with Lilly; our recent
co-development collaborations with multiple partners to explore
immunotherapy (PD-1) combinations with our vascular endothelial
growth factor receptor (VEGFR) inhibitors; as well as a general
rise in clinical trial spending on our eight clinical drug
candidates and discovery programs including a one-time non-cash
adjustment relating to one of our joint ventures. Further, while
progress has been made towards realizing the one-time property
compensation gain under the Commercial Platform, it is not expected
to occur in 2018. We make no other changes to the full year 2018
financial guidance as detailed below:
2018 Previous 2018 Current Adjustment
Guidance Guidance
----------------------------------------------------------- ----------------- ------------------ ------------------
Group Level:
* Consolidated revenue $155-175m $155-175m None
* Admin., interest & tax $(16)-(18)m $(16)-(18)m None
----------------- ------------------ ------------------
$(12)-(32)m
* Net loss([1]) $(39)-(72)m $(71)-(84)m increase
Innovation Platform:
* Consolidated revenue $40-50m $40-50m None
* Adjusted (non-GAAP) R&D expenses $(130)-(140)m $(142)-(152)m $(12)m increase
----------------- ------------------ ------------------
* Net loss([1]) $(80)-(100)m $(92)-(112)m $(12)m increase
Commercial Platform:
* Sales (consolidated) $115-125m $115-125m None
* Sales of non-consolidated JVs([) (2) (]) $460-480m $460-480m None
----------------- ------------------ ------------------
* Net income on an adjusted (non-GAAP) basis excl.
one-time gains([1]) $41-43m $41-43m None
* One-time gains([1]) $0-20m([3]) $0m $0-(20)m decrease
----------------- ------------------ ------------------
* Net income([1]) $41-63m $41-43m $0-(20)m decrease
----------------------------------------------------------- ----------------- ------------------ ------------------
Notes: [1] Attributable to Chi-Med; [2] Joint ventures; [3]
One-time property compensation, timing of which is dependent on
Guangzhou government policy.
All dollars are expressed in US dollar currency unless otherwise
stated.
About Fruquintinib
Fruquintinib (brand name: Elunate(R) ) is a small molecule,
selective and highly potent inhibitor of VEGFR 1, 2 and 3. VEGFR
inhibitors play a pivotal role in tumor-related angiogenesis,
cutting off the blood supply that a tumor needs to grow rapidly.
The global market for anti-angiogenesis therapies was estimated at
over $18 billion in 2017, including both monoclonal antibodies and
small molecules approved in around 30 tumor settings. During the
discovery research process, which began at Chi-Med in 2007,
fruquintinib was successfully designed to be differentiated by
improving kinase selectivity in comparison to other approved small
molecule tyrosine kinase inhibitors (TKIs), to minimize off-target
toxicities, improve tolerability and provide more consistent target
coverage, resulting in better clinical efficacy.
The superior tolerability, along with fruquintinib's low
potential for drug-drug interaction based on preclinical
assessment, suggests that it may be highly suitable for innovative
combinations with other anti-cancer therapies. The most common
adverse reactions included hypertension, hand-foot syndrome and
proteinuria. Clinically effective management of these adverse
effects is feasible. For important safety information about
fruquintinib, please see www.chi-med.com.
About Other Fruquintinib Development Programs
Global Development
Phase I monotherapy in the U.S.: In December 2017, Chi-Med
initiated a multi-center, open-label, Phase I clinical study to
evaluate the safety, tolerability and pharmacokinetics of
fruquintinib in U.S. patients with advanced solid tumors
(clinicaltrials.gov identifier NCT03251378). This study is almost
complete, and proof-of-concept ("POC") studies are expected to
begin in 2019.
PD-1 checkpoint inhibitor combination: It is an important part
of Chi-Med's strategy to explore the potential synergies of its
drug candidates in combination with other anti-cancer treatments in
several solid tumor settings. In November 2018, Chi-Med entered
into a global collaboration agreement to evaluate the safety,
tolerability and efficacy of fruquintinib in combination with
sintilimab (IBI308), a PD-1 inhibitor being developed by
Innovent.
China Development
CRC in China: The National Medical Products Administration
(NMPA) approved the first New Drug Application ("NDA") for
fruquintinib for the treatment of patients with advanced CRC in
September 2018. The NDA is supported by data from the successful
FRESCO study, a Phase III pivotal registration trial of
fruquintinib in 416 patients with CRC in China, which was
highlighted in an oral presentation at the American Society of
Clinical Oncology Annual Meeting held on June 5, 2017 and was
published in The Journal of the American Medical Association, JAMA,
in June 2018 (clinicaltrials.gov identifier NCT02314819).
Gastric cancer in China: In October 2017, Chi-Med initiated a
pivotal Phase III clinical trial of fruquintinib in combination
with Taxol(R) (paclitaxel), known as the FRUTIGA study, in
approximately 500 patients with advanced gastric or
gastroesophageal junction (GEJ) adenocarcinoma who have progressed
after first-line standard chemotherapy (clinicaltrials.gov
identifier NCT03223376). An interim analysis on FRUTIGA, to
establish POC, is anticipated during the first half of 2019 and if
successful could trigger a POC milestone payment from Lilly. The
FRUTIGA study followed a Phase I/II clinical trial in 34 patients
with gastric cancer that demonstrated that combination therapy of
fruquintinib and Taxol(R) was generally well-tolerated with
promising tumor response (clinicaltrials.gov identifier
NCT02415023).
Lung cancer in China: The FALUCA trial is a randomized,
double-blind, placebo-controlled, multi-center, Phase III
registration study targeted at treating patients with advanced
non-squamous NSCLC, who have failed two lines of systemic
chemotherapy. 527 patients were randomized at a 2:1 ratio to
receive either: 5mg of fruquintinib orally once per day, on a
three-weeks-on / one-week-off cycle, plus best supportive care
("BSC"); or placebo plus BSC. On November 16, 2018, Chi-Med
announced that FALUCA did not meet the primary endpoint to
demonstrate a statistically significant increase in overall
survival (OS) compared to placebo, however the data did show
statistically significant improvement in all secondary endpoints
including progression free survival (PFS), objective response rate
(ORR), disease control rate (DCR) and duration of response (DoR) as
compared to the placebo. The safety profile of the trial was in
line with that observed in prior clinical studies. Full detailed
results are expected to be disclosed at an upcoming scientific
meeting. Additional details about this study can be found at
clinicaltrials.gov, using identifier NCT02691299.
Along with FALUCA, fruquintinib is concurrently being studied in
a Phase II study in combination with Iressa(R) (gefitinib) in
patients with untreated advanced or metastatic NSCLC
(clinicaltrials.gov identifier NCT02976116). Preliminary results
were highlighted in an oral presentation at the 18(th) World
Conference on Lung Cancer on October 16, 2017.
PD-1 checkpoint inhibitor combination: In October 2018, Chi-Med
entered into a further collaboration in China to evaluate the
combination of fruquintinib with genolimzumab (GB226), a PD-1
inhibitor being developed by Genor.
About Chi-Med
Chi-Med (AIM/Nasdaq: HCM) is an innovative biopharmaceutical
company which researches, develops, manufactures and markets
pharmaceutical products. Its Innovation Platform, Hutchison
MediPharma, has about 400 scientists and staff focusing on
discovering, developing and commercializing targeted therapeutics
in oncology and autoimmune diseases. It has a portfolio of eight
cancer drug candidates currently in clinical studies around the
world. Chi-Med's Commercial Platform manufactures, markets, and
distributes prescription drugs and consumer health products,
covering an extensive network of hospitals across China.
Dual-listed on the AIM market of the London Stock Exchange and
the Nasdaq Global Select Market, Chi-Med is headquartered in Hong
Kong and majority owned by the multinational conglomerate CK
Hutchison Holdings Limited (SEHK: 1). For more information, please
visit: www.chi-med.com.
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 reflect Chi-Med's current expectations regarding future
events, including its expectations for the ability of fruquintinib
to gain commercial acceptance in China, the potential market of
fruquintinib for patients with metastatic CRC who have failed two
prior treatments in China, the ability for Chi-Med to quickly
provide fruquintinib to patients by year end, and the clinical
development of fruquintinib in other indications. Forward-looking
statements involve risks and uncertainties. Such risks and
uncertainties include, among other things, assumptions regarding
Chi-Med's ability to obtain regulatory approval in different
jurisdictions, to commercialize fruquintinib, that the benefits
obtained from fruquintinib during clinical trials will be the same
for all patients who are prescribed fruquintinib, that no
unidentified side effects will occur which could result in the NMPA
pulling fruquintinib from the market and the sufficiency of funding
to support commercialization of fruquintinib in metastatic CRC and
the development of fruquintinib in other indications. In addition,
as certain studies rely on the use of Iressa(R) (gefitinib),
Taxol(R) (paclitaxel), sintilimab or genolimzumab as combination
therapeutics with fruquintinib, such risks and uncertainties
include assumptions regarding the safety, efficacy, supply and
continued regulatory approval of Iressa(R) , Taxol(R) , sintilimab
and genolimzumab. Existing and prospective investors are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. 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 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.
USE OF NON-GAAP FINANCIAL MEASURES
In addition to financial information prepared in accordance with
U.S. GAAP, this announcement also contains certain non-GAAP
financial measures.
Adjusted R&D expenses: We exclude the expected impact of the
revenue received from external customers of our Innovation
Platform, which is reinvested into our clinical trials, to derive
our adjusted R&D expense. Revenue received from external
customers of our Innovation Platform consists of milestone and
other payments from our collaboration partners. The variability of
such payments makes the identification of trends in our ongoing
R&D activities more difficult. We believe the presentation of
adjusted R&D expenses guidance provides useful and meaningful
information about our ongoing R&D activities by enhancing
investors' understanding of the scope of our normal, recurring
operating R&D expenses.
Adjusted consolidated net income attributable to Chi-Med from
our Commercial Platform: We exclude the impact of one-time gains
which could be triggered by the payment of land compensation from
the Guangzhou government to a non-consolidated JV, dependent on
Guangzhou government policy.
Management uses such measures internally for planning and
forecasting purposes and to measure the Chi-Med Group's overall
performance. We believe these adjusted financial measures provide
useful and meaningful information to us and investors because they
enhance investors' understanding of the continuing operating
performance of our business and facilitate the comparison of
performance between past and future periods. These adjusted
financial measures are non-GAAP measures and should be considered
in addition to, but not as a substitute for, the information
prepared in accordance with U.S. GAAP. Other companies may define
these measures in different ways.
Reconciliation of GAAP to adjusted R&D expenses 2018 Previous Guidance 2018 Current Guidance
----------------------------------------------------------------------- ---------------------- ---------------------
Segment operating loss - Innovation Platform $(80)-(100)m $(92)-(112)m
Less: Segment revenue from external customers - Innovation Platform $(40)-(50)m $(40)-(50)m
---------------------- ---------------------
Adjusted R&D expenses $(130)-(140)m $(142)-(152)m
Reconciliation of GAAP to adjusted consolidated net income attributable 2018 Previous Guidance 2018 Current Guidance
to Chi-Med from our
Commercial Platform
----------------------------------------------------------------------- ---------------------- ---------------------
Consolidated net income attributable to Chi-Med - Commercial Platform $41-63m $41-43m
Less: One-time gains from land compensation $0-(20)m $0m
---------------------- ---------------------
Adjusted consolidated net income attributable to Chi-Med - Commercial
Platform $41-43m $41-43m
Inside Information
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
CONTACTS
Investor Enquiries
Mark Lee, Senior Vice President, Corporate Finance & Development +852 2121 8200
David Dible, Citigate Dewe Rogerson +44 7967 566 919 (Mobile)
david.dible@citigatedewerogerson.com
Xuan Yang, Solebury Trout +1 (415) 971 9412 (Mobile)
xyang@troutgroup.com
Media Enquiries
UK & Europe - Anthony Carlisle, Citigate Dewe Rogerson +44 7973 611 888 (Mobile)
anthony.carlisle@cdrconsultancy.co.uk
Americas - Brad Miles, Solebury Trout +1 (917) 570 7340 (Mobile)
bmiles@troutgroup.com
Hong Kong & Asia ex-China - Joseph Chi Lo, Brunswick +852 9850 5033 (Mobile)
jlo@brunswickgroup.com
- Zhou Yi, Brunswick +852 9783 6894 (Mobile)
yzhou@brunswickgroup.com
Mainland China - Sam Shen, Edelman +86 136 7179 1029 (Mobile)
sam.shen@edelman.com
Nominated Advisor
Richard Gray / Andrew Potts, Panmure Gordon (UK) Limited +44 (20) 7886 2500
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END
AGRQBLBLVLFZFBK
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