HUTCHMED Reports 2023 Full Year Results and Provides Business Updates

Rhea-AI Summary

HUTCHMED Reports 97% Revenue Growth to $838M, FDA Approval, and NDA Review for Sovleplenib

Positive

• Revenue grew 97% (102% CER) to US$838 million with net income of US$101 million
• First U.S. FDA approval for self-developed medicine FRUZAQLA™ (fruquintinib)
• Sovleplenib for ITP accepted for NDA review in China with Priority Review status
• Strategic partnerships and global vision driving growth and sustainability
• Fruquintinib U.S. FDA approval ahead of schedule with $15.1 million in sales
• Strong financial performance with 2023 revenue up 97% and net income of $100.8 million
• Pipeline expansion and regulatory progress across multiple indications

Negative

• None.

Insights

Financial Analyst

The reported revenue growth of 97% to US$838 million, with a net income of US$101 million, indicates a robust financial performance for HUTCHMED. This growth is particularly noteworthy when considering the broader biopharmaceutical landscape, where such high growth rates are not common. The upfront and milestone payments from the strategic partnership with Takeda, totaling $435 million, significantly bolstered revenue and exemplify the potential of strategic licensing deals in the biotech sector. The company's guidance for 2024 Oncology/Immunology consolidated revenue suggests a continued positive trajectory, albeit at a slower growth rate of 30% to 50%. The strong cash position of $886.3 million provides the company with a solid foundation for future R&D investments and commercialization efforts.

Medical Research Analyst

The FDA approval of FRUZAQLA™ (fruquintinib) for third-line colorectal cancer (CRC) and the acceptance of Sovleplenib for NDA review in China with Priority Review status and Breakthrough Therapy designation are significant clinical milestones. The early U.S. in-market sales of FRUZAQLA™ amounting to $15.1 million signal a successful market entry and the potential for growth in a competitive oncology market. The Priority Review status of Sovleplenib in China underscores the drug's potential to meet an unmet medical need in the treatment of primary ITP, a chronic blood disorder. The Breakthrough Therapy designation for fruquintinib in combination with sintilimab for second-line endometrial cancer highlights its potential as a significant new therapy in a disease with limited treatment options.

Market Research Analyst

The strategic focus on self-sustainability through a disciplined approach to leveraging R&D expertise and creating value through licensing and commercialization is likely to resonate well with investors. HUTCHMED's global vision of bringing innovative medicines worldwide is demonstrated by the Takeda partnership and the swift regulatory progress in multiple jurisdictions for fruquintinib. The company's ability to navigate the complex regulatory environment and achieve early approvals is a testament to its strategic execution. The emphasis on a balanced strategy of growing sales in China and advancing medicines overseas could position HUTCHMED favorably in the global biopharmaceutical market, despite the uncertain macroeconomic environment.

Revenue grew 97% (102% CER) to US$838 million, with net income of US$101 million

First U.S. FDA approval of our self-developed medicine, FRUZAQLA™ (fruquintinib)

Sovleplenib for ITP accepted for NDA review in China, with Priority Review status and Breakthrough Therapy designation

HONG KONG and SHANGHAI, China and FLORHAM PARK, N.J., Feb. 28, 2024 (GLOBE NEWSWIRE) -- HUTCHMED (China) Limited (“HUTCHMED”, the “Company” or “we”) (Nasdaq/AIM:​HCM; HKEX:​13), the innovative, commercial-stage biopharmaceutical company, today reports its financial results for the year ended December 31, 2023 and provides updates on key clinical and commercial developments. HUTCHMED to host results call and webcasts today at 7:30 a.m. EST / 12:30 p.m. GMT / 8:30 p.m. HKT in English, and at 8:30 a.m. HKT in Chinese (Putonghua) on Thursday, February 29, 2024.

All amounts are expressed in U.S. dollars unless otherwise stated.

Strategic: global vision, commitment to patients and path to self-sustainability

• Executed our global vision of bringing our innovative medicines worldwide, as demonstrated through the Takeda¹ partnership which brought $435 million in upfront and milestone payments plus manufacturing income and royalties on net sales, setting a strategic example for the rest of our pipeline.
• On track to be self-sustaining with a disciplined approach to leveraging our R&D² expertise and creating value through licensing and commercialization.

Pipeline: fruquintinib global and China expansion, sovleplenib China NDA³ review, savolitinib NSCLC⁴ enrolled

• Fruquintinib U.S. FDA⁵ approval three weeks ahead of PDUFA⁶ date for third-line CRC⁷, leading to a swift launch by Takeda, inclusion in NCCN⁸ guidelines and U.S. in-market sales⁹ of $15.1 million. Global regulatory progress with MAA¹⁰ filing to the EMA¹¹ validated in June 2023 and NDA submitted to PMDA¹² in September 2023.
• Fruquintinib NDA for second-line gastric cancer accepted for review in China. Registrations studies in China for 2L EMC¹³ and 2L RCC¹⁴ completed enrollment during 2023 for fruquintinib in combination with sintilimab, expecting NDA filing to the NMPA¹⁵ for EMC in early 2024 and topline results for RCC by end of 2024.
• NDA for sovleplenib, a novel Syk¹⁶ inhibitor, for primary ITP¹⁷ accepted and granted priority review in China, supported by data from Phase III trial (ESLIM-01), meeting all endpoints.
• SAVANNAH, the pivotal global Phase II trial for savolitinib in NSCLC, completed enrollment, to be followed by potential NDA filing to the U.S. FDA by AstraZeneca¹⁸ around the end of 2024.

Outlook and financial: expecting strong product revenue growth and reduced expenses; substantial cash

• Total revenue up 97% (102% at CER¹⁹) to $838.0 million for 2023, with Oncology/​Immunology consolidated revenue up 223% (228% at CER) to $528.6 million at high end of guidance, including recognition of $280 million of the upfront payment from Takeda. Net income attributable to HUTCHMED of $100.8 million.
• 2024 Oncology/Immunology consolidated revenue guidance of $300 million to $400 million, driven by 30% to 50% growth target in marketed product sales and royalties.
• R&D expenses focused in line with strategy targeting key projects.
• Strengthened cash balance, with $886.3 million at year end (2022: $631.0m), ensures HUTCHMED is well placed to deliver on its objective of becoming a self-sustaining business.

2023 FULL YEAR RESULTS & BUSINESS UPDATES

Mr Simon To, Executive Chairman of HUTCHMED, said, “We have made significant progress throughout 2023. We executed against our commitment to bring our innovative medicines to patients worldwide with the U.S. FDA approval of FRUZAQLA™ in November 2023, while remaining dedicated to becoming a self-sustaining business. The Takeda partnership, which is one of the biggest small-molecule overseas licensing deals in the history of China biotech, strengthened our cash position by $435 million. Takeda delivered a successful U.S. launch within 48 hours of approval, and has subsequently seen strong early patient uptake.”

“We will continue to deliver on our strategy in 2024. We will stay focused on our target of becoming sustainable through our balanced strategy of growing sales of our novel medicines in China, and advancing our medicines overseas with our partners. This, when combined with our other goals on pipeline progression and further business development, means that while the global macroeconomic environment remains uncertain, HUTCHMED is positioned to thrive and continue to deliver innovative medicines to ever more patients around the world.”

Dr Weiguo Su, Chief Executive Officer and Chief Scientific Officer of HUTCHMED, said, “HUTCHMED delivered impressive financial results in 2023, with revenue up 97% to $838 million. This, alongside our significantly strengthened cash balance of $886 million, will enable us to continue advancing our pipeline and successfully executing our strategy.”

“2023 was an important year for HUTCHMED, particularly for fruquintinib, for which we filed market authorization applications in the U.S., EU and Japan, based on the successful FRESCO-2 study. Following the U.S. FDA approval for third-line patients with advanced CRC, we continue to work together with Takeda to pursue additional launches in new markets worldwide. In China, we also filed an NDA for second-line gastric cancer based on the FRUTIGA study.”

“Another milestone was the successful ESLIM-01 registration study in China in ITP patients for sovleplenib, our first potential novel medicine in immunological diseases. The NDA was accepted and granted priority review by the NMPA in January 2024. There are over 250,000 new and existing adult ITP patients in China²⁰. The treatment options are limited to steroids and TPO/TPO-RAs²¹, representing an unmet medical need that sovleplenib could help address, with its new mechanism of action and favorable safety profile. Syk inhibition has the potential to target other major diseases such as rheumatoid arthritis. We are also planning to initiate clinical development of sovleplenib outside China in 2024.”

“For savolitinib, we completed the confirmatory trial in NSCLC patients with MET²² exon 14 skipping alterations. An NDA submission is expected in the first quarter of 2024, with potential to expand the label indication to include first-line patients in China. Outside China, we will continue our work with AstraZeneca on the pivotal global savolitinib lung cancer trial SAVANNAH, which, subject to favorable data, can support a filing to the U.S. FDA for approval. This study completed enrollment with a potential NDA submission towards the end of 2024 in EGFR²³ mutant NSCLC patients who progressed on TAGRISSO^® treatment, which received U.S. FDA Fast Track designation in January 2023. We believe the convenient dosing, targeted efficacy and safety profile of savolitinib as an oral medicine in combination with TAGRISSO^®, the leading oral third-generation EGFR TKI²⁴, should position it well in a competitive market and address the unmet needs of MET+ NSCLC patients.”

"Our China commercialization efforts progressed well, as we successfully renewed NRDL²⁵ coverage for both fruquintinib and surufatinib without further price reduction. Their in-market sales saw strong growth in 2023. Over the next two years, we plan to continue growth in China through expanded indications and the launch of new products together with revenue from FRUZAQLA™ overseas commercialization.”

I. COMMERCIAL OPERATIONS

Total revenue increased 97% (102% at CER) to $838.0 million in 2023 (2022: $426.4m), driven by the Takeda partnership, our strong commercial progress in China, and growth in third-party distribution sales, resulting in a net income of $101 million for 2023.

Oncology/Immunology consolidated revenue were up 223% (228% at CER) to $528.6 million (2022: $163.8m); towards the high end of our guidance, driven by recognition of $280.0 million in partnering revenue for the upfront payment, $32.0 million for U.S. FDA approval milestone payments from Takeda, and our strong product sales growth resulting from in-market sales up 28% (35% at CER) to $213.6 million (2022: $167.1m);

• ELUNATE^® (fruquintinib China) in-market sales in 2023 increased 15% (22% at CER) to $107.5 million (2022: $93.5m), reflecting its continued lead in market share;
• FRUZAQLA™ (fruquintinib U.S.) in-market sales in 2023 were $15.1 million, reflecting its U.S. launch in November 2023;
• SULANDA^® (surufatinib) in-market sales in 2023 increased 36% (43% at CER) to $43.9 million (2022: $32.3m), reflecting its growing market share after two years on the NRDL;
• ORPATHYS^® (savolitinib) in-market sales in 2023 increased 12% (19% at CER) to $46.1 million (2022: $41.2m). Sales in the first quarter were impacted by customary channel fluctuations ahead of its NRDL inclusion on March 1, with the subsequent three quarters of 2023 up 30% compared to the same period in 2022;
• R&D services income up 116% (119% at CER) to $52.4 million (2022: $24.2m), now also including fees from our new partner Takeda for the management of regulatory activities;
• Takeda upfront payment of $400.0 million received, of which $280.0 million recognized in revenue during 2023, with the remainder to be recognized when services and performance obligations are completed; and
• Successful management of commercial operations to expand coverage of oncology hospitals and physicians, despite challenges from COVID-19-related disruptions around the start of the year, and from an anti-corruption crackdown of the healthcare sector in China in the second half of 2023. Hospital access and related activities became more restricted, but improved starting in October 2023.
  
  

$’millions	In-market Sales*					Consolidated Revenue**
		2023	2022	%Δ	(CER)		2023	2022	%Δ	(CER)
ELUNATE®	$107.5		$93.5	+15%	(+22%)	$83.2		$69.9	+19%	(+26%)
FRUZAQLA™	$15.1		–		–	$7.2		–		–
SULANDA®	$43.9		$32.3	+36%	(+43%)	$43.9		$32.3	+36%	(+43%)
ORPATHYS®	$46.1		$41.2	+12%	(+19%)	$28.9		$22.3	+30%	(+37%)
TAZVERIK®	$1.0		$0.1	>700%		$1.0		$0.1	>700%
Products Revenue	$213.6		$167.1	+28%	(+35%)	$164.2		$124.6	+32%	(+39%)
Other R&D services income						$52.4		$24.2	+116%	(+119%)
Upfront and milestone income						$312.0		$15.0
Total Oncology/​Immunology						$528.6		$163.8	+223%	(+228%)
Other Ventures						$309.4		$262.6	+18%	(+24%)
Total revenue						$838.0		$426.4	+97%	(+102%)
* = For ELUNATE®, FRUZAQLA™ and ORPATHYS®, mainly represents total sales to third parties as provided by Lilly26, Takeda and AstraZeneca, respectively. ** = For ELUNATE®, represents drug product supply, commercial service fees and royalties paid by Lilly, to HUTCHMED, and sales to other third parties invoiced by HUTCHMED; for FRUZAQLA™, represents drug product supply and royalties paid by Takeda; for ORPATHYS®, represents drug product supply and royalties paid by AstraZeneca and sales to other third parties invoiced by HUTCHMED; for SULANDA® and TAZVERIK®, represents the Company’s sales of the products to third parties.

II. REGULATORY UPDATES

China

• Fruquintinib NDA accepted in combination with paclitaxel for second-line gastric cancer in April 2023;
• Sovleplenib NDA accepted for primary ITP in January 2024, after receiving priority review status in 2023;
• Fruquintinib received Breakthrough Therapy designation in combination with sintilimab for second-line endometrial cancer in July 2023;
• Fruquintinib received Hong Kong approval for third-line CRC in January 2024; and
• ORPATHYS^® (savolitinib) and TAZVERIK^® (tazemetostat) received Macau approvals in March 2023.
  

Ex-China

• Fruquintinib U.S. FDA approved in November 2023 for previously treated metastatic CRC, after the NDA was granted priority review in May 2023;
• Fruquintinib NDA submitted to the Japanese PMDA in September 2023;
• Fruquintinib MAA submission to the EMA validated in June 2023; and
• Savolitinib, in combination with TAGRISSO^®, designated a U.S. FDA Fast Track program in January 2023 for the treatment of patients with NSCLC with MET overexpression and/or amplification, and who have had disease progression during or following prior TAGRISSO^®.

III. LATE-STAGE CLINICAL DEVELOPMENT ACTIVITIES

Savolitinib (ORPATHYS^® in China), a highly selective oral inhibitor of MET being developed broadly across MET-driven patient populations in lung, gastric and papillary renal cell carcinomas

• Completed enrollment of a pivotal global Phase II study SAVANNAH (NCT03778229) for NSCLC patients who have progressed following TAGRISSO^® due to MET amplification or overexpression designated as a Fast Track development program by the U.S. FDA, with the possibility of accelerated approval. Continued enrolling SAFFRON (NCT05261399), a global, pivotal Phase III study of the TAGRISSO^® combination supporting SAVANNAH;
• Reported positive results from the confirmatory China Phase IIIb study (NCT04923945) first-line cohort in MET exon 14 skipping alteration NSCLC; completed enrollment in a second-line cohort; and
• Initiated the registration stage of a China Phase II study in third-line gastric cancer patients with MET amplification (NCT04923932).
  
  Potential upcoming clinical and regulatory milestones for savolitinib:

• Submit China NDA for first-line and second-line MET exon 14 skipping alteration NSCLC in early-2024;
• Complete enrollment of SACHI (NCT05015608), a pivotal Phase III study of the TAGRISSO^® combination in China for NSCLC patients with MET amplification following progression on EGFR inhibitor treatment in late 2024;
• Complete enrollment of SANOVO (NCT05009836), a pivotal Phase III study of the TAGRISSO^® combination in China in first-line NSCLC patients with EGFR mutation & MET overexpression in late 2024; and
• Engage U.S. FDA regarding possible NDA filing on SAVANNAH, subject to positive results, around year end 2024.

Fruquintinib (ELUNATE^® in China, FRUZAQLA™ in the U.S.), a highly selective oral inhibitor of VEGFR²⁷ 1/2/3 designed to have enhanced selectivity that limits off-target kinase activity, allowing for high drug exposure, sustained target inhibition, and flexibility for the potential use as part of a combination therapy

• Presented FRUTIGA (NCT03223376) results at ASCO²⁸ Plenary in February 2024 in second-line gastric cancer patients on fruquintinib plus paclitaxel. PFS²⁹, ORR³⁰ and DCR³¹ endpoints showed statistically significant improvements. Although OS³² improvement was not statistically significant overall, it was statistically significant in a pre-specified analysis excluding patients taking subsequent antitumor therapy;
• Completed enrollment of FRUSICA-1 (NCT03903705), a China endometrial cancer registration cohort of a Phase II study of fruquintinib in combination with PD-1³³ antibody sintilimab in July 2023;
• Completed enrollment of FRUSICA-2 (NCT05522231), a China Phase II/III study of fruquintinib in combination with PD-1 antibody sintilimab in clear cell RCC in December 2023;
• Updated results from the clear cell RCC cohort of a China Phase II study on fruquintinib in combination with PD-1 antibody sintilimab at ASCO 2023 (NCT03903705); and
• Published in peer-reviewed journal The Lancet positive results of the global Phase III FRESCO-2 registration trial (NCT04322539) in previously treated metastatic CRC patients in June 2023.
  
  Potential upcoming clinical and regulatory milestones for fruquintinib:

• Completion of EMA MAA review for previously-treated metastatic CRC in mid-2024;
• Completion of PMDA NDA review for previously-treated metastatic CRC in late-2024;
• Registration filing to the NMPA for second-line endometrial cancer in early 2024; and
• Top-line results from Phase II/III registration trial in clear cell RCC around year end 2024.

Surufatinib (SULANDA^® in China), an oral inhibitor of VEGFR, FGFR³⁴ and CSF-1R³⁵ designed to inhibit tumor angiogenesis and promote immune response against tumor cells via tumor associated macrophage regulation

• Reported data from the Phase Ib/II China toripalimab (PD-1 antibody) combination study at the 2023 AACR³⁶ and ASCO annual meetings (NCT04169672); and
• Reported encouraging early results at ASCO 2023 of an investigator-initiated trial of surufatinib in combination with a PD-1 antibody and chemotherapy in first-line treatment for pancreatic ductal adenocarcinoma.

Sovleplenib (HMPL-523), an investigative and highly selective oral inhibitor of Syk, an important component of the Fc receptor and B-cell receptor signaling pathway

• Met primary endpoint and all secondary endpoints for a pivotal Phase III study (NCT05029635) in adult patients with primary ITP in China; and
• Met primary endpoint for a Phase II Proof-of-Concept study in warm AIHA³⁷ in China (NCT05535933) with Phase III registration study being planned.
  
  Potential upcoming clinical milestones for sovleplenib:

• Submit ESLIM-01 results for publication and/or presentation in mid-2024; and
• Initiate a dose-finding study in ITP in the U.S./EU in mid-2024.

Tazemetostat (TAZVERIK^® in Macau and the China Hainan Pilot Zone), a first-in-class, oral inhibitor of EZH2 licensed from Ipsen³⁸

• Completed recruitment of a China bridging study in follicular lymphoma for conditional registration based on U.S. approvals in September 2023 (NCT05467943);
• Approved and launched in the Macau Special Administrative Region in March 2023; and
• Published promising results from the Phase Ib portion of SYMPHONY-1, a global Phase 1b/III combination study in relapsed/refractory follicular lymphoma patients after at least two prior therapies (NCT04224493). ORR was 90.9%, and in the recommended Phase III dose cohort, 18-month PFS and DoR³⁹ estimates were 94.4% and 100% with no dose-limiting toxicities.
  
  Potential upcoming clinical and regulatory milestones for tazemetostat:

• China NDA filing for relapsed/refractory 3L+ follicular lymphoma expected in mid-2024.
  

HMPL-453, a novel, highly selective and potent inhibitor targeting FGFR 1, 2 and 3

• Reported human data for the first time at the 2023 ASCO annual meeting; and
• After consultation with NMPA, initiated the registration phase of the ongoing Phase II trial for IHCC⁴⁰ patients with FGFR 2 fusion (NCT04353375).

Amdizalisib (HMPL-689), an investigative and highly selective oral inhibitor of PI3Kδ⁴¹ designed to address the gastrointestinal and hepatotoxicity associated with currently approved and clinical-stage PI3Kδ inhibitors

• Met primary endpoint of ORR in the follicular lymphoma cohort of a China registration Phase II study with Breakthrough Therapy designation (NCT04849351). However, in recent discussions with China NMPA, it is clear that a randomized study is now required to support registration. In view of the changing regulatory requirement, we are currently evaluating the clinical development plan and regulatory guidance before deciding the regulatory strategy for this indication.
  

IV. COLLABORATION UPDATES

Closed Exclusive Worldwide License to Takeda for Fruquintinib Outside China

• Takeda is responsible for development, manufacturing and commercialization in all indications and territories outside of mainland China, Hong Kong and Macau; and
• HUTCHMED is eligible to receive up to $1.13 billion, including the $400 million upfront received in April 2023, and up to $730 million in additional potential payments relating to regulatory, development and commercial sales milestones, of which a $35 million milestone payment was received in December 2023 after the approval by the U.S. FDA, as well as manufacturing income and royalties on net sales.

Further clinical progress by Inmagene⁴² with two candidates discovered by HUTCHMED

• Inmagene initiated two global Phase IIa trials with IMG-007, an anti-OX40 antibody, in adults with moderate-to-severe atopic dermatitis and in adults with alopecia areata. It was safe and well-tolerated in the completed Phase I study with no reports of pyrexia or chills, which are common adverse events of rocatinlimab, another anti-OX40 treatment;
• Inmagene completed a Phase I study with IMG-004, a reversible, non-covalent, highly selective oral BTK⁴³ inhibitor designed to target immunological diseases. IMG-004 was safe and well-tolerated in this single-ascending-dose study, with a long half-life and sustained pharmacodynamic effects that are well above others in its class; and
• Inmagene exercised options for an exclusive license to further develop, manufacture and commercialize these two drug candidates worldwide subject to completion of a share subscription agreement signed in February 2024 for approximately 7.5% of Inmagene shares (fully diluted).
  

V. OTHER VENTURES

Other Ventures include our profitable prescription drug marketing and distribution platforms

• Consolidated revenue increased by 18% (24% at CER) to $309.4 million (2022: $262.6m);
• SHPL⁴⁴ non-consolidated joint venture revenue increased by 4% (10% at CER) to $385.5 million (2022: $370.6m);
• Consolidated net income attributable to HUTCHMED from our Other Ventures decreased by 8% (3% at CER) to $50.3 million (2022: $54.6m), which was primarily due to decrease on the net income contributed from SHPL of $47.4 million (2022: $49.9m) resulting from the impact of gradual price adjustment from volume-based procurement;
• Disposed interests in HHOHK⁴⁵ and HSN⁴⁶ for $5.1 million; and
• We continue to explore opportunities to monetize the underlying value of our SHPL joint venture including various divestment and equity capital market alternatives.
  

VI. SUSTAINABILITY

HUTCHMED is committed to progressively embedding sustainability into all aspects of our operations and creating long-term value for our stakeholders. In 2023, we continued to make progress, including:

• Satisfactory progress made in 11 short- to long-term goals and targets; sustainability performance on goals and targets continued to be incorporated into management’s performance-based remuneration;
• Enhanced climate actions by conducting Scope 3 emissions screening and measurement, and engaging with suppliers to gradually implement sustainability initiatives collaboratively. Following the climate risk assessment in 2022, regular monitoring and reviews on climate risks and opportunities have been undertaken; our climate actions continue to be disclosed in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD);
• Enhanced data quality by introducing a digital data collection platform to streamline collecting, managing, and reporting data, ensuring improved data reliability, comparability and transparency;
• Strengthened alignment in the five key sustainability pillars which encompassed the most relevant and material sustainability topics for HUTCHMED, including (i) climate action; (ii) access to healthcare; (iii) human capital; (iv) ethics and transparency; and (v) innovation;
• Marked improvements shown in major ESG ratings and awards, reflecting wider recognition of HUTCHMED’s efforts in sustainability; and
• Enhanced disclosure by referencing the latest sustainability disclosure standards and sector specific disclosure standards ahead of requirement.

These efforts will continue to guide HUTCHMED towards a more sustainable future. The 2023 Sustainability Report will be published alongside our 2023 Annual Report in April 2024 and will include further information on HUTCHMED sustainability initiatives and their performance.

VII. IMPACT OF COVID-19

While restrictive measures related to COVID-19 were gradually lifted in China starting from December 2022, COVꞮD-19 had some impact on our research, clinical studies and our commercial activities in the first few months of 2023. Measures were put in place to reduce the impact and, in the second quarter of 2023, these activities normalized.

FINANCIAL HIGHLIGHTS

Foreign exchange impact: The RMB depreciated against the U.S. dollar on average by approximately 5% during 2023, which has impacted our consolidated financial results as highlighted below.

Cash, Cash Equivalents and Short-Term Investments were $886.3 million as of December 31, 2023 compared to $631.0 million as of December 31, 2022.

• Adjusted Group (non-GAAP⁴⁷) net cash flows excluding financing activities in 2023 were $206.7 million (2022: -$297.9m) mainly due to the receipt of $435 million in upfront and milestone payments from Takeda; and
• Net cash generated from financing activities in 2023 totaled $48.7 million mainly due to the drawdowns of bank borrowings (2022: net cash used in financing activities of $82.8m).

Revenue for the year ended December 31, 2023 were $838.0 million compared to $426.4 million in 2022.

• Oncology/Immunology consolidated revenue increased 223% (228% at CER) to $528.6 million (2022: $163.8m) resulting from:
  • ELUNATE^® revenue increased 19% (26% at CER) to $83.2 million (2022: $69.9m) due to continued market share gains, comprising of manufacturing revenue, promotion and marketing service revenue and royalties;
  • FRUZAQLA™ revenue was $7.2 million, reflecting its U.S. launch in early November 2023, comprising of manufacturing revenue and royalties;
  • SULANDA^® revenue increased 36% (43% at CER) to $43.9 million (2022: $32.3m) from our continuing marketing activities, increasing patient access and longer durations of treatment;
  • ORPATHYS^® revenue increased 30% (37% at CER) to $28.9 million (2022: $22.3m) after inclusion in the NRDL effective from March 2023, comprising of manufacturing revenue and royalties;
  • TAZVERIK^® revenue was $1.0 million (2022: $0.1m) from further sales in the Hainan Pilot Zone;
  • Partnering revenue of $312.0 million was the $280 million recognized portion of the $400 million upfront payment, and the $32 million recognized portion of the US$35 million milestone payment from Takeda; and
  • Other R&D services income of $52.4 million (2022: $24.2m), primarily related to fees from AstraZeneca, Lilly and Takeda for the management of development and regulatory activities.
• Other Ventures consolidated revenue increased 18% (24% at CER) to $309.4 million (2022: $262.6m), mainly due to higher sales of prescription drugs. This excludes 4% (10% at CER) growth in non-consolidated revenue at SHPL of $385.5 million (2022: $370.6m).
  

Net Expenses for 2023 were $737.2 million compared to $787.2 million in 2022.

• Cost of Revenue increased by 24% to $384.4 million (2022: $311.1m), of which cost of revenue from our Other Ventures increased by 21% to $292.7 million (2022: $241.9m) due to the increasing sales of third-party prescription drug products. Cost of revenue from Oncology/Immunology increased by 33% to $91.7 million (2022: $69.2m) due to the increase in product sales of our marketed products and the cost of provision of promotion and marketing services for ELUNATE^® resulting from the increased sales force;
• R&D Expenses reduced 22% to $302.0 million (2022: $386.9m), mainly due to the completion of several large registration-enabling trials, the focus on ex-China development through partnerships, and the ongoing strategic prioritization of our pipeline. Our international clinical and regulatory operations in the U.S. and Europe incurred expenses of $106.9 million (2022: $170.9m), while R&D expenses in China were $195.1 million (2022: $216.0m);
• SG&A⁴⁸ Expenses were $133.2 million (2022: $136.1m), which decreased primarily due to the restructuring of our U.S. Oncology/Immunology commercial operations at the end of 2022 while our China commercial infrastructure was able to support further revenue growth; and
• Other Items mainly comprised of equity in earnings of SHPL, interest income and expense, FX and taxes, generated net income of $82.4 million (2022: $46.9m), which increased primarily due to higher interest income after receiving the $400 million Takeda upfront payment.

Net Income attributable to HUTCHMED for 2023 was $100.8 million compared to Net Loss attributable to HUTCHMED of $360.8 million in 2022.

• The net income attributable to HUTCHMED in 2023 was $0.12 per ordinary share / $0.59 per ADS⁴⁹, compared to net loss attributable to HUTCHMED of $0.43 per ordinary share / $2.13 per ADS in 2022.
  
  

FINANCIAL SUMMARY

Condensed Consolidated Balance Sheets Data
(in $’000)

	As of December 31,
	2023		2022
Assets
Cash and cash equivalents and short-term investments	886,336		630,996
Accounts receivable	116,894		97,988
Other current assets	93,609		110,904
Property, plant and equipment	99,727		75,947
Investments in equity investees	48,411		73,777
Other non-current assets	34,796		39,833
Total assets	1,279,773		1,029,445
Liabilities and shareholders’ equity
Accounts payable	36,327		71,115
Other payables, accruals and advance receipts	271,399		264,621
Deferred revenue	127,119		13,537
Bank borrowings	79,344		18,104
Other liabilities	22,197		25,198
Total liabilities	536,386		392,575
Company’s shareholders’ equity	730,541		610,367
Non-controlling interests	12,846		26,503
Total liabilities and shareholders’ equity	1,279,773		1,029,445

Condensed Consolidated Statements of Operations Data
(in $’000, except share and per share data)

	Year Ended December 31,
	2023			2022
Revenue:
Oncology/Immunology – Marketed Products	164,165			124,642
Oncology/Immunology – R&D	364,451			39,202
Oncology/Immunology consolidated revenue	528,616			163,844
Other Ventures	309,383			262,565
Total revenue	837,999			426,409
Operating expenses:
Cost of revenue	(384,447	)		(311,103	)
Research and development expenses	(302,001	)		(386,893	)
Selling and general administrative expenses	(133,176	)		(136,106	)
Total operating expenses	(819,624	)		(834,102	)
Other income/(expense), net	39,933			(2,729	)
Income/(loss) before income taxes and equity in earnings of equity investees	58,308			(410,422	)
Income tax (expense)/benefit	(4,509	)		283
Equity in earnings of equity investees, net of tax	47,295			49,753
Net income/(loss)	101,094			(360,386	)
Less: Net income attributable to non-controlling interests	(314	)		(449	)
Net income/(loss) attributable to HUTCHMED	100,780			(360,835	)
Earnings/(losses) per share attributable to HUTCHMED (US$ per share)
– basic	0.12			(0.43	)
– diluted	0.12			(0.43	)
Number of shares used in per share calculation
– basic	849,654,296			847,143,540
– diluted	869,196,348			847,143,540
Earnings/(losses) per ADS attributable to HUTCHMED (US$ per ADS)
– basic	0.59			(2.13	)
– diluted	0.58			(2.13	)
Number of ADSs used in per share calculation
– basic	169,930,859			169,428,708
– diluted	173,839,270			169,428,708

OUTLOOK AND FINANCIAL GUIDANCE

2023 was an impressive year for HUTCHMED, in large part due to the upfront payment of $400 million received from Takeda, of which $280 million was recognized in revenue during 2023, with the remainder to be recognized when services and performance obligations are completed over approximately three years.

Full year 2024 guidance for Oncology/Immunology consolidated revenue is $300 million to $400 million, driven by 30% to 50% growth target in oncology marketed product revenue.

HUTCHMED’s work in 2024 and beyond will be supported by its strong balance sheet, which grew by $255 million to $886 million in Cash, Cash Equivalents and Short-Term Investments as of December 31, 2023. The Company is thus well placed to deliver against its target to become a self-sustaining business and its goal to bring its innovative medicines to patients globally through its own sales network in China markets and through partners worldwide.

Shareholders and investors should note that:

• we do not provide any guarantee that the statements contained in the financial guidance will materialize or that the financial results contained therein will be achieved or are likely to be achieved; and
  
  
• we have in the past revised our financial guidance and reference should be made to any announcements published by us regarding any updates to the financial guidance after the date of publication of this announcement.

Use of Non-GAAP Financial Measures and Reconciliation – References in this announcement to adjusted Group net cash flows excluding financing activities and financial measures reported at CER are based on non-GAAP financial measures. Please see the “Use of Non-GAAP Financial Measures and Reconciliation” below for further information relevant to the interpretation of these financial measures and reconciliations of these financial measures to the most comparable GAAP measures, respectively.

Conference calls and audio webcast presentations scheduled today at 7:30 a.m. EST / 12:30 p.m. GMT / 8:30 p.m. HKT in English. In addition to the usual English webcast, there will also be a Chinese (Putonghua) webcast at 8:30 a.m. HKT on Thursday, February 29, 2024. After registering, investors may access a live audio webcast of the call via HUTCHMED’s website at www.hutch-med.com/event/.

Participants who wish to join the call by telephone and ask a question must register. Upon registration, each participant will be provided with dial-in numbers and a unique PIN.

FINANCIAL STATEMENTS

HUTCHMED will today file with the U.S. Securities and Exchange Commission its Annual Report on Form 20-F.

About HUTCHMED

HUTCHMED (Nasdaq/AIM: ​HCM; HKEX: ​13) is an innovative, commercial-stage, biopharmaceutical company. It is committed to the discovery, global development and commercialization of targeted therapies and immunotherapies for the treatment of cancer and immunological diseases. It has approximately 5,000 personnel across all its companies, at the center of which is a team of about 1,800 in oncology/immunology. Since inception, HUTCHMED has focused on bringing cancer drug candidates from in-house discovery to patients around the world, with its first three oncology medicines now approved marketed in China, the first of which is also marketed in the U.S. For more information, please visit: www.hutch-med.com or follow us on LinkedIn.

Contacts

Investor Enquiries	+852 2121 8200 / +1 973 306 4490 / ir@hutch-med.com
Media Enquiries
Ben Atwell / Alex Shaw, FTI Consulting	+44 20 3727 1030 / +44 7771 913 902 (Mobile) / +44 7779 545 055 (Mobile) / HUTCHMED@fticonsulting.com
Zhou Yi, Brunswick	+852 9783 6894 (Mobile) / HUTCHMED@brunswickgroup.com
Nominated Advisor
Atholl Tweedie / Freddy Crossley / Daphne Zhang, Panmure Gordon	+44 (20) 7886 2500

References

Unless the context requires otherwise, references in this announcement to the “Group,” the “Company,” “HUTCHMED,” “HUTCHMED Group,” “we,” “us,” and “our,” mean HUTCHMED (China) Limited and its subsidiaries unless otherwise stated or indicated by context.

Past Performance and Forward-Looking Statements

The performance and results of operations of the Group contained within this announcement are historical in nature, and past performance is no guarantee of future results of the Group. 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 can be identified by words like “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “pipeline,” “could,” “potential,” “first-in-class,” “best-in-class,” “designed to,” “objective,” “guidance,” “pursue,” or similar terms, or by express or implied discussions regarding potential drug candidates, potential indications for drug candidates or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on these statements. Such forward-looking statements are based on the current beliefs and expectations of management regarding future events, and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. There can be no guarantee that any of our drug candidates will be approved for sale in any market, that any approvals which have been obtained will continue to remain valid and effective in the future, or that the sales of products marketed or otherwise commercialized by HUTCHMED and/or its collaboration partners (collectively, “HUTCHMED’s Products”) will achieve any particular revenue or net income levels. In particular, management’s expectations could be affected by, among other things: unexpected regulatory actions or delays or government regulation generally, including, among others, the risk that HUTCHMED’s ADSs could be barred from trading in the United States as a result of the Holding Foreign Companies Accountable Act and the rules promulgated thereunder; the uncertainties inherent in research and development, including the inability to meet our key study assumptions regarding enrollment rates, timing and availability of subjects meeting a study’s inclusion and exclusion criteria and funding requirements, changes to clinical protocols, unexpected adverse events or safety, quality or manufacturing issues; the inability of a drug candidate to meet the primary or secondary endpoint of a study; the inability of a drug candidate to obtain regulatory approval in different jurisdictions or the utilization, market acceptance and commercial success of HUTCHMED’s Products after obtaining regulatory approval; discovery, development and/or commercialization of competing products and drug candidates that may be superior to, or more cost effective than, HUTCHMED’s Products and drug candidates; the impact of studies (whether conducted by HUTCHMED or others and whether mandated or voluntary) or recommendations and guidelines from governmental authorities and other third parties on the commercial success of HUTCHMED’s Products and drug candidates in development; the ability of HUTCHMED to manufacture and manage supply chains for multiple products and drug candidates; the availability and extent of reimbursement of HUTCHMED’s Products from third-party payers, including private payer healthcare and insurance programs and government insurance programs; the costs of developing, producing and selling HUTCHMED’s Products; the ability of HUTCHMED to meet any of its financial projections or guidance and changes to the assumptions underlying those projections or guidance; global trends toward health care cost containment, including ongoing pricing pressures; uncertainties regarding actual or potential legal proceedings, including, among others, actual or potential product liability litigation, litigation and investigations regarding sales and marketing practices, intellectual property disputes, and government investigations generally; and general economic and industry conditions, including uncertainties regarding the effects of the persistently weak economic and financial environment in many countries, uncertainties regarding future global exchange rates and uncertainties regarding the impact of pandemics and disease outbreaks. For further discussion of these and other risks, see HUTCHMED’s filings with the U.S. Securities and Exchange Commission, on AIM and on HKEX⁵⁰. HUTCHMED is providing the information in this announcement as of this date and does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

In addition, this announcement contains statistical data and estimates that HUTCHMED obtained from industry publications and reports generated by third-party market research firms. Although HUTCHMED believes that the publications, reports and surveys are reliable, HUTCHMED has not independently verified the data and cannot guarantee the accuracy or completeness of such data. You are cautioned not to give undue weight to this data. Such data involves risks and uncertainties and are subject to change based on various factors, including those discussed above.

Inside Information

This announcement contains inside information for the purposes of Article 7 of Regulation (E.U.) No 596/2014 (as it forms part of retained E.U. law as defined in the European Union (Withdrawal) Act 2018).

Medical Information

This announcement contains information about products that may not be available in all countries, or may be available under different trademarks, for different indications, in different dosages, or in different strengths. Nothing contained herein should be considered a solicitation, promotion or advertisement for any prescription drugs including the ones under development.

This announcement in its entirety is available at:

http://ml.globenewswire.com/Resource/Download/2764a8e2-c30d-4c40-ae43-56309cc71d54 

REFERENCES AND ABBRIVATIONS
1.	Takeda = Takeda Pharmaceuticals International AG, a subsidiary of Takeda Pharmaceutical Company Limited.
2.	R&D = Research and development.
3.	NDA = New Drug Application.
4.	NSCLC = Non-small cell lung cancer.
5.	FDA = Food and Drug Administration.
6.	PDUFA = U.S. Prescription Drug User Fee Act.
7.	CRC = Colorectal cancer.
8.	NCCN = National Comprehensive Cancer Network.
9.	In-market sales = total sales to third parties provided by Eli Lilly (ELUNATE®), Takeda (FRUZAQLA™), AstraZeneca (ORPATHYS®) and HUTCHMED (ELUNATE®, SULANDA®, ORPATHYS® and TAZVERIK®).
10.	MAA = Marketing Authorization Application.
11.	EMA = European Medicines Agency.
12.	PMDA = Pharmaceuticals and Medical Devices Agency.
13.	EMC = Endometrial cancer.
14.	RCC = Renal cell carcinoma.
15.	NMPA = National Medical Products Administration.
16.	Syk = Spleen tyrosine kinase.
17.	ITP = Immune thrombocytopenia purpura.
18.	AstraZeneca = AstraZeneca AB, a subsidiary of AstraZeneca plc.
19.	CER = Constant exchange rate. We also report changes in performance at CER which is a non-GAAP measure. Please refer to “Use of Non-GAAP Financial Measures and Reconciliation” below for further information relevant to the interpretation of these financial measures and reconciliations of these financial measures to the most comparable GAAP measures.
20.	Source: IQVIA. Report on file.
21.	TPO = Thrombopoietin; TPO-RAs = Thrombopoietin receptor agonists.
22.	MET = Mesenchymal epithelial transition factor.
23.	EGFR = Epidermal growth factor receptor.
24.	TKI = Tyrosine kinase inhibitor.
25.	NRDL = National Reimbursement Drug List.
26.	Lilly = Eli Lilly and Company.
27.	VEGFR = Vascular endothelial growth factor receptor.
28.	ASCO = American Society of Clinical Oncology.
29.	PFS = Progression free survival.
30.	ORR = Objective response rate.
31.	DCR = Disease control rate.
32.	OS = Overall survival.
33.	PD-1 = Programmed cell death protein-1.
34.	FGFR = Fibroblast growth factor receptor.
35.	CSF-1R = Colony-stimulating factor 1 receptor.
36.	AACR = American Association for Cancer Research.
37.	AIHA = Autoimmune hemolytic anemia.
38.	Ipsen = Ipsen SA, parent of Epizyme Inc.
39.	DoR = Duration of response.
40.	IHCC = Intrahepatic cholangiocarcinoma.
41.	PI3Kδ = Phosphoinositide 3-kinase delta.
42.	Inmagene = Inmagene Biopharmaceuticals.
43.	BTK = Bruton tyrosine kinase.
44.	SHPL = Shanghai Hutchison Pharmaceuticals Limited.
45.	HHOHK = Hutchison Hain Organic (Hong Kong) Limited.
46.	HSN = HUTCHMED Science Nutrition Limited.
47.	GAAP = Generally Accepted Accounting Principles.
48.	SG&A= Selling, general, and administrative expenses.
49.	ADS = American depositary share.
50.	HKEX = The Main Board of The Stock Exchange of Hong Kong Limited.

FAQ

What was HUTCHMED's revenue growth in 2023?

HUTCHMED reported 97% revenue growth to $838 million in 2023.

What is the ticker symbol for HUTCHMED?

The ticker symbol for HUTCHMED is HCM.

Which medicine received the first U.S. FDA approval?

FRUZAQLA™ (fruquintinib) received the first U.S. FDA approval.

What is the status of Sovleplenib for ITP in China?

Sovleplenib for ITP has been accepted for NDA review in China with Priority Review status.

What was HUTCHMED's net income in 2023?

HUTCHMED reported a net income of $100.8 million in 2023.

What is the revenue guidance for 2024 for HUTCHMED?

HUTCHMED expects 2024 Oncology/Immunology consolidated revenue of $300 million to $400 million.

What milestone did HUTCHMED achieve with Takeda partnership?

The Takeda partnership brought $435 million in upfront and milestone payments.

Which key medicine had a successful U.S. launch after FDA approval?

FRUZAQLA™ (fruquintinib) had a successful U.S. launch after FDA approval.