ASCO data set up fruquintinib for China launch

Hutchison China MediTech 13 June 2017 Update
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Hutchison China MediTech

ASCO data set up fruquintinib for China launch

ASCO update

Pharma & biotech

13 June 2017

Price

3,117.50p

Market cap

£1,893m

US$1.25/£

Net cash ($m) at 31 December 2016

56.9

Shares in issue

60.7m

Free float

39.6%

Code

HCM

Primary exchange

AIM

Secondary exchange

NASDAQ

Share price performance

%

1m

3m

12m

Abs

6.0

29.2

58.9

Rel (local)

5.2

25.9

30.4

52-week high/low

3252.5p

1787.5p

Business description

Hutchison China MediTech (Chi-Med; HCM) is an innovative China-based biopharmaceutical company targeting the global market for novel, highly selective oral oncology, and immunology drugs. Its established China Healthcare business is growing ahead of the market.

Next events

Savolitinib PRCC OS data

H217

Savolitinib NSLC pivotal decision

H217

Fruquintinib China NDA CRC decision

2018

Analysts

Dr Susie Jana

+44 (0)20 3077 5700

Dr Daniel Wilkinson

+44 (0)20 3077 5734

Hutchison China MediTech is a research client of Edison Investment Research Limited

At ASCO, Hutchison China MediTech (HCM) presented detailed Phase III trial results for one of its leading assets, fruquintinib (third-line colorectal cancer). Full data from the China-based FRESCO study demonstrated statistically meaningful improvements in both overall and progression-free survival while reinforcing the safety profile of the drug (no liver toxicity). This is the first full Phase III data readout from HCM and further validates its strategy of creating next-generation selective tyrosine kinase inhibitors (TKIs). HCM’s (together with partner Lilly) NDA to the China FDA has been accepted (Lilly will pay HCM a $4.5m milestone payment) with a launch potentially now in 2018. We maintain our valuation of $2.7bn.

Year end

Revenue ($m)

Net profit*
($m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/15

178.2

8.0

14.6

0.0

267

N/A

12/16

216.1

11.7

19.6

0.0

199

N/A

12/17e

234.2

(21.1)

(34.9)

0.0

N/A

N/A

12/18e

262.5

(9.7)

(16.0)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Fruquintinib: FRESCO data shine bright

At ASCO, HCM presented the full data package (Abstract 3508) from FRESCO, its Phase III, 416-patient trial evaluating fruquintinib (a selective inhibitor of VEGFR 1, 2 and 3) in patients with metastatic colorectal cancer (positive top-line data announced in March). It met all primary and secondary endpoints; notably, median overall survival was 9.30 months in the fruquintinib group vs 6.57 months in the placebo group, a clinically significant achievement in this hard-to-treat patient population. Data demonstrate that it has a narrow serious side effect profile, notably no reported liver toxicity, a major advantage over available TKIs such as Bayer’s Stivarga, which has a black box warning for liver toxicity. The most common serious AE reported on fruquintinib included clinically manageable hypertension.

Other assets highlighted at ASCO

Presentations from three collaborator-led trials with savolitinib (c-Met inhibitor) continued to reinforce its applicability in c-Met-driven cancers. In an AZN-led trial (Abstract 9020) tracking the response of osimertinib (Tagrisso) resistant NSCLC patients, 30% of resistant patients were c-Met-driven and 3/3 patients had a partial response when treated with savolitinib + EGFR TKI. Additional presentations included the initiation of an NIH/NCI-funded Phase II study (Abstract TPS4599) and an update on the VIKTORY trial (Abstract 4020). Also, promising preliminary results of a Phase II trial testing sulfatinib in selected thyroid cancers demonstrated that 4/17 efficacy-evaluable patients had confirmed partial responses.

Valuation: $2.7bn (£36.1/share, $22.6/ADS)

Our SOTP valuation remains unchanged at $2.7bn (£36.1/share). IP is valued at $1,948.6m and placing the commercial platform’s (CP) 2016e share of net profit on a 23.6x rating gives $788.8m (1,040p/share). Adding December 2016 net cash and netting out unallocated costs results in a value of $2.7bn. Please see our recent note Future stars are aligning for a detailed description of valuation and financials.

FRESCO positive efficacy, favourable safety

HCM and partner Lilly are developing fruquintinib as a potential best-in-class drug for it to compete in the global setting. In our view, FRESCO underpins the hypothesis that fruquintinib’s safety and efficacy profile could enable it to be positioned as best in class in China. Its profile internationally will be determined by global Phase III trials; however, data from FRESCO bode well.

Full data were presented at ASCO from HCM’s first pivotal Phase III trial (FRESCO), a China-based study, which evaluated fruquintinib, a VEGFR 1/2/3 inhibitor in third-line colorectal cancer patients. Colorectal cancer is believed to be one of the five most common cancers in both Chinese men and women, with an estimated 191.0 thousand deaths in China in 2015 (incidence of 376.3 thousand in 2015). Most Chinese CRC patients are treated with chemotherapy and few targeted therapies are approved, with limited salvage treatments in third line and above. If approved, fruquintinib could capture a significant portion of the market in these patients.

The FRESCO study randomised 416 patients (519 screened) 2:1 into fruquintinib (+ best standard of care [BSC] [n=278]) and placebo (+ BSC [N=138]) arms with an 80% powering to detect a hazard ratio of 0.7 (corresponding to a median OS improvement from 6.3 to nine months). Inclusion criteria included a range of factors, but notably patients had to have been diagnosed with metastatic stage IV colorectal cancer, have failed on two prior treatments (with fluoropyrimidine, oxaliplatin and irinotecan) and were allowed to have prior anti-VEGF or anti-EGFR targeted therapy. Eastern Cooperative Oncology Group (ECOG) status, a measure of patient health, demonstrated that 72.3% (n=201) of fruquintinib patients had an ECOG status of 1 and 27.7% had a status of ECOG 0 (placebo; ECOG 1:73.2% [n=101], ECOG 0:26.8% [n=37]). ECOG 0 patients are asymptomatic and ECOG 1 patients are symptomatic and restricted in strenuous physical activity, but can perform the majority of normal day-to-day functions (ECOG scale goes up to 5, which is death).

Positive efficacy in difficult patient population

Both overall survival and progression-free survival (PFS) (Exhibits 1 and 2) demonstrated statistical significance over placebo, a notable clinical achievement when considering the difficult patient population in which fruquintinib was tested. Key points include:

Positive hazard ratio of 0.65 (95% CI: 0.51-0.83).

Median overall survival (OS) of 9.30 months in the fruquintinib group (95% CI 8.18-10.45) vs 6.57 months in the placebo group (95% CI 5.88-8.11) (p-value < 0.001).

Median progression-free survival (PFS) was 3.71 months (95% CI 3.65-4.63) vs 1.84 (95% CI 1.81-1.84) for placebo with a hazard ratio of 0.26 (95% CI 0.21-0.34) (p-value <0.001).

The majority of responses in the treatment arm were stabilisation of disease at 57.6% (n=160). Comparatively, 12.3% of placebo patients (n=17) had stabilised disease, with the majority (71%, n=98) having progressive disease.

One and 12 patients in the fruquintinib arm had a complete response and partial response respectively, while no patients experienced either in the placebo arm.

Disease control rate (CR+ PR + SD, > 8 weeks after randomisation, p<0.001) of 62.2% (n=173) vs 12.3% (n=17) was demonstrated.

These data compare favourably to both pivotal data from an international trial (CORRECT) with Bayer’s Stivarga (regorafenib) (a multi-kinase inhibitor targeting VEGFR 1,2 and 3, which is approved and sold in multiple countries) and to a subgroup analysis focused on Chinese patients from an Asian study (CONCUR). Both trials were in patients with previously treated metastatic colorectal cancer. Median overall survival on Stivarga in the CORRECT study was 6.4 months (95% CI, 5.8-7.3) versus 5.0 months (95% CI, 4.4-5.5) on placebo with a 0.77 hazard ratio (95% CI, 0.64-0.94). PFS was 2.0 months (95% CI, 1.9-2.3) vs 1.7 months on placebo (95% CI, 1.7-1.8).

Subgroup analysis of the CONCUR trial focused on Chinese patients (n=172, 112 on Stivarga, 60 on placebo). ECOG status of 1 was demonstrated in 72% of patients (n=81) and 0 in 28% of patients (31). OS in this Chinese patient subgroup was 8.4 months for Stivarga (vs 6.2 months on placebo, no CI given) with a hazard ratio of 0.56 (95% CI, 0.39-0.80). Median PFS was two months vs 1.7 on placebo (no CI given) with a hazard ratio of 0.32 (95% CI, 0.22-0.47).

Exhibit 1: FRESCO overall survival

Source: Hutchison China MediTech

Favourable efficacy and safety in comparison to competition

Safety will be a key differentiator for fruquintinib as it looks to position itself in the Chinese market as a best-in-class product. Grade 3 and above adverse events (AEs) occurred in 61.1% (n=170) of patients receiving fruquintinib versus 19.7% (n=27) of patients in the placebo arm. Dose interruptions, a key indicator of tolerability, were 35.3% (n=98) in the fruquintinib arm and 10.2% (n=14) in the placebo arm, while treatment discontinuation occurred 15.1% (n=42) and 5.8% (n=8) in each arm respectively. The most common grade 3-5 adverse events were hypertension (21.2%, n=59), palmar-plantar erythrodysaesthesia/hand-foot syndrome (HFSR/PPE) (10.8%, n=30) and proteinuria (3.2%, n=9). All other grade 3-5 AEs occurred at a frequency below 3%, further reinforcing the selective nature of fruquintinib.

Exhibit 2: Progression-free survival

Source: Hutchison China MediTech

Due to varying patient demographics and standards of care, trial comparisons, while useful, can be complicated. Dose interruptions can be a key indicator for tolerability and can negatively affect the anti-angiogenic mode of action of VEGFR inhibitors.

In the CORRECT trial testing Stivarga (regorafenib), it was reported that 61% of patients receiving Stivarga required a dose interruption. Similar results occurred in the CONCUR trial, which demonstrated that 68.8% of patients had a dose interruption. In the CORRECT and CONCUR trials, treatment discontinuation occurred in 8.2% and 14% of the patients respectively.

In the CORRECT trial the most common grade >3 AEs were HFSR/PPE (17% vs 0% placebo), fatigue (15% vs 9% placebo), pain (9% vs 7% placebo), infection (9% vs 6% placebo), hypertension (8% vs <1% placebo), diarrhoea (8% vs 2% placebo), rash (6% vs >1% placebo) and mucositis (4% vs 0% placebo). All other grade > 3 AEs occurred below 3%. Stivarga also contains a black box warning for fatal hepatotoxicity (liver damage), which occurred in 1.6% of the metastatic CRC patient population (vs 0.4% on placebo).

In the Chinese patient subgroup analysis of the CONCUR trial, grade 3,4 and 5 AEs occurred in 52% (n=58), 8% (n=9) and 10% (n=11) of patients on Stivarga and 35% (n=21), 2% (n=1) and 10% (n=6) on placebo, respectively.

Fruquintinib China sales possible in 2018

We believe that fruquintinib demonstrates comparable if not better efficacy than that of Stivarga, caveated by the fact that direct comparisons should be made cautiously. While severe side effects are apparent, mainly in the form of hypertension, these are manageable (eg hypertension controlling medication like beta blockers/ACE inhibitors and topical lotions for HFSR/PPE) and are a result of VEGFR inhibition. The lack of reported hepatotoxicity and a narrower side effect profile than Stivarga indicates that the majority of side effects are target based. We believe that this more controlled safety profile may be a key driver of sales. HCM has recently announced that the China FDA has accepted its new drug application (NDA) for fruquintinib in advanced CRC patients. This has triggered a milestone payment of RMB30.8m ($4.5m) to HCM from its partner Lilly. If approved, we anticipate a potential launch in China in 2018, where HCM’s partner Lilly will be responsible for sales and marketing.

US bridging studies in Caucasians to start in 2017

In the US, a Phase I bridging study in Caucasian patients will initiate in 2017. This study should determine the dose required to take fruquintinib into US Phase II/II studies across its differing indications in preparation for a US NDA submission. Contingent on strong proof-of concept (POC) and Phase III results in fruquintinib clinical trials in China, Eli Lilly may exercise its option (once it receives the Phase III NSCLC data) to co-develop fruquintinib globally under the terms of the 2013 licence agreement. We expect fruquintinib to enter US Phase II/III trials regardless of whether Lilly exercises its option. We expect additional indications post the bridging study to be determined by a range of factors including combination potential and achievable market.

Savolitinib – patient selection drives efficacy

Presentations at ASCO from three collaborator trials utilising savolitinib (c-Met inhibitor) further reinforce its applicability in treating c-Met-driven patients. In an AstraZeneca (AZN) led trial (Abstract 9020), which tracked the response of osimertinib (Tagrisso) resistant NSCLC patients, 30% (7/23) of resistant patients were c-Met-driven (the largest driver of resistance and a significant new market opportunity); 3/3 of patients treated had a partial response when treated with savolitinib + EGFR TKI. Additional presentations included the initiation of an NIH/NCI-funded Phase II study (Abstract TPS4599), which is looking to compare sunitinib with three MET-directed therapies (including savolitinib) in PRCC. An update on the VIKTORY trial (Abstract 4020), testing savolitinib in preselected MET amp/overexpressed patients, was presented.

In an AstraZeneca-led trial (Massachusetts General Hospital Cancer Center), 23 patients who acquired resistance to osimertinib were tested to determine the mechanisms at play. Patients were tested with tumour biopsy and/or plasma circulating tumour biopsies. Tumour biopsies were analysed by next-generation sequencing (NGS) and fluorescence in situ hybridization (FISH) for MET and EGFR amplification. Plasma ctDNA was analysed by NGS. Tissue biopsies demonstrated that six patients had MET amplification, with a further one identified from plasma ctDNA. This was the most prevalent resistant mechanism to osimertinib occurring in 30% (7/23) of patients. Three of the MET-amplified patients were treated with savolitinib and an EGFR TKI; all three achieved a RECIST partial response to the combination.

PAPMET, the Phase II NIH/NCI-funded trial, has enrolled 36 patients to date (target = 180). The study has four arms that aim to compare sunitinib (Pfizer, targets multiple receptor tyrosine kinases including PDGFRs and VEGFRs), cabozantinib (Exelixis, c-Met and VEGR2 inhibitor), crizotinib (Pfizer, ALK, ROS1 and c-Met inhibitor) and savolitinib in treating patients with metastatic papillary renal cell carcinoma (PRCC). Patients must have historically confirmed and measurable PRCC, received 0-1 lines of prior therapy, but no prior therapy with sunitinib. In addition to measuring the primary endpoint of PFS, secondary endpoints include overall survival, response rate, adverse events and an exploratory evaluation of MET mutational status and expression. We expect this to further highlight savolitinib’s suitability in c-MET-driven PRCC. While no timelines have been given, we anticipate that enrolment will complete in 2018, with initial data in late 2018/early 2019.

Updated results were provided on the multi-arm VIKTORY trial. The trial is a biomarker-based umbrella trial in gastric cancer with nine arms. Two of the arms aim to treat MET overexpressed or amplified patients with savolitinib, either as a monotherapy or in combination with docetaxel. As of the data presentation, four patients have been enrolled to be treated with the monotherapy and 19 in combination.

Phase II overall survival data on savolitinib in c-Met-driven PRCC later this year could support a US NDA application under breakthrough therapy designation, with potential to be HCM’s first internationally launched asset (we expect launch in the US in 2018 by partner AstraZeneca, which we assume will be under breakthrough therapy designation). Additionally, positive data from the ongoing multi-arm TATTON trial in second-line, EGFR-mutant lung cancer with savolitinib in combination with osimertinib (Tagrisso) could support a US NDA under breakthrough therapy designation for lung cancer. We anticipate the initiation of Phase III trials in PRCC and potentially NSLC (if a pivotal decision is made) in H217

Sulfatinib

A Phase II multi-centre trial of sulfatinib (VEGFR 1, 2 & 3, FGFR1, CSF-1R inhibitor) in advanced medullary thyroid cancer (MTC) and radioiodine-refractory differentiated thyroid cancer (DTC) is ongoing. As of 31 March 2017, a total of 20 patients have been enrolled and treated (total enrolment expected 30-50 patients). 16 of these patients are evaluable for efficacy evaluation, four (25%) of whom had confirmed partial response (PR) and the other 12 had stable disease (SD) including two unconfirmed PR. Objective response rates (include complete response and PR) in the MTC and DTC groups were 16.7% (n=1/6) and 33.3% (n=3/10) respectively. All 20 patients experienced at least one adverse event (AE) with 11 (55%) patients experiencing a grade 3 or above treatment-related AE; the most common grade >3 AEs were hypertension (20%) and proteinuria (20%) irrespective of causality. Three patients experienced a serious treatment-related AE, but there were no deaths due to treatment. Nine patients (45%) had a dose reduction and 15 patients (75%) had a dose interruption. Based on these promising initial data, we expect the trial to continue as planned with further data readouts in 2018.

Sulfatinib is currently in six ongoing trials: two Phase III registration trials (pancreatic NET and extra[non]-pancreatic NET), three Phase II trials (biliary tract carcinoma and thyroid cancer) and one Phase I crossover study in the US. A Phase II US study in NET is expected to initiate by year-end 2017. PFS data (top-line) from the China Phase III registration trials (SANET-p and SANET-ep) are anticipated in 2018. Positive data could lead to a China FDA filing in 2018/19. Sulfatinib is an unpartnered asset and HCM could reap the full economic benefit by launching this asset through its extensive manufacturing and distribution prescription drug business in China.

Exhibit 3: Financial summary

2014

2015

2016

2017e

2018e

2019e

December

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

PROFIT & LOSS

Revenue

 

87,329

178,203

216,080

234,199

262,526

304,619

Cost of Sales

(58,849)

(110,777)

(156,328)

(158,810)

(161,601)

(171,066)

Gross Profit

28,480

67,426

59,752

75,389

100,925

133,554

Research and development

(29,914)

(47,368)

(66,871)

(85,000)

(89,500)

(100,000)

Other overheads

(16,825)

(29,829)

(39,578)

(42,699)

(46,858)

(49,946)

EBITDA

 

(16,994)

(7,756)

(44,264)

(48,575)

(30,933)

(11,062)

Operating Profit (before amort. and except.)

 

(18,259)

(9,771)

(46,697)

(52,310)

(35,433)

(16,392)

Intangible Amortisation

0

0

0

0

0

0

Operating Profit

(18,259)

(9,771)

(46,697)

(52,310)

(35,433)

(16,392)

Net Interest

(957)

(953)

(1,129)

(1,500)

(1,500)

(659)

Exceptionals

0

0

0

0

0

0

Profit Before Tax (norm)

 

(19,957)

(10,540)

(47,356)

(53,810)

(36,933)

(17,051)

Profit Before Tax (reported)

 

(19,957)

(10,540)

(47,356)

(53,810)

(36,933)

(17,051)

Tax

(1,343)

(1,605)

(4,331)

(3,229)

(3,000)

(3,410)

Equity investments, after tax

15,180

22,572

66,244

41,900

35,150

26,100

Profit After Tax (norm)

(6,120)

10,427

14,557

(15,138)

(4,783)

5,638

Profit After Tax (reported)

(6,120)

10,427

14,557

(15,138)

(4,783)

5,638

Minority

(3,220)

(2,434)

(2,859)

(6,000)

(4,900)

(3,700)

Discontinued operations

2,034

0

0

0

0

0

Net profit (norm)

(9,340)

7,993

11,698

(21,138)

(9,683)

1,938

Net profit (reported)

(7,306)

7,993

11,698

(21,138)

(9,683)

1,938

Average Number of Shares Outstanding (m)

52.6

54.7

59.7

60.6

60.6

60.6

EPS - normalised (c)

 

(17.8)

14.6

19.6

(34.9)

(16.0)

3.2

EPS - normalised and fully diluted (c)

 

(17.8)

14.6

19.5

(34.9)

(16.0)

3.2

EPS - (reported) (c)

 

(13.9)

14.6

19.6

(34.9)

(16.0)

3.2

Average number of ADS outstanding (m)

105.1

109.3

119.4

121.3

121.3

121.3

Earnings per ADS - normalised ($)

 

(0.09)

0.07

0.10

(0.17)

(0.08)

0.02

Earnings per ADS ($)

 

(0.07)

0.07

0.10

(0.17)

(0.08)

0.02

BALANCE SHEET

Fixed Assets

 

120,992

140,087

175,057

173,222

183,872

184,642

Intangible Assets

4,096

3,903

3,606

3,419

3,194

2,928

Tangible Assets

7,482

8,507

9,954

16,406

22,131

27,067

Investments

109,414

127,677

161,497

153,397

158,547

154,647

Current Assets

 

89,842

89,675

167,380

149,834

135,700

142,406

Stocks

4,405

9,555

12,822

12,000

14,000

14,060

Debtors

27,924

38,628

49,349

51,838

76,659

93,231

Cash

38,941

31,949

79,431

60,218

33,533

23,607

St investments

12,179

0

24,270

24,270

10,000

10,000

Other

6,393

9,543

1,508

1,508

1,508

1,508

Current Liabilities

 

(75,299)

(81,062)

(95,119)

(91,581)

(95,581)

(99,418)

Creditors

(20,427)

(24,086)

(35,538)

(32,000)

(36,000)

(39,837)

Short term borrowings

(26,282)

(23,077)

(19,957)

(19,957)

(19,957)

(19,957)

Other

(28,590)

(33,899)

(39,624)

(39,624)

(39,624)

(39,624)

Long Term Liabilities

 

(37,584)

(46,415)

(43,258)

(43,258)

(43,258)

(43,258)

Long term borrowings

(26,923)

(26,923)

(26,830)

(26,830)

(26,830)

(26,830)

Other long term liabilities

(10,661)

(19,492)

(16,428)

(16,428)

(16,428)

(16,428)

Net Assets

 

97,951

102,285

204,060

188,217

180,733

184,372

Minority

(17,764)

(18,921)

(19,790)

(25,790)

(30,690)

(34,390)

Shareholder equity

 

80,187

83,364

184,270

162,427

150,043

149,982

CASH FLOW

Operating Cash Flow

 

8,359

(9,385)

(9,569)

(8,508)

(28,254)

2,073

Net Interest

0

0

0

0

0

0

Tax

0

0

0

0

0

0

Capex

(3,729)

(3,324)

(4,327)

(10,000)

(10,000)

(10,000)

Acquisitions/disposals

689

0

0

0

0

0

Dividends

(1,179)

(590)

(564)

(700)

(2,700)

(2,000)

Equity financing and capital movements

5,860

(1,676)

97,076

0

0

0

Other

(12,179)

12,179

(29,270)

0

14,270

0

Net Cash Flow

(2,179)

(2,796)

53,346

(19,208)

(26,684)

(9,927)

Opening net debt/(cash and ST investments)

 

4,645

2,085

18,051

(56,914)

(37,701)

3,254

Increase/(decrease) in ST investments

12,179

(12,179)

24,270

0

(14,270)

0

Other

(7,440)

(991)

(2,651)

(5)

0

0

Closing net debt/(cash and ST investments)

 

2,085

18,051

(56,914)

(37,701)

3,254

13,180

Source: Hutchison China MediTech reports, Edison Investment Research. Note: Equity investments after tax include the net profit contribution from JVs.

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Hutchison China MediTech and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Hutchison China MediTech and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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