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A Chinese Oncology Company With Great Potential


  • Hutchison China MediTech is a major Chinese company with an established market in that country.
  • Its R&D subsidiary is developing a number of oncology drugs which have shown great potential.
  • The relative ignorance in the US about the company’s potential makes it a great investment right now.

By Dr. Udaya K Maiya, Oncologist, MBBS, MD, DNB, DCCF-Paris

The thesis is quite simple: Hutchison China MediTech Ltd - ADR (NASDAQ:HCM) is a Hong Kong based company with a market cap just shy of $3bn that is partnering with Eli Lilly (LLY) to develop a drug candidate targeting third line metastatic colorectal cancer (mCRC), which, if approved, will bring in peak sales of roughly $250mn per year.

That doesn't sound like much, but the market is missing sight of the huge pipeline, and ignoring that this drug candidate, fruquintinib, not only did extremely well in its pivotal Phase 3 trial but it actually did better than current US standard of care Stivarga (regorafenib) in both efficacy and safety, although not in a head-to-head trial.

The market is also forgetting fruquintinib's ability to combine in combo therapies, which opens it up for use in a variety of different cancers, many of them with potentially hundreds of millions in market revenues in China alone. These calculations do not even take into account the vast Western markets which could be targeted if the drug proves itself in comparator trials, especially since the company has tie-ups with Western pharma giants like Eli Lilly, AstraZeneca (AZN), and Nestle (OTCPK:NSRGF). They also do not account for the rest of the pipeline.

Chi-Med Pipeline

Fruquintinib just reported successful results from a pivotal trial in mCRC. It is also in Phase 3 trial for gastric cancer and non-small cell lung cancer (NSCLC) in China, both quite large markets there.

Source - Company website

Besides fruquintinib, the company has a number of other assets, as we see in the pipeline above. All told, there are eight Phase 3 trials involving four molecules, savolitinib, fruquintinib, sulfatinib, and epitinib, in papillary renal cell carcinoma, NSCLC (3), gastric cancer, mCRC, and pancreatic and non-pancreatic NET OR neuroendocrine tumors.

This article was written by

Avisol Capital Partners profile picture
Cautious, low key, disciplined investing in biopharma stocks
Avisol Capital Partners runs the Total Pharma Tracker Seeking Alpha Marketplace service. This is managed by Dr Asok Dutta, BVScAH and Dr Udaya Kumar Maiya, MD Oncologist. The service offers end-to-end research on both investing and trading ideas everyday, and includes a 150-stock watchlist and two 40-stock model portfolios that are continuously tracked.

Dr Dutta is a retired veterinary surgeon. He has over 40 years experience in the industry. Dr Maiya is a well-known oncologist who has 30 years in the medical field, including as Medical Director of various healthcare institutions. Both doctors are also avid private investors. They are assisted by a number of finance professionals in developing this service.

If you want to check out our service, go here - https://seekingalpha.com/author/avisol-capital-partners/research

Disclaimer - we are not investment advisors.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in HCM over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

We hold LLY and AZN.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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