Hutchmed files for $600M+ IPO in Hong Kong as lead oncology drug surufatinib awaits FDA's good graces
In oncology, a flush of Chinese-developed drugs has the biopharma industry rethinking the poles of power in R&D as the blossoming nation continues to make a name for itself and pick up bundles of cash in the process. Now, as its lead drug faces a pivotal FDA review, the company formerly known as Chi-Med is planting its flag on home soil with a massive public offering.
Hutchmed — recently renamed from Chi-Med, or Hutchison China MediTech — will look to raise $603 million as part of a Hong Kong IPO that serves as a homecoming of sorts for the Chinese-based oncology player, which has listed on Nasdaq since 2016.
The company plans to offer up to 104 million shares at around HK$45 per share — or roughly $5.80. Hutchmed will trade under the ticker “13” on the exchange, complementing the company’s Nasdaq ticker $HCM.
Hutchmed already has a five-firm group of cornerstone investors on board in The Carlyle Group, the Canada Pension Plan Investment Board, General Atlantic, HBM Healthcare Investments and CICC Grandeur Fund, which combined have pledged to buy up $325 million worth of shares or about 54% of the offering.
The Chinese firm is currently awaiting FDA review for its oral oncology med surufatinib for non-pancreatic neuroendrocrine tumors — which Hutchmed filed for rolling submission in May. The drug previously scored a fast track designation with the agency in April.
According to a prospectus filed with the exchange, Hutchmed intends to use 50% of the proceeds to advance late-stage trials with that drug, marketed as Sulanda in China, as well as Eli Lilly-partnered colorectal cancer drug fruquintinib, marketed as Elunate; AstraZeneca-partnered investigational MET inhibitor savolitinib; and candidates HMPL-689 and HMPL-523, which are PI3K and SYK inhibitors, respectively, for blood cancers.
The rest of the proceeds will be divvied up between BD, advancing the early pipeline, corporate strategy and internal hires, Hutchmed said.
Hutchmed was the first Chinese company to bring an in-house oncology drug to market in that country with fruquintinib, which was approved as a third-line therapy for metastatic CRC. Surafatinib hit the Chinese market in January 2021 for non-pancreatic NET and savolitinib is up for Chinese review with a potential launch expected within weeks.
With its Chinese drug discovery engine in full swing — seven other candidates are sweeping through preclinical and early human studies — Hutchmed has looked to break into the US market, where only BeiGene’s Brukinsa has earned an approval as a Chinese-developed oncology drug. Surufatinib is the furthest along in that effort, but both fruquintinib and savolitinib have started registrational studies stateside.
With a potential approval expected in the coming months, Hutchmed has already started building out a commercial team for surufatinib. The company is already at 1,300 employees spread across its global enterprise.
The rise of oncology drug development has injected a new challenger into the global marketplace and begun to shift the poles of power in R&D in that space. Companies like Samantha Du’s Zai Lab and Junshi Biosciences have earned a reputation as oncology specialists in China and have earned massive public raises to show for it.
In September, Zai Lab closed a $761 million Hong Kong IPO to drive its in-licensing business model and then followed that up with a $750 million offering in US depository shares in April. The company specializes in taking in-licensed oncology drugs to market, and recently signed a deal with Mirati to market investigational KRAS inhibitor adagrasib in the Greater China area.
Junshi, meanwhile, closed its own $450 million Hong Kong IPO back in January 2019 as part of its push to bring its own in-house PD-1 drug toripalimab to market alongside international partner Coherus. The partners read out Phase II data at this year’s ASCO showing a significant improvement in PFS for a toripalimab-chemo combo over chemo alone in patients with nasopharyngeal cancer, a disease that affects Southeast Asians at a proportionally higher rate.
That study, dubbed JUPITER-02, would be the first solely Chinese-run pivotal trial to win an FDA approval, if it crosses the finish line.