Trinity Delta Lighthouse: HUTCHMED
Trinity Delta view: The global (ex-China) licensing deal with Takeda for fruquintinib development and commercial rights is significant on several fronts. It is the first major partnership agreement under the new strategy, providing external validation for fruquintinib, a substantial near-term opportunity ex-China. With a potential FDA approval decision in H124, fruquintinib remains on track to become the first HUTCHMED asset to be approved ex-China, thus executing a near-term deal was also key to ensure commercial success and the timing should provide partner Takeda with ample time for commercial preparations. The deal could also facilitate and potentially accelerate a broader development and commercial opportunity for fruquintinib, with HUTCHMED sharing the downstream economics, while also freeing up internal bandwidth. This, coupled with that $400m upfront payment boosting end-June 2022 cash and equivalents of >$800m, will enable more internal resources to be directed towards advancing other late-stage assets. We currently value HUTCHMED at $5.51bn ($31.89 per ADS), £4.6bn and HK$43.1bn (531p or HK$49.83 per share); we intend to revisit our forecasts once the Takeda deal closes following antitrust review and FY22 results report, likely in early-March.
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