On Wednesday, Hutchmed (China) Limited (NASDAQ:HCM) entered into two agreements to divest its 45% equity interest in Shanghai Hutchison Pharmaceuticals Limited (SHPL) for approximately $608 million (RMB 4.478 billion) in cash to GP Health Service Capital Co., Ltd and Shanghai Pharmaceuticals Holding Co., Ltd.
Hutchmed has been exploring opportunities to monetize the underlying value of SHPL, a non-core, non-consolidated joint venture.
These transactions would allow Hutchmed to focus on its core business of discovering, developing, and commercializing novel therapies for cancers and immunological diseases, including advancing its next-generation antibody-targeted therapy conjugate programs.
SHPL primarily manufactures, sells, and distributes its own-brand prescription medicines in China, predominantly for cardiovascular diseases.
SHPL is a 50:50 joint venture established between Hutchmed and Shanghai Pharma in 2001.
In 2023, the consolidated net income attributable to Hutchmed from SHPL was $47.4 million. HUTCHMED does not consolidate revenue from SHPL.
Hutchmed plans to invest the proceeds from these transactions to further develop its internal pipeline and advance its core business strategy.
Hutchmed plans to move the first of these antibody-targeted therapy conjugates into clinical trials in the second half of 2025.
Before the transactions, Hutchmed and Shanghai Pharma each hold a 50% equity interest in SHPL. GP Health Service Capital has agreed to acquire a 35% equity interest for approximately $473 million in cash, and Shanghai Pharma will acquire a 10% equity interest for approximately $135 million in cash.
After the transactions, the investors will hold a 60% equity interest in SHPL. Out of its 35%, GP Health Service Capital retains the right to designate a third-party investment fund to acquire up to a 10% equity interest in SHPL.
Hutchmed will retain a 5% equity interest in SHPL after the transactions.
Hutchmed expects to record a gain on disposal of approximately $477 million before taxation.
On Wednesday, Hutchmed announced that the China National Medical Products Administration accepted and granted priority review of the New Drug Application for the combination of Orpathys (savolitinib) and Tagrisso (osimertinib) for locally advanced or metastatic epidermal growth factor receptor mutation-positive non-small cell lung cancer with MET amplification after disease progression.
The acceptance also triggers a milestone payment from AstraZeneca plc (NASDAQ:AZN).
Price Action: At last check on Wednesday, HCM stock was up 7.98% at $15.56 during the premarket session.
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