HUTCHMED's Strategic Divestment: Unlocking Value and Accelerating Innovation
Wednesday, Jan 1, 2025 5:54 am ET
HONG KONG and SHANGHAI and FLORHAM PARK, N.J., Jan. 01, 2025 (GLOBE NEWSWIRE) -- HUTCHMED (China) Limited (“HUTCHMED”) (Nasdaq/AIM:HCM; HKEX:13) has announced a significant strategic move, divesting its 45% equity interest in Shanghai Hutchison Pharmaceuticals Limited (“SHPL”) for approximately US$608 million (RMB4,478 million) in cash. The transaction involves two agreements: GP Health Service Capital Co., Ltd (“GP Health Service Capital”) will acquire a 35% equity interest in SHPL from HUTCHMED for approximately US$473 million in cash, and Shanghai Pharmaceuticals Holding Co., Ltd (“Shanghai Pharma”) will acquire a 10% equity interest from HUTCHMED for approximately US$135 million in cash. Following the transactions, HUTCHMED will retain a 5% equity interest in SHPL.
The divestment aligns with HUTCHMED's November 2022 strategy to create value, prioritize its portfolio, and bring innovative medicines to patients globally. By monetizing the underlying value of SHPL, a non-core, non-consolidated joint venture, HUTCHMED can focus on its core business of discovering, developing, and commercializing novel therapies for the treatment of cancers and immunological diseases. The company expects to record a gain on disposal of approximately US$477 million before taxation, subject to review and audit.

HUTCHMED plans to invest the proceeds from these transactions to further develop its internal pipeline and drive its core business strategy forward. A key area of investment is the company's next-generation antibody drug conjugate (ADC) platform, which builds on HUTCHMED's extensive knowledge from pursuing oncological pathways and proven expertise in small molecule targeted therapeutics. By combining antibodies with targeted therapeutics instead of cytotoxins, these antibody-targeted therapy conjugates (ATTCs) offer dual mechanisms for addressing a target. Pre-clinical research has shown robust anti-tumor activity with durable response following a single administration, and stronger anti-tumor activity compared to administration with the individual antibody and targeted therapy components, improving tolerability associated with targeted therapy. HUTCHMED plans to move the first of these ATTCs into clinical trials in the second half of 2025.
Dr. Dan Eldar, Chairman and Non-executive Director of HUTCHMED, commented on the transaction: "This transaction to divest most of our holding in SHPL is another example of HUTCHMED delivering on the strategy outlined in 2022, accelerating our path to profitability and focusing on core operations. SHPL is a well-established business, having delivered over US$370 million in dividends to HUTCHMED throughout the years, and we are confident that it continues to have promising future growth prospects."
The divestment proceeds will enable HUTCHMED to accelerate its innovative medicines pipeline, particularly the ATTC platform, potentially creating higher long-term value than the steady but slower-growth traditional pharmaceutical business. The strategic pivot toward the ATTC platform represents a significant technological advancement in targeted cancer therapy, offering a more sophisticated dual-mechanism strategy compared to traditional ADCs that use cytotoxins. The pre-clinical data suggesting robust anti-tumor activity with single administration is particularly promising.
The transaction transforms HUTCHMED's business model from a hybrid traditional/innovative pharma company to a pure-play innovative drug developer. By divesting SHPL, which has provided over US$370 million in historical dividends, HUTCHMED can now fully focus on higher-growth opportunities in the oncology and immunology sectors. The deal structure with GP Health Service Capital (35%) and Shanghai Pharma (10%) optimally balances strategic and financial interests, ensuring operational continuity while bringing fresh perspective and potential new network benefits.
In conclusion, HUTCHMED's strategic divestment of SHPL unlocks value and accelerates innovation by enabling the company to focus on its core business and invest in its promising ATTC platform. This move aligns with the biotech sector's current emphasis on core competency focus and capital efficiency, positioning HUTCHMED well in the rapidly evolving ADC market.