The company reported oncology revenue of US$363m, down 31% YoY, in line with its guidance of US$300m-US$400m but below our estimation. Despite this decline, oncology product revenue reached 65% YoY growth. Among these, fruquintinib performed exceptionally well with global sales of US$291m, significantly boosting overall profitability. Hutchmed’s net profit for 2024 was US$38m, ahead of previous schedule to achieve profitability in 2025. The company projects oncology revenue to increase to US$350m-US$450m, reflecting -4%-24% YoY growth, driven by continued growth of fruquintinib’s global sales and indication expansion in its pipeline.
　　Hutchmed also expects continued profitability in 2025. Reiterate BUY.
　　Key Factors for Rating
　　Achieved profitability ahead of schedule in 2024, driven by strong global sales of fruquintinib. The company reported total revenue of US$630m, down 25% YoY (24% decrease at constant exchange rates). Oncology revenue was US$363m, down 31% YoY (31% at constant exchange rates), in line with the company’s guidance of US$300m-US$400m but below our estimation. Despite this decline, oncology product revenue reached US$272m, representing a 65% YoY growth (67% growth at constant exchange rates). Among these, FRUZAQLA (fruquintinib) performed exceptionally well with global sales of US$291m, and triggered a US$20m sales milestone payment from partner Takeda, significantly boosting overall profitability. Sales of ELUNATE (fruquintinib) in China grew by 7% to US$115m, and SULANDA (surufatinib) saw a 12% YoY increase to US$49m, with market share rising to 27%. Sales of ORPATHYS (savolitinib) remained stable at US$46m, with growth expected to resume in 2025 following the approval of new indications. Due to a large one-time upfront payment in 2023, Takeda-related revenue decreased by 81% to US$67m. Hutchmed’s net profit for 2024 was US$38m, and the company maintained cash reserves of US$836m, ensuring robust financial support for clinical development and global market expansion. The company projects oncology revenue to increase to US$350m- US$450m, reflecting -4%-24% YoY growth, driven by continued growth of FRUZAQLA and indication expansion in its pipeline. Hutchmed also expects continued profitability in 2025.
　　Near-term catalysts include: 1) Fruquintinib: Continued growth driven by global launches, broader insurance coverage in the US, and new indications expanding sales in China, including EMC and RCC. 2) Savolitinib: SACHI approval in China for 2L EGFRm NSCLC with MET amplification by YE2025, potential global NDA filings for SAVANNAH/SAFFRON for 2/3L EGFRm NSCLC with MET amplification, and a potential NDA filing for 3L GC with MET amplification in 2026. 3) Tazemetostat: Potential NDA approval in China for advanced r/r FL in 1H25. 4) Sovleplenib: Potential NDA approval for ITP by YE2025 and NDA filing for wAIHA in 2026. 5) Surufatinib: Potential data readouts from the Phase II trial for 1L PDAC by YE2025.
　　Key Risks for Rating
　　1) Delay or failure in clinical trials and registration processes of key assets; 2) intensified competition; 3) breakdown of key partnerships.
　　Valuation
　　We reduced our revenue forecasts to reflect lower-than-expected revenue from collaborators while raising our earnings forecasts, factoring in lower-than- expected expenses. Maintain DCF-based TP (WACC: 11.4%, terminal growth: 4.0%) of HK$41/US$26 for HK/ADR shares. Reiterate BUY on Hutchmed’s continued profitability and near-term NDA related catalysts.