Financial Highlights

Interim Results for the six months ended June 30, 2017 (U.S. GAAP)

July 31, 2017
Consolidated financial results of the Group are reported under U.S. generally accepted accounting principles (“U.S. GAAP”) and in U.S. dollar currency unless otherwise stated.  Chi-Med also conducts its business through three non-consolidated joint ventures, which are accounted for under the equity accounting method as non-consolidated entities in our consolidated financial statements. Within this announcement, certain financial results reported by such non-consolidated joint ventures are referred to, which are based on figures reported in their respective consolidated financial statements prepared pursuant to International Financial Reporting Standards (as issued by the International Accounting Standards Board).  Unless otherwise indicated, references to “subsidiaries” mean the consolidated subsidiaries and joint ventures (excluding non-consolidated joint ventures) of Chi-Med.

Group Results

  • Consolidated revenue up 21% to $126.6 million (H1 2016: $104.5m).
  • Net income attributable to Chi-Med of $1.7 million (H1 2016: $0.5m).
  • Solid cash position: Available cash resources of $192.5 million as of June 30, 2017 (December 31, 2016: $173.7m) at the Chi-Med Group level, including cash and cash equivalents, short-term investments and unutilized banking facilities. During the first half of 2017, Chi-Med received dividends from its non-consolidated joint ventures of $42.6 million (H1 2016: $15.9m).

 

Innovation Platform

A deep, broad, risk-balanced global oncology/immunology pipeline

  • Consolidated revenue of $22.7 million (H1 2016: $22.3m) from milestone payments from Lilly ($4.5m, fruquintinib NDA filing) and AstraZeneca ($5.0m, savolitinib Phase III initiation) and service fee payments from Lilly, AstraZeneca and Nutrition Science Partners Limited (“NSP”), our 50/50 joint venture with Nestlé Health Science S.A. (“Nestlé”).
  • Net loss attributable to Chi-Med of $14.8 million (H1 2016: -$13.7m) driven by $31.6 million (H1 2016: $31.2m) in research and development expenses, or $37.5 million (H1 2016: $36.0m) on an as adjusted (non-GAAP) basis, spent on our 31 active or completing clinical trials, five of which are pivotal Phase III studies on fruquintinib, sulfatinib and savolitinib.

Commercial Platform

A deeply established, cash-generative, pharmaceutical business in China – a platform to commercialize our Innovation Platform candidate drugs

  • Total consolidated sales up 26% to $103.9 million (H1 2016: $82.3m) mainly resulting from growth in our Prescription Drug commercial services business.
  • Total sales of non-consolidated joint ventures were $253.1 million (H1 2016: $249.6m) resulting from flat sales on She Xiang Bao Xin (“SXBX”) pill due to a price increase that we implemented in December 2016; and a relatively quiet influenza season on the over-the-counter (“OTC”) drug business.
  • Total consolidated net income attributable to Chi-Med up 14% to $25.2 million (H1 2016: $22.1m) or up 2% to $22.7 million on an adjusted basis to exclude $2.5 million one-time government subsidies; strong Prescription Drug net income growth was offset by short-term pressures in OTC drugs caused by our factory move and certain raw material price increases.
  • Both top- and bottom-line growth were reduced by -5% in U.S. dollar terms during the first half of 2017 as a result of the weakening of the Chinese RMB as compared to the same period in 2016.

H1 2017 Group Results

(US$ millions)H1-2016H1-2017Change
Revenues104.5126.621%
     Unconsolidated JV Revenues249.6253.1
Net Income/(Loss) [1]
     Innovation Platform(13.7)(14.8)-8%
          Base HMP Operations(11.6)(12.4)
          50% share of Nestlé JV (NSP)[2](2.1)(2.4)
     Commercial Platform22.125.214%
           Prescription Drugs Business15.319.4
           Consumer Health Business6.85.8
     Chi-Med Group Costs(7.9)(8.7)-10%
           General & Administrative Expenses(5.8)(6.6)
           Interest/Tax(2.1)(2.1)
Net Income Attrib. to Chi-Med0.51.7213%
           Accretion on redeemable NCI[3]--
Net Income Attrib. to Ord. S-H0.51.7
     EPS Attrib. to Ord. S-H (Basic)(US$)[4]0.010.03

[1] Net Income/(Loss) = Net Income/(Loss) attributable to Chi-Med; [2] NSP = Nutrition Science Partners Limited; [3] Non-cash accretion relates to Mitsui’s share in Innovation Platform, which was exchanged for Chi-Med shares in July 2015; [4] Includes adjustment for accretion on redeemable non-controlling interests.

Revenues

(US$ millions)

Net Income[1]

(US$ millions)