Interim Results and Business Updates

HUTCHMED Reports 2022 Interim Results and Provides Business Updates

Oncology/Immunology revenues up 113% to $91.1 million, due to ELUNATE®, SULANDA® and ORPATHYS® growth

First presentation of SAVANNAH data showing 52% response rate and 9.6 month duration of response in 2L+ post-TAGRISSO® NSCLC1 patients with high MET2 levels and no prior chemotherapy

Initiated six new trials thus far in 2022 with a further six starting, including with five new drug candidates

FRESCO-2 Phase III, our first global multi-regional clinical trial, on track to read out in August 2022

Company to Host Interim Results Call & Webcast Today at 8 p.m. HKT / 1 p.m. BST / 8 a.m. EDT

Hong Kong, Shanghai & Florham Park, NJ - Monday, August 1, 2022: HUTCHMED (China) Limited ("HUTCHMED", the "Company" or "we") (Nasdaq/AIM:HCM; HKEX:13), the innovative, commercial-stage biopharmaceutical company, today reports its unaudited financial results and provides updates on key clinical and commercial developments for the six months ended June 30, 2022.

All amounts are expressed in U.S. dollars unless otherwise stated.

2022 INTERIM Results & Business Updates

"HUTCHMED has continued to make good progress in the last six months," said Mr Simon To, Chairman of HUTCHMED.

"We have driven revenue growth in our innovative portfolio of marketed drugs. With ELUNATE® for CRC3 and following last year's successful launches of ORPATHYS® for MET-driven NSCLC and SULANDA® for epNETs4 and pNETs5, this will be the first full year of product sales from three novel, in-house discovered oncology products in China, with strong sales momentum. We have also significantly expanded our in-house commercial team to drive growth. On top of this, in June we announced that TAZVERIK® was approved for use in the Hainan Pilot Zone, bringing the clinical benefits of a fourth product to patients in China."

"Our experienced clinical team has also made progress in the first half of this year. We have initiated a number of key early-stage trials and our later-stage pipeline of on-going studies are also moving at a steady pace, with promising new data from the SAVANNAH study of savolitinib combined with osimertinib being presented in more detail in August. We believe that the achievement of these milestones demonstrates the depth and potential of our R&D6 pipeline, which is the core of our business and the foundation for our growth in the years ahead."

"HUTCHMED continues to be well-financed, which positions us well to continue delivering on our strategic objectives. We are a global biopharmaceutical company developing high quality, novel oncology and immunology drug candidates for patients across the world and under the leadership of Dr Weiguo Su, our new Chief Executive Officer, I have great hope for the future."

Dr Weiguo Su said, "In HUTCHMED, I see a company with exciting science and a first-in-class or differentiated, best-in-class pipeline of clinical-stage candidates, each with substantial prospects for additional indications and combinations, which is exceptional, particularly in the China biopharma industry."

"After driving our innovation as Head of Research and Chief Scientific Officer for the last 16 years, I was delighted to become the Chief Executive Officer earlier this year and am very excited about the next chapter of our growth."

"There are several reasons which underline the opportunity in our future. These include our expected ongoing growth of ORPATHYS®, SULANDA® and ELUNATE® revenues in China, and FRESCO-2, our first global, multi-regional clinical trial, which is due to read out later this month. While receiving a Complete Response Letter for surufatinib from the U.S. FDA7 earlier this year and our decision today to withdraw the EMA8 MAA9 are a adisappointment, it has no impact on our global development strategy. We will continue to leverage our solid balance sheet, strong commercial capability with extensive China coverage that generates cash, pipeline of innovative products and world-class people, as we work towards our goal of being a leading global biopharmaceutical company."

I. COMMERCIAL OPERATIONS

· Total revenues increased 28% to $202.0 million in the first half of 2022 (H1-21: $157.4m), driven by commercial progress on our three in-house developed oncology drugs ELUNATE®, SULANDA® and ORPATHYS®;

· Oncology/Immunology consolidated revenues were up 113% to $91.1 million (H1-21: $42.9m);

· Continuing expansion of in-house oncology commercial organization in China, which in the first half of 2022 numbered about 820 personnel (end 2021: ~630) covering around 3,000 oncology hospitals and around 30,000 oncology physicians;

· ELUNATE® (fruquintinib) in-market sales10 in the first half of 2022 increased 26% to $50.4 million (H1-21: $40.1m), reflecting its expanding lead in market share, particularly in tier 2 and 3 cities;

· SULANDA® (surufatinib) in-market sales in the first half of 2022 of $13.6 million (H1-21: $8.0m), reflecting its first time NRDL11 inclusion which started in January 2022;

· ORPATHYS® (savolitinib) in-market sales in the first half of 2022 of $23.3 million (H1-21: nil) following its launch in the second half of 2021 through AstraZeneca's extensive oncology commercial organization. Rapid initial self-pay uptake due to being the first-in-class selective MET inhibitor in China;

· TAZVERIK® (tazemetostat) successfully launched in Hainan province in China in June 2022; and

· Successful management of commercial operations despite challenges of pandemic-related lockdowns, particularly in Shanghai in April and May 2022.

II. REGULATORY UPDATES

· Received Breakthrough Therapy Designation in China for sovleplenib (HMPL-523) in January 2022 for the treatment of ITP13;

· Received approval for TAZVERIK® in the Hainan Boao Lecheng International Medical Tourism Pilot Zone in May 2022 for the treatment of certain patients with epithelioid sarcoma or follicular lymphoma; and

· Received Macau approvals for ELUNATE® and SULANDA®, the first drugs approved in the territory based on China NMPA14 approval, following regulatory updates in Macau.

· Surufatinib U.S. FDA Complete Response Letter was received in April 2022, after the NDA15 filing was accepted in June 2021, following Fast Track and Orphan Drug designations in 2020 and 2019, respectively;

o The letter indicates that a multi-regional clinical trial that includes subjects more representative of the U.S. population and aligned with current U.S. medical practice is required; and

o Pandemic-related issues concerning inspection access also contributed to the FDA action.

· HUTCHMED has decided to withdraw the surufatinib MAA filed with the EMA,  following interactions with EMA reviewers which suggested that there is a low probability of a positive opinion on the MAA;

o EMA indicated that the SANET studies were not representative of patients and medical practice in the EU16; and

o The requisite pre-approval on-site inspections are currently subject to restrictions in China.

· Discussions on the path forward are ongoing with U.S. and EU regulators.

III. CLINICAL DEVELOPMENT ACTIVITIES

· Presentation of the SAVANNAH global Phase II study (NCT03778229) for the savolitinib plus TAGRISSO® combination in NSCLC patients harboring EGFR17 mutation and MET amplification or overexpression at WCLC18 2022;

o Results showed improved response rates with increasing levels of MET aberration. Overall results are consistent with TATTON and ORCHARD global studies, but demonstrate higher response, DoR19 and PFS20 among patients with higher MET levels, particularly among those with no prior chemotherapy;

· Opened enrollment for SAFFRON, a global, pivotal Phase III study for the savolitinib plus TAGRISSO® combination (NCT05261399). Enrolled patients will have MET levels consistent with the higher MET level patient groups in SAVANNAH and have had no prior chemotherapy; and

· Presented final Phase II OS21 in patients with MET exon 14 skipping alteration NSCLC at ELCC22 2022 (NCT02897479).

· Initiate SOUND, a China Phase II study for the savolitinib plus IMFINZI® combination in EGFR wild-type NSCLC patients with MET alterations (NCT05374603).

· Presented preliminary data from the U.S. Phase Ib monotherapy study of fruquintinib in patients with refractory metastatic CRC (NCT03251378) at the 2022 ASCO GI24 Gastrointestinal Cancers Symposium; and

· Completed enrollment of the FRUTIGA China Phase III registration study (NCT03223376) in about 700 advanced gastric cancer patients.

· Report top-line results of the global Phase III FRESCO-2 registration trial (NCT04322539) in 691 refractory metastatic CRC patients, recruited from 14 countries including U.S., EU, Japan and Australia, in August 2022 as the pre-specified number of OS events that triggers the primary analysis has occurred; 

· If FRESCO-2 is positive, HUTCHMED plans to initiate discussions with regulatory authorities to apply for fruquintinib marketing authorization with the U.S. FDA, the EMA and the Japanese PMDA25 in the second half of 2022, with submissions targeted for completion in 2023; and

· Plan to initiate Phase III studies of fruquintinib plus PD-1 inhibitor TYVYT® combination in multiple indications in China.

· Presented a pooled analysis of safety data from the SANET-p and SANET-ep studies at the 2022 ASCO28 annual meetings.

· Submit for presentation data from the Phase Ib/II global combination study with tislelizumab at a scientific conference in 2023;

· Submit for presentation further Phase II data for the PD-1 inhibitor TUOYI® combination study in China for thyroid cancer, non-small cell lung cancer and endometrial cancer cohorts at a scientific conference in 2023; and

· Complete bridging study in NET patients in Japan (NCT05077384) in the first half of 2023 and discuss results with the Japanese PMDA.

· Plan for additional Phase II studies with potential for registration intent in China in additional relapsed/refractory lymphoma indications;

· Initiate studies in combination with tazemetostat and other anti-cancer therapies in China; and

· Complete recruitment of patients for two Phase II studies with potential for registration in China for the treatment of follicular lymphoma (with Breakthrough Therapy Designation) around the end of 2022 and marginal zone lymphoma in the first half of 2023 (NCT04849351).

· Complete enrollment of the ESLIM-01 Phase III pivotal study in primary ITP (NCT03951623) in China around year end, with readout in 2023;

· Initiate Phase I study in the U.S. in patients with ITP in 2023;

· Initiate Phase II Proof-of-Concept study in warm AIHA31 in China; and

· Initiate exploratory Phase II trial in patients with severe or critical COVID-19 requiring hospitalization and supplemental oxygen, subject to COVID-19 outbreak.

· Initiated a bridging study in follicular lymphoma patients in China for conditional registration based on U.S. approvals; and

· Epizyme presented updated data from the Phase Ib portion of the global SYMPHONY-1 Phase III trial at ASCO (NCT04224493) of tazemetostat combined with lenalidomide and rituximab (R²) in patients with relapsed or refractory follicular lymphoma after at least one prior line of therapy.

· Initiate the China portion of the global SYMPHONY-1 Phase III trial (NCT04224493); and

· Initiate Phase II combination studies with amdizalisib and other HUTCHMED assets.

· Initiate dose expansion portion of the Phase I study in hematological malignancies in China in early 2023; and

· Initiate indication specific dose expansion cohorts of a Phase I study in the U.S. and Europe in patients with an IDH1 and/or IDH2 mutation in mid-2023 (NCT04762602).

· Initiated China Phase I trial (NCT05190068) in patients with advanced hematological malignancies in January 2022; and

· Initiating U.S. Phase I trial (NCT05176691) in patients with advanced hematological malignancies in mid-2022.

· Initiated combination studies with other anti-cancer therapies, including chemotherapies or PD-1 antibodies, in China in January 2022 (NCT05173142).

· Continuing to enroll Phase I trial (NCT04908046) in patients with advanced solid tumors in China.

· Initiated Phase I trial in China (NCT05190068) in patients with advanced malignant solid tumors and tenosynovial giant cell tumors in January 2022.

· Initiated Phase I trial in China (NCT05429008) in patients with advanced malignant neoplasms in July 2022.

· Phase I trial initiated in Australia for IMG-007, an investigative, OX40 antagonistic monoclonal antibody designed to selectively shut down OX40+ T cell function, thereby providing a treatment option for pathological OX40+ T cell-mediated immune diseases such as atopic dermatitis, in healthy volunteers and patients with severe atopic dermatitis in July 2022 (NCT05353972); and

· Phase I trial initiation imminent in healthy volunteers following IND36 clearance in the US for IMG-004, a reversible, non-covalent, highly selective oral BTK inhibitor designed to target immunological diseases (NCT05349097).

IV. MANUFACTURING

· Increased production of commercial supplies of ELUNATE®, SULANDA® and ORPATHYS® to meet demand;

· Initiated NDA enabling studies including registration stability studies and process validation for amdizalisib and sovleplenib; and

· Continued construction of our new flagship Shanghai manufacturing facility on schedule - this facility is designed to increase our novel drug product manufacturing capacity by over five-fold. Equipment installation is planned for late 2022, with Good Manufacturing Practice (GMP) compliance targeted for late 2023.

V. OTHER VENTURES

Other Ventures include our profitable prescription drug marketing and distribution platforms

· Other Ventures consolidated revenues fell 3% (-4% at CER37) to $110.9 million (H1-21: $114.5m);

· SHPL38 non-consolidated joint venture revenues grew by 18% (16% at CER) to $212.4 million (H1-21: $180.4m); and

· Consolidated net income attributable to HUTCHMED from our Other Ventures increased by 19% (16% at CER) to $35.4 million (H1-21: $29.8m, excluding net income attributable to HUTCHMED of $11.5 million contributed from HBYS39 which was disposed in September 2021), which primarily included net income contributed from SHPL of $33.6 million (H1-21: $28.6m).

VI. IMPACT OF COVID-19

COVID-19 had some impact on our research, clinical studies and our commercial activities in the first half of 2022, particularly with respect to hospital lockdowns, travel restrictions, and shipping difficulties. Sites in Shanghai were particularly impacted during April and May. Measures were put in place to minimize the impact of such restrictions to the extent possible, including online patient follow-up and the retention of core research teams on-site to maintain critical activities, with business returning to normal in June. We will continue to closely monitor the evolving situation.

VII. SUSTAINABILITY

The Group is committed to the long-term sustainability of its businesses and the communities in which we conduct business. In the first half of 2022, we published 2021 Sustainability Report of HUTCHMED, detailing our environmental, social and governance performance of HUTCHMED during 2021, including our sustainability governance, stakeholder engagement and materiality analysis, business ethics, environmental performance, research and development, responsible commercialization, and human capital management.

Five new sustainability-related policies and statements - Sustainability Policy, Environmental Policy, Health and Safety Policy, Human Rights Policy and Modern Slavery and Human Trafficking Statement - were published along with the 2021 Sustainability Report, serving to demonstrate our commitment in sustainability, enriched and more transparent disclosures, as well as acting as an important gateway to communicate with our stakeholders in all sustainability matters.

In the second half of 2022, we will continue our efforts in facilitating discussions regarding relevant sustainability issues and opportunities, including climate-related issues, and actively looking to set our own sustainability targets and goals.

VIII. U.S. LISTING

The Holding Foreign Companies Accountable Act, or the Act, was signed into law in December 2020. It provides that if the U.S. Securities and Exchange Commission (SEC) determines that a U.S.-listed company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the Public Company Accounting Oversight Board (PCAOB) for three consecutive years beginning in 2021, the SEC shall prohibit such company's shares or ADSs40 from being traded on a national securities exchange or in the over-the-counter trading market in the U.S.

As had been expected, following its adoption of implementing rules pursuant to the Act, the SEC named over 150 companies, including HUTCHMED, to its conclusive list of issuers identified under these rules. Under the current terms of the Act, the Company's ADSs will be delisted from the Nasdaq Stock Market in early 2024, unless the Act is amended to exclude the Company or the PCAOB is able to conduct a full inspection of the Company's auditor during the required timeframe. In addition, legislation is being considered in the U.S. to shorten the number of non-inspection years from three years to two. In the case that such legislation becomes law, it will reduce the time period before our ADSs could be delisted from the Nasdaq Stock Market and prohibited from over-the-counter trading in the U.S. from 2024 to 2023.

This has had no impact on the Company's business operations. We continue to monitor market developments and evaluate all strategic options, with the appropriate counsel and guidance.

The Company's ADSs, each of which represents five ordinary shares, continue to trade uninterrupted on the Nasdaq Global Select Market. Its ordinary shares are also admitted for trading in London on the AIM market, and are primary listed on HKEX41. The shares listed on HKEX and AIM are fully fungible with the shares represented by the Company's ADSs.

INTERIM 2022 Financial Results

· Adjusted Group (non-GAAP42) net cash flows excluding financing activities in the first half of 2022 were -$110.9 million (H1-21: -$63.1m) mainly due to increased spending on Oncology/Immunology R&D and China commercial operations; and

· Net cash used in financing activities in the first half of 2022 totaled $74.6 million (H1-21: net cash generated from financing activities of $578.3m) mainly due to the repayments of bank borrowings and purchases of ADSs by a trustee for the settlement of equity awards.

· Oncology/Immunology consolidated revenues increased 113% (111% at CER) to $91.1 million (H1-21: $42.9m) resulting from:

ELUNATE® revenues increased 21% to $36.0 million (H1-21: $29.8m) in manufacturing revenues, promotion and marketing service revenues and royalties, as our in-house sales team increased in-market sales 26% to $50.4 million (H1-21: $40.1m), as provided by Lilly;

SULANDA® revenues increased 69% to $13.6 million (H1-21: $8.0m), after inclusion on the NRDL starting in January 2022;

ORPATHYS® revenues of $13.8 million (H1-21: nil), in manufacturing revenues and royalties. AstraZeneca reported $23.3 million in-market sales (H1-21: nil) of ORPATHYS® in first half of 2022;

TAZVERIK® revenues of $0.1 million following its successful launch in Hainan in June 2022;

Milestone payment of $15.0 million (H1-21: nil), to us by AstraZeneca, was triggered in February 2022 upon initiation of start-up activities for SAFFRON; and

Other R&D services income of $12.6 million (H1-21: $5.1m), which were primarily fees from AstraZeneca and Lilly for the management of development activities in China.

· Other Ventures consolidated revenues decreased 3% (-4% at CER) to $110.9 million (H1-21: $114.5m), mainly due to lower sales of consumer products. This excludes the strong 18% (16% at CER) growth in non-consolidated revenues at SHPL of $212.4 million (H1-21: $180.4m).

· Cost of Revenues were $137.3 million (H1-21: $123.2m), the majority of which were the cost of third-party prescription drug products marketed through our profitable Other Ventures, as well as costs associated with ELUNATE®, including the provision of promotion and marketing services to Lilly, and the costs for SULANDA® and ORPATHYS® which commenced commercial sales in July 2021;

· R&D Expenses were $181.7 million (H1-21: $123.1m), which increased mainly as a result of an expansion in the active development of our novel oncology drug candidates. Our international clinical and regulatory operations in the U.S. and Europe incurred expenses of $83.6 million (H1-21: $59.3m), while R&D expenses in China were $98.1 million (H1-21: $63.8m);

· SG&A Expenses43 were $79.8 million (H1-21: $54.8m), which increased primarily due to higher staff costs and selling expenses to support rapidly expanding operations. This included the scaling of a national oncology commercial infrastructure in China and in the U.S.; and

· Other Items generated net income of $33.9 million (H1-21: $41.3m), which decreased primarily due to a reduction in equity in earnings of equity investees of $9.4 million after the divestiture of our interest in HBYS in September 2021.

· As a result, the net loss attributable to HUTCHMED in the first half of 2022 was $0.19 per ordinary share / $0.96 per ADS, compared to net loss attributable to HUTCHMED of $0.14 per ordinary share / $0.70 per ADS in the six months ended June 30, 2021.

Financial Summary

(in $'000)

(Unaudited, in $'000, except share and per share data)

FINANCIAL GUIDANCE

We provide financial guidance for 2022 below reflecting expected revenue growth of ELUNATE®, SULANDA® and ORPATHYS® in China. We believe that we remain on track to meet the 2022 guidance for Oncology/Immunology revenues provided in the announcement of our 2021 full year results on March 3, 2022.

Shareholders and investors should note that:

· we do not provide any guarantee that the statements contained in the financial guidance will materialize or that the financial results contained therein will be achieved or are likely to be achieved; and

· we have in the past revised our financial guidance and reference should be made to any announcements published by us regarding any updates to the financial guidance after the date of publication of this announcement.

Use of Non-GAAP Financial Measures and Reconciliation - References in this announcement to adjusted Group net cash flows excluding financing activities and financial measures reported at CER are based on non-GAAP financial measures. Please see the "Use of Non-GAAP Financial Measures and Reconciliation" below for further information relevant to the interpretation of these financial measures and reconciliations of these financial measures to the most comparable GAAP measures, respectively.

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Conference call and audio webcast presentation scheduled today at 8 p.m. HKT / 1 p.m. BST / 8 a.m. EDT - Investors may participate in the call as follows: +852 3027 6500 (Hong Kong) / +44 20 3194 0569 (U.K.) / +1 646 722 4977 (U.S.), or access a live audio webcast of the call via HUTCHMED's website at www.hutch-med.com/event/.

Additional dial-in numbers are also available at HUTCHMED's website. Please use participant access code "55793362#."

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About HUTCHMED

HUTCHMED (Nasdaq/AIM:HCM; HKEX:13) is an innovative, commercial-stage, biopharmaceutical company. It is committed to the discovery, global development and commercialization of targeted therapies and immunotherapies for the treatment of cancer and immunological diseases. It has more than 4,900 personnel across all its companies, at the center of which is a team of about 1,800 in oncology/immunology. Since inception it has advanced 13 cancer drug candidates from in-house discovery into clinical studies around the world, with its first three oncology drugs now approved and marketed in China. For more information, please visit: www.hutch‑med.com or follow us on LinkedIn.

Contacts

References

Unless the context requires otherwise, references in this announcement to the "Group," the "Company," "HUTCHMED," "HUTCHMED Group," "we," "us," and "our," mean HUTCHMED (China) Limited and its consolidated subsidiaries and joint ventures unless otherwise stated or indicated by context.

Past Performance and Forward-Looking Statements

The performance and results of operations of the Group contained within this announcement are historical in nature, and past performance is no guarantee of future results of the Group. This announcement contains forward-looking statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words like "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "pipeline," "could," "potential," "first-in-class," "best-in-class," "designed to," "objective," "guidance," "pursue," or similar terms, or by express or implied discussions regarding potential drug candidates, potential indications for drug candidates or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on these statements. Such forward-looking statements are based on the current beliefs and expectations of management regarding future events, and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. There can be no guarantee that any of our drug candidates will be approved for sale in any market, that any approvals which are obtained will be obtained at any particular time, or that the sales of products marketed or otherwise commercialized by HUTCHMED and/or its collaboration partners (collectively, "HUTCHMED's Products") will achieve any particular revenue or net income levels. In particular, management's expectations could be affected by, among other things: unexpected regulatory actions or delays or government regulation generally, including, among others, the risk that HUTCHMED's ADSs could be barred from trading in the United States as a result of the Holding Foreign Companies Accountable Act and the rules promulgated thereunder; the uncertainties inherent in research and development, including the inability to meet our key study assumptions regarding enrollment rates, timing and availability of subjects meeting a study's inclusion and exclusion criteria and funding requirements, changes to clinical protocols, unexpected adverse events or safety, quality or manufacturing issues; the inability of a drug candidate to meet the primary or secondary endpoint of a study; the inability of a drug candidate to obtain regulatory approval in different jurisdictions or the utilization, market acceptance and commercial success of HUTCHMED's Products after obtaining regulatory approval; competing drugs and product candidates that may be superior to, or more cost effective than HUTCHMED's Products and drug candidates; the impact of studies (whether conducted by HUTCHMED or others and whether mandated or voluntary) or recommendations and guidelines from governmental authorities and other third parties on the commercial success of HUTCHMED's Products and candidates in development; the ability of HUTCHMED to manufacture and manage supply chains for multiple products and product candidates; the availability and extent of reimbursement of HUTCHMED's Products from third-party payers, including private payer healthcare and insurance programs and government insurance programs; coverage and reimbursement determinations by such payers and new policies and procedures adopted by such payers; the costs of developing, producing and selling HUTCHMED's Products; the ability of HUTCHMED to meet any of its financial projections or guidance and changes to the assumptions underlying those projections or guidance; global trends toward health care cost containment, including ongoing pricing pressures; uncertainties regarding actual or potential legal proceedings, including, among others, actual or potential product liability litigation, litigation and investigations regarding sales and marketing practices, intellectual property disputes, and government investigations generally; and general economic and industry conditions, including uncertainties regarding the effects of the persistently weak economic and financial environment in many countries, uncertainties regarding future global exchange rates and uncertainties regarding the impact of the COVID-19 pandemic. For further discussion of these and other risks, see HUTCHMED's filings with the U.S. Securities and Exchange Commission, on AIM and on HKEX. HUTCHMED is providing the information in this announcement as of this date and does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

In addition, this announcement contains statistical data and estimates that HUTCHMED obtained from industry publications and reports generated by third-party market research firms. Although HUTCHMED believes that the publications, reports and surveys are reliable, HUTCHMED has not independently verified the data and cannot guarantee the accuracy or completeness of such data. You are cautioned not to give undue weight to this data. Such data involves risks and uncertainties and are subject to change based on various factors, including those discussed above.

Inside Information

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (as it forms part of retained EU law as defined in the European Union (Withdrawal) Act 2018).

Ends

OPERATIONS REVIEW

Oncology/Immunology

We discover, develop, manufacture and market targeted therapies and immunotherapies for the treatment of cancer and immunological diseases through a fully integrated team of approximately 960 scientists and staff (December 31, 2021: ~820), and an in-house oncology commercial organization of about 820 staff (December 31, 2021: ~630).

We have advanced 13 oncology drug candidates into clinical trials in China, with seven also in clinical development in the U.S. and Europe. Our first three drug candidates, fruquintinib, surufatinib and savolitinib, have all been approved and launched in China and a fourth, tazemetostat, has been approved and launched in Hainan Pilot Zone.

MARKETED PRODUCT SALES

Fruquintinib (ELUNATE® in China)

ELUNATE® is approved for the treatment of third-line metastatic CRC for which there is an approximate incidence of 83,000 new patients per year in China. We estimate that in the first half of 2022, approximately 14,000 (H1-21: approximately 10,000) new patients were treated with ELUNATE® in China resulting in in-market sales of $50.4 million, up 26% versus H1-21 ($40.1 million). ELUNATE® surpassed regorafenib in prescription numbers for late stage CRC at the end of 2021 and that lead has continued to grow in the first half of 2022.

Under the terms of our agreement with Lilly, HUTCHMED manages all on-the-ground medical detailing, promotion and local and regional marketing activities for ELUNATE® in China. We consolidate as revenues approximately 70-80% of ELUNATE® in-market sales from manufacturing fees, service fees and royalties paid to us by Lilly. In the first half of 2022, we consolidated $36.0 million in revenue for ELUNATE®, equal to 71.4% of in-market sales.

Following negotiations with the China NHSA44, ELUNATE® continues to be included in the NRDL for a new two-year term starting in January 2022. For this renewal, we agreed to a discount of 5% relative to the 2021 NRDL price. 

In January 2022, ELUNATE® was approved in the Macau Special Administrative Region, our first drug to be approved in the territory and the first based on NMPA approval, following the latest update to the Macau provisions on new drug importation which allow drugs approved in one or more specified jurisdictions to be authorized for use in Macau.

Surufatinib (SULANDA® in China)

SULANDA® was launched in China in 2021 for the treatment of all advanced NETs45 for which there is an approximate incidence of 34,000 new patients per year in China.

In 2021, SULANDA® was sold as a self-pay drug. We used means-tested early access and patient access programs to help patients afford SULANDA®. Despite these access programs, duration of treatment was often affected by the economic constraints of patients. Following negotiations with the China NHSA, SULANDA® was included in the NRDL starting in January 2022 at a 52% discount on our main 50mg dosage form, relative to the 2021 self-pay price. Under the NRDL, actual out-of-pocket costs for patients in the first half of 2022 represented approximately 15-20% of the 2021 self-pay price.

As a result of inclusion in the NRDL and our continued marketing activities, patient access to SULANDA®, as well as duration of treatment, have been expanding with total sales in the first half of 2022 increasing by 69% to $13.6 million (H1-21: $8.0 million). It should be noted that the first half of 2021 in-market sales included normal pipeline fill behind the initial launch of SULANDA® whereas 2022 figures represent consumption sales. In the first half of 2022, approximately 7,500 new patients were treated with SULANDA®, representing approximately 3.8 times the approximately 2,000 new patients in the first half of 2021. In June 2022, approximately 1,300 continuing patients were also treated.

There are two therapies for advanced NETs approved and NRDL reimbursed in China: SUTENT® for the treatment of pancreatic NET (approximately 10% of NET), and AFINITOR® in broadly the same indication as SULANDA®.

In April 2022, SULANDA® was approved in the Macau Special Administrative Region.

Savolitinib (ORPATHYS® in China)

In late June 2021, ORPATHYS® became the first-in-class selective MET inhibitor to be approved in China. Our partner, AstraZeneca, then launched ORPATHYS® in mid-July 2021, less than three weeks after its conditional approval by the NMPA for patients with MET exon 14 skipping alteration NSCLC.

More than a third of the world's lung cancer patients are in China and, among those with NSCLC, approximately 2-3% have tumors with MET exon 14 skipping alterations, representing an approximate incidence of 13,000 new patients per year in China. Importantly also, MET plays a role in multiple other solid tumors, with an estimated total incidence of 120,000 new patients per year in China. 

AstraZeneca introduced a patient access program in late 2021 which subsidizes use of ORPATHYS®, through progressive disease. As a result, in-market sales for ORPATHYS® grew significantly in the first half of 2022. In-market sales of ORPATHYS® were $23.3 million (H1-21: nil) resulting in our consolidation of $13.8 million (H1-21: nil) in revenues from manufacturing fees and royalties in the first half of 2022.

Market understanding of the need for MET testing has improved significantly, with ORPATHYS®'s brand share more than doubling since the end of 2021 in the rapidly growing targeted therapy area. In the National Health Commission's Treatment Guidelines for Primary Lung Cancer 2022 and the China Medical Association Oncology Committee Lung Cancer Group's China Medical Association Guideline for Clinical Diagnosis and Treatment of Lung Cancer, ORPATHYS® was identified as the only targeted therapy recommended for MET exon 14 patients, while similar guideline from CSCO46 also recommended ORPATHYS® as the standard of care for such patients.

AstraZeneca and HUTCHMED are preparing to begin negotiations with the China NMPA for potential inclusion in the 2023 NRDL.

ORPATHYS® is the first and only selective MET inhibitor on the market in China. XALKORI® is an approved multi-kinase inhibitor of ALK and ROS1 with modest MET activity. Several selective MET inhibitors are in development in China, but none are currently expected to reach the market before 2023.

RESEARCH & DEVELOPMENT

Savolitinib (ORPATHYS® in China)

Savolitinib is an oral, potent, and highly selective oral inhibitor of MET. In global partnership with AstraZeneca, savolitinib has been studied in NSCLC, PRCC47 and gastric cancer clinical trials with over 1,500 patients to date, both as a monotherapy and in combinations.

In February 2022, a $15 million milestone payment from AstraZeneca was triggered by the initiation of start-up activities for the SAFFRON study. In total, AstraZeneca has paid HUTCHMED $85 million of the total $140 million in upfront payments, development and approvals milestones that are potentially payable under the 2011 license and collaboration agreement.

MET plays an important role in NSCLC. Savolitinib has made significant development progress in lung cancer, completing NMPA NDA review, gaining approval and successfully launching as a monotherapy in China. It is also now in multiple late stage registrational studies as a combination therapy.

The table below shows a summary of the clinical studies for savolitinib in lung cancer patients.

Update on MET altered, EGFR wild type NSCLC in China - The June 2021 monotherapy approval by the NMPA was based on positive results from a Phase II trial conducted in China in patients with NSCLC with MET exon 14 skipping alterations (NCT02897479). Final OS and subgroup analysis was presented for this trial at ELCC 2022. The updated results further confirmed the favorable benefit of savolitinib in these patients and in each subgroup and the acceptable safety profile. In addition to this trial and the confirmatory study in this patient population (NCT04923945), the SOUND Phase II trial is an open-label, interventional, multicenter, exploratory Phase II study to evaluate savolitinib combined with IMFINZI® in EGFR/ALK/ROS1 wild-type, locally advanced or metastatic NSCLC patients with MET aberrations (NCT05374603). The primary endpoint is PFS.

Update on combination therapies in EGFR TKI-resistant NSCLC - MET-aberration is a major mechanism for acquired resistance to both first/second-generation EGFR TKIs as well as third-generation EGFR TKIs like TAGRISSO®. Among patients who experience disease progression post-TAGRISSO® treatment, approximately 15-50% present with MET aberration. The prevalence of MET amplification and overexpression may differ depending on the sample type, detection method and assay cut-off used. Savolitinib has been studied extensively in these patients in the TATTON and SAVANNAH studies. The encouraging results led to the initiation and planning of three Phase III studies: SACHI and SANOVO were initiated in China in 2021, and the global, pivotal Phase III SAFFRON study is currently open for enrollment.

SAVANNAH (NCT03778229) - This global Phase II study in patients who have progressed following TAGRISSO® due to MET amplification or overexpression has three dose cohorts of savolitinib combined with TAGRISSO®. In addition to continuing TAGRISSO® treatment, patients received savolitinib 300mg QD, 300mg BID, or 600mg QD. 294 patients are enrolled in the study. We continue to evaluate the possibility of using the SAVANNAH study as the basis for U.S. accelerated approval.

The first presentation of results will be at the upcoming 2022 WCLC. These results are based on an analysis of 193 efficacy evaluable patients who received savolitinib 300mg once daily plus TAGRISSO® 80mg once daily at data cut-off date of August 27, 2021. Qualifying MET aberrations are FISH5+50 or IHC50+51. Importantly, additional analysis using a higher cut-off level of MET aberration are presented. The higher cut-off levels for MET aberration are FISH10+52 and/or IHC90+53. The prevalence of this higher cut-off levels of MET aberration was 34% of patients centrally tested for enrollment in this study vs. 62% at the lower, qualifying cut-off level.

Results showed a trend toward improved response rates with increasing level of MET aberration. Across all patients in this analysis, ORR54 was 32% [95% CI: 26-39%], median DoR was 8.3 months [95% CI: 6.9-9.7 months], and median PFS was 5.3 months [95% CI: 4.2-5.8 months]. These results are consistent with the TATTON and ORCHARD global studies.

Among the 108 SAVANNAH patients who met the criteria for higher cut-off levels of MET aberration, ORR was 49% [95% CI: 39-59%], median DoR was 9.3 months [95% CI: 7.6-10.6 months], and median PFS was 7.1 months [95% CI: 5.3-8.0 months]. Among the 87 patients who did not receive prior chemotherapy, ORR was 52% [95% CI: 41-63%], median DoR was 9.6 months [95% CI: 7.6-14.9 months], and median PFS was 7.2 months [95% CI: 4.7-9.2 months]. The safety profile of savolitinib plus TAGRISSO® was consistent with the known profiles of the combination and each treatment alone. 

SAFFRON (NCT05261399) - Findings based on SAVANNAH and the TATTON study supported the initiation of the SAFFRON global Phase III study in patients with EGFR-mutated, MET-driven, locally advanced or metastatic NSCLC whose disease progressed on first- or second-line treatment with TAGRISSO® as the most recent therapy, with no prior chemotherapy in the metastatic setting allowed. Patients will be prospectively selected for the higher level of MET aberration of FISH10+ and/or IHC90+. The SAFFRON study will evaluate the efficacy and safety of savolitinib in combination with TAGRISSO® compared to pemetrexed plus platinum doublet-chemotherapy, the current standard-of-care treatment in this setting. The primary endpoint of the study is PFS.

Two registrational studies are ongoing in China in EGFR mutated NSCLC with MET aberrations: the SANOVO (NCT05009836) study in treatment naïve patients, and SACHI (NCT05015608) study in patients whose disease progressed following treatment with any first-line EGFR TKI.

MET is a key genetic driver in papillary RCC55, and emerging evidence suggests that combining immunotherapies with a MET inhibitor could enhance anti-tumor activity. PRCC is a subtype of kidney cancer, representing about 15% of patients, with no treatments approved for patients with tumors that harbor MET-driven alterations. We have conducted multiple global studies of savolitinib in PRCC patients, including the SAVOIR monotherapy and CALYPSO combination therapy global Phase II trials, that both demonstrated highly encouraging results. These results led to the initiation of a global Phase III, the SAMETA study, in 2021.

The table below shows a summary of the clinical study for savolitinib in kidney cancer patients.

MET-driven gastric cancer has a very poor prognosis. Multiple Phase II studies have been conducted in Asia to study savolitinib in MET-driven gastric cancer, of which approximately 5% of all gastric cancer patients, demonstrated promising efficacy, including VIKTORY. The VIKTORY study reported a 50% ORR with savolitinib monotherapy in gastric cancer patients whose tumors harbor MET amplification.

Fruquintinib (ELUNATE® in China)

Fruquintinib is a novel, selective, oral inhibitor of VEGFR 1/2/3 kinases that was designed to improve kinase selectivity to minimize off-target toxicity and thereby improve tolerability. Fruquintinib has been studied in clinical trials with about 5,000 patients to date, both as a monotherapy and in combination with other agents.

Aside from its first approved indication of third-line CRC (in China), several studies of fruquintinib combined with checkpoint inhibitors (including TYVYT®, geptanolimab and tislelizumab) have been underway, some of which presented encouraging data in 2021. Registration-intent studies combined with chemotherapy (FRUTIGA study in gastric cancer) or checkpoint inhibitors (TYVYT® combo, in endometrial cancer) are ongoing in China, with further registration studies in HCC56 and RCC under consideration.

We retain all rights to fruquintinib outside of China and are partnered with Lilly in China. The table below shows a summary of the clinical studies for fruquintinib.

FRESCO-2 (NCT04322539) - This double-blind, placebo-controlled, global Phase III study in patients with refractory metastatic CRC reached its enrollment goal in December 2021. It recruited 691 patients from approximately 150 sites in 14 countries in fifteen months, ahead of schedule. The primary endpoint of the study is OS. Topline results are expected to be reported in August 2022 as the pre-specified number of OS events that trigger the primary analysis has accrued. If positive, HUTCHMED would simultaneously initiate plans to apply for marketing authorization of fruquintinib with the U.S. FDA, which granted Fast Track Designation in 2020, the EMA and the Japanese PMDA.

U.S. Phase I/Ib CRC cohorts (NCT03251378) - Preliminary efficacy and safety data of fruquintinib in patients with refractory, metastatic CRC were presented at ASCO GI in early 2022. In patients who had progressed on all standard therapies, including LONSURF® and/or STIVARGA®, the DCR61 was 68.3% and the median OS was 10.7 months [95% CI: 6.7-11.7]. In patients who had not received LONSURF® or STIVARGA®, the DCR was 57.5% and the median OS was 9.3 months [95% CI: 5.2-NR62]. The safety profile in both patient populations was consistent with what has previously been reported.

FRUTIGA (NCT03223376) - This randomized, double-blind, Phase III study in China to evaluate fruquintinib combined with paclitaxel compared with paclitaxel monotherapy, for second-line treatment of advanced gastric cancer, enrolled approximately 700 patients in July 2022. Its co-primary endpoints are PFS and OS.

Advanced endometrial cancer registration-intent cohort of TYVYT® combination (NCT03903705) - Platinum-based systemic chemotherapy is the standard first-line treatment for advanced endometrial cancer. However, patients who progress following first-line chemotherapy have limited treatment options, and the prognosis remains poor. As disclosed at CSCO 2021, data in this endometrial cancer cohort is encouraging.

As of the data cutoff date of August 31, 2021, 35 patients were enrolled, including 7 treatment-naïve and 28 pretreated patients. Of them, 29 were efficacy evaluable, 4 were treatment-naïve and 25 were pretreated. All 4 treatment-naïve patients experienced confirmed tumor response, for ORR of 100% (95% CI: 39.8-100.0), and median PFS was not reached. Among the 25 pretreated patients, the confirmed ORR was 32.0% (95% CI: 14.9-53.5), DCR was 92.0% (95% CI: 74.0-99.0) and the median PFS was 6.9 months (95% CI: 4.1-NR). Among the 19 proficient mismatch repair (pMMR) patients in pretreated cohort, the confirmed ORR was 36.8% (95% CI: 16.3-61.6), DCR was 94.7% (95% CI: 74.0-99.9), median PFS was 6.9 months (95% CI: 4.1-NR), and the median OS was not reached.

We have agreed with the NMPA to expand this cohort into a single-arm registrational Phase II study. The cohort is now targeting to enroll over 130 patients. 

We are currently evaluating the merits of and planning further registration studies based on other cohorts, such as HCC and RCC.

Tislelizumab combinations (NCT04577963 & NCT04716634) - In August 2021, we initiated an open-label, multi-center, non-randomized Phase Ib/II study in the U.S. to assess fruquintinib in combination with tislelizumab in patients with locally advanced triple negative breast cancer, advanced endometrial cancer or MSS-CRC. The safety lead-in phase of the U.S. study has been completed, to be followed by the dose-expansion phase shortly. The Phase II study in China and Korea for fruquintinib in combination with tislelizumab is being led by BeiGene for the treatment of advanced or metastatic, unresectable gastric cancer, CRC or NSCLC.

We are conducting multiple Phase Ib expansion cohorts in the U.S. to explore fruquintinib in CRC and breast cancer. In China, we support an investigator initiated trial program for fruquintinib, and there are about 40 of such trials ongoing in various solid tumor settings.

Surufatinib (SULANDA® in China)

Surufatinib is a novel, oral angio-immuno kinase inhibitor that selectively inhibits the tyrosine kinase activity associated with VEGFR and FGFR, both shown to be involved in tumor angiogenesis, and CSF-1R, which plays a key role in regulating tumor-associated macrophages, promoting the body's immune response against tumor cells. Surufatinib has been studied in clinical trials with around 1,200 patients to date, both as a monotherapy and in combinations, and is approved in China. HUTCHMED currently retain all rights to surufatinib worldwide.

Initial approvals for surufatinib in China are for the treatment of advanced NET patients. NETs present in the body's organ system with fragmented epidemiology. About 58% of NETs originate in the gastrointestinal tract and pancreas, 27% in the lung or bronchus, and a further 15% in other organs or unknown origins.

Surufatinib's ability to inhibit angiogenesis, block the accumulation of tumor associated macrophages and promote infiltration of effector T cells into tumors could help improve the anti-tumor activity of PD-1 antibodies. Several combination studies with PD-1 antibodies have shown promising data.

A summary of the clinical studies of surufatinib is shown in the table below.

U.S. NDA and EMA MAA - Surufatinib received FDA Fast Track Designations in April 2020 for the treatment of pNETs and epNETs. Orphan Drug Designation for pNETs was granted in November 2019. In a May 2020 pre-NDA meeting, we reached an agreement with the FDA that the two positive Phase III studies of surufatinib in patients with pNETs and epNETs in China, along with the bridging trial in the U.S. could form the basis to support a U.S. NDA submission. The FDA accepted the filing of the NDA in June 2021. However, in April 2022, we received a Complete Response Letter from the FDA regarding the NDA for surufatinib for the treatment of pNETs and epNETs. FDA determined that the current data package, based on two positive Phase III trials in China and one bridging study in the U.S., does not support an approval in the U.S. at this time.

The FDA evaluated the applicability of the SANET studies data generated in one country to U.S. patients and U.S. medical practice. The Complete Response Letter stated that the FDA will require a multiregional clinical trial (MRCT) that includes subjects more representative of the U.S. patient population and aligned to current U.S. medical practice. In addition, COVID-19 related issues concerning inspection scheduling and access contributed to the FDA action. This action by the FDA is not related to any safety issues with surufatinib.

We also submitted an EMA MAA for surufatinib using the same data package, which was validated and accepted in July 2021. However, on August 1, 2022, HUTCHMED informed the EMA of its decision to withdraw the MAA. This decision was reached following interactions with the EMA which suggested that there is a low probability of a positive opinion on the MAA. The EMA indicated that the SANET studies were not representative of patients and medical practice in Europe. The Company believes that their critiques on aspects of the design and conduct of the trials are unlikely to be resolved by re-analysis of the existing data set. Additionally, pre-approval on-site inspections are required to confirm Good Manufacturing Practice and Good Clinical Practice. Such inspections are currently subject to restrictions due to COVID-containment measures and security requirements for foreign visitors in China.

We will continue to work with regulators to explore the feasibility of conducting a MRCT that would support approval in U.S. and Europe.

Japan Bridging Study to Support Registration for Advanced NET (NCT05077384) - Based on dialogue with the Japanese PMDA, it was agreed that the Japanese NDA would include results from a 34-patient, registration-enabling bridging study in Japan to complement the existing data package. The trial was initiated in September 2021 and results are expected in the first half of 2023. We plan to engage with the PMDA when these results are available.

A Phase II China study (NCT04169672) combining surufatinib with TUOYI® is enrolling approximately 260 patients in nine solid tumor indications, including NENs, biliary tract cancer, gastric cancer, thyroid cancer, SCLC, soft tissue sarcoma, endometrial cancer, esophageal cancer and NSCLC. These have led to the initiation in September 2021 of the first Phase III trial combining surufatinib with a PD-1 antibody, the SURTORI-01 study in NEC, and we are currently considering further registration studies.

In March 2021 we initiated an open-label, Phase Ib/II study of surufatinib in combination with BeiGene's tislelizumab. This study is ongoing in the U.S. and Europe, evaluating the safety, tolerability, pharmacokinetics and efficacy in patients with advanced solid tumors, including CRC, NET, small cell lung cancer, gastric cancer, and soft tissue sarcoma and anaplastic thyroid cancer. The dose finding phase of the study is now complete and the expansion phase is ongoing (NCT04579757).

In China, we support an investigator initiated trial program for surufatinib, with about 50 of such trials in various solid tumor settings being conducted for both combination and single agent regimens. These trials explore and answer important medical questions in addition to our own company-sponsored clinical trials.

Hematological Malignancies Candidates

HUTCHMED currently has six investigational drug candidates targeting hematological malig-nan-cies in clinical development. Amdizalisib (targeting PI3Kδ), sovleplenib (HMPL-523, targeting Syk) and HMPL-760 (targeting BTK) are being studied in several trials against B-cell dominant malignancies. In addition to the three B-cell receptor pathway inhibitors, HUTCHMED is also develop-ing HMPL-306 (targeting IDH1 and IDH2), tazemetostat (a methyl-trans-ferase inhibitor of EZH2) and HMPL-A83 (an anti-CD47 monoclonal antibody).

Amdizalisib (HMPL-689)

Amdizalisib is a novel, highly selective oral inhibitor targeting the isoform PI3Kδ, a key component in the B-cell receptor signaling pathway. Amdizalisib's pharmacokinetic properties have been found to be favorable with good oral absorption, moderate tissue distribution and low clearance in preclinical studies. We also expect that amdizalisib will have low risk of drug accumulation and drug-drug interactions, supporting feasibility of development in combination with other medicines. The first of such activities is in combination with tazemetostat (IND filed in June 2022). In 2021, registration-intent studies for amdizalisib were initiated and Breakthrough Therapy Designation was granted for relapse or refractory follicular lymphoma in China. HUTCHMED currently retains all rights to amdizalisib worldwide. The table below shows a summary of the clinical studies for amdizalisib.

Phase II registration-intent trial (NCT04849351) - In April 2021, we commenced a registration-intent, single-arm, open-label Phase II trial in China in approximately 100 patients with relapsed/refractory follicular lymphoma and approximately 80 patients with relapsed/refractory marginal zone lymphoma, two subtypes of non-Hodgkin's lymphoma. The primary endpoint is ORR. The trial is being conducted in over 35 sites in China and is expected to be fully enrolled around year end for follicular lymphoma cohort and in the first half of 2023 for marginal zone lymphoma cohort.

Sovleplenib (HMPL-523)

Sovleplenib is a novel, selective, oral inhibitor targeting Syk, for the treatment of hematological malignancies and immune diseases. Syk is a component in Fc receptor and B-cell receptor signaling pathway.

In 2021, we initiated a Phase III study in China for primary ITP, for which it has received Breakthrough Therapy Designation, and presented data on both primary ITP and hematological malignancies at ASH69 2021. HUTCHMED currently retains all rights to sovleplenib worldwide. The table below shows a summary of the clinical studies for sovleplenib.

ESLIM-01 (Evaluation of Sovleplenib for immunological diseases-01, NCT05029635) - In October 2021, we initiated a randomized, double-blinded, placebo-controlled Phase III trial in China of sovleplenib in approximately 180 adult patients with primary ITP who have received at least one prior line of standard therapy. ITP is an autoimmune disorder that can lead to increased risk of bleeding. The primary endpoint of the study is the durable response rate. In January 2022, the NMPA granted Breakthrough Therapy Designation for this indication. Enrollment is expected to be completed around the end of 2022.

China Phase II/III in warm AIHA - This is a randomized, double-blind, placebo-controlled Phase II/III study to evaluate the efficacy, safety, tolerability, and pharmacokinetics of sovleplenib in the treatment of warm AIHA. AIHA is the result of destruction of red blood cells due to the production of antibodies against red blood cells which bind to antigens on the red blood cell membrane in autoimmune disorders. If the results of the Phase II stage of the study indicate sufficiently satisfactory efficacy and safety, the Phase III stage will be initiated. The China IND was approved in July 2022.

China Phase II in COVID-19 - Patients hospitalized with COVID-19 may experience severe inflammation, becoming at risk of multiple organ failures, which is the most common cause of death. Syk inhibition has been shown to reduce severe inflammation in severe and critical patients. This study is a multicenter, randomized, double-blind, placebo-controlled phase II study. The target population is adult patients with severe/critical COVID-19 requiring hospitalization and supplemental oxygen. About 80 patients are planned to be randomized to receive sovleplenib or placebo combined with standard therapy. The primary endpoint is all-cause mortality by day 29. The China IND was approved in June 2022.

Tazemetostat

In August 2021, we entered into a strategic collaboration with Epizyme to research, develop, manufacture and commercialize tazemetostat in Greater China, including the mainland, Hong Kong, Macau and Taiwan. Tazemetostat is an inhibitor of EZH2 developed by Epizyme that is approved by the U.S. FDA for the treatment of certain epithelioid sarcoma and follicular lymphoma patients. It received accelerated approval from the FDA based on ORR and DoR in January and June 2020 for epithelioid sarcoma and follicular lymphoma, respectively.70

We are developing and plan to seek approval for tazemetostat in various hematological and solid tumors, including epithelioid sarcoma, follicular lymphoma and potentially other forms of lymphoma in Greater China. We are participating in Epizyme's SYMPHONY-1 (EZH-302) study, leading it in Greater China. The parties also intend to conduct additional global studies jointly. We will generally be responsible for funding all clinical trials of tazemetostat in Greater China, including the portion of global trials conducted there. We are responsible for the research, manufacturing and commercialization of tazemetostat in Greater China.

The table below shows a summary of the clinical studies for tazemetostat.

Hainan Pilot Zone - In May 2022, tazemetostat was approved by the Health Commission and Medical Products Administration of Hainan Province to be used in the Hainan Boao Lecheng International Medical Tourism Pilot Zone (Hainan Pilot Zone), under the Clinically Urgently Needed Imported Drugs scheme, for the treatment of certain patients with epithelioid sarcoma and follicular lymphoma consistent with the label as approved by the FDA. Launched in 2013 and located in China, the Hainan Pilot Zone is a destination for international medical tourism and global hub for scientific innovation, welcoming 83,900 medical tourists in 2020, according to official data.

SYMPHONY-1 (NCT04224493) - This is a global, multicenter, randomized, double-blind, active-controlled, 3-stage, biomarker-enriched, Phase Ib/III study of tazemetostat in combination with R² in patients with relapsed or refractory follicular lymphoma after at least one prior line of therapy. Epizyme conducted the Phase Ib portion of the study in 2021, which determined the recommended Phase III dose and also demonstrated potential efficacy in second-line follicular lymphoma. The safety profile of the combination was consistent with the previously reported safety information in the U.S. prescribing information for both tazemetostat and R², respectively.

An interim analysis of the Phase Ib portion of the study, based on 44 follicular lymphoma patients as of January 22, 2022, was presented at ASCO 2022. The safety profile of the tazemetostat and R² combination was consistent with the prescribing information for both tazemetostat and R², respectively. Additionally, there was no clear dose response for treatment-emergent adverse events (TEAEs) or dose modifications. Of 38 evaluable patients, ORR was 95% with 50% complete response rate. Median PFS and DoR were not yet reached.

In the Phase III portion of the trial, approximately 500 patients are randomly assigned to receive the recommended Phase III dose of tazemetostat + R² or placebo + R². The study will also include a maintenance arm with tazemetostat or placebo following the first year of treatment with tazemetostat + R² or placebo + R². The first patients were enrolled in May 2022 and we anticipate the first China patient will enroll in the second half of 2022.

China Phase II bridging study in relapsed/refractory follicular lymphoma (NCT05467943) - In July 2022, we initiated a multicenter, open-label, Phase II study to evaluate the efficacy, safety and pharmacokinetics of tazemetostat for the treatment of patients with relapsed/refractory follicular lymphoma intended to support conditional registration in China. The primary objective is to evaluate the efficacy of tazemetostat in patients with EZH2 mutation (Cohort 1). The secondary objectives are to evaluate the efficacy of tazemetostat in patients with EZH2 wild-type (Cohort 2) and to evaluate the safety and the pharmacokinetics of tazemetostat.

China Phase II combination study in relapsed/refractory follicular lymphoma - This is a multicenter, open-label, Phase II study to evaluate the safety, tolerability and preliminary anti-tumor efficacy of tazemetostat in combination with amdizalisib in patients with R/R lymphoma. An IND was submitted in June 2022.

We intend to initiate other combination studies of tazemetostat with other HUTCHMED assets.

HMPL-306

HMPL-306 is a novel dual-inhibitor of IDH1 and IDH2 enzymes. IDH1 and IDH2 mutations have been implicated as drivers of certain hematological malignancies, gliomas and solid tumors, particularly among acute myeloid leukemia patients. HUTCHMED currently retains all rights to HMPL-306 worldwide. The table below shows a summary of the clinical studies for HMPL-306.

HMPL-760

HMPL-760 is an investigational, non-covalent, third-generation BTK inhibitor. It is a highly potent, selective, and reversible inhibitor with long target engagement against BTK, including wild-type and C481S-mutated BTK. China and U.S. Phase I studies opened in early 2022 will include relapsed or refractory non-Hodgkin's lymphoma or CLL71 patients with or without a prior regimen containing a BTK inhibitor. HUTCHMED currently retains all rights to HMPL-760 worldwide.

HMPL-453

HMPL-453 is a novel, selective, oral inhibitor targeting FGFR 1/2/3. Aberrant FGFR signaling is associated with tumor growth, promotion of angiogenesis, as well as resistance to anti-tumor therapies. HUTCHMED currently retains all rights to HMPL-453 worldwide. The table below shows a summary of the clinical studies for HMPL-453.

HMPL-295

HMPL-295 is a novel ERK inhibitor. ERK is a downstream component of the RAS-RAF-MEK-ERK signaling cascade (MAPK pathway). This is our first of multiple candidates in discovery targeting the MAPK pathway. A China Phase I study was initiated in July 2021. HUTCHMED currently retains all rights to HMPL-295 worldwide.

RAS-MAPK pathway is dysregulated in cancer, in which mutations or non-genetic events hyper-activate the pathway in approximately 50% of cancers. RAS and RAF predict worse clinical prognosis in a wide variety of tumor types, mediate resistance to targeted therapies, and decrease the response to the approved standards of care, namely, targeted therapy and immunotherapy. ERK inhibition has the potential to overcome or avoid the intrinsic or acquired resistance from the inhibition of RAS, RAF and MEK upstream mechanisms.

HMPL-653

HMPL-653 is a novel, highly selective, and potent CSF-1R inhibitor designed to target CSF-1R driven tumors as a monotherapy or in combination with other drugs. We initiated a China Phase I study in January 2022. HUTCHMED currently retains all rights to HMPL-653 worldwide.

CSF-1R is usually expressed on the surface of macrophages and can promote growth and differentiation of macrophages. Studies have shown that blocking the CSF-1R signaling pathway could effectively modulate the tumor microenvironment, relieve tumor immunosuppression, and synergize with other anti-cancer therapies such as immune checkpoint inhibitors to achieve tumor inhibition. It has been demonstrated in several clinical studies that CSF-1R inhibitors could treat tenosynovial giant cell tumors, and treat a variety of malignancies combined with immuno-oncology or other therapeutic agents. Currently no CSF-1R inhibitor has been approved in China.

HMPL-A83

HMPL-A83 is an investigational IgG4-type humanized anti-CD47 monoclonal antibody that exhibits high affinity for CD47. HMPL-A83 blocks CD47 binding to Signal regulatory protein (SIRP) α and disrupts the "do not eat me" signal that cancer cells use to shield themselves from the immune system. HUTCHMED currently retains all rights to HMPL-A83 worldwide.

In preclinical studies, HMPL-A83 demonstrated a high affinity for CD47 antigen on tumor cells and strong phagocytosis induction of multiple tumor cells. HMPL-A83 also demonstrated weak affinity for red blood cells and no induction of hemagglutination, implying low risk of anemia, a potential event of special interest. HMPL-A83 has also demonstrated strong anti-tumor activity in multiple animal models. 

Immunology Collaboration with Inmagene

In January 2021, we entered into a strategic partnership with Inmagene, a clinical development stage company with a focus on immunological diseases, to further develop four novel preclinical drug candidates we discovered for the potential treatment of multiple immunological diseases. Under the terms of the agreement, we granted Inmagene exclusive options to such drug candidates solely for the treatment of immunological diseases. Funded by Inmagene, we will work together to move the drug candidates towards IND. If successful, Inmagene will then advance the drug candidates through global clinical development. INDs for the first two compounds were submitted in 2022.

IMG-007 in atopic dermatitis - This is a novel antagonistic monoclonal antibody targeting the OX40 receptor. OX40 is a costimulatory receptor member of the tumor necrosis factor receptor (TNFR) superfamily expressed predominantly on activated T cells. The ligation of OX40 by its ligand OX40L leads to enhanced T cell survival, proliferation, and effector functions. Preclinical research results show that IMG-007 can bind to human OX40 receptor with high affinity, thereby inhibit the binding of OX40 to OX40L, reducing OX40L-dependent downstream signaling and cytokine release by OX40+ T cells. By selectively shutting down OX40+ T cell function, IMG-007 may provide a treatment option for pathological OX40+ T cell-mediated immune diseases, such as atopic dermatitis. Atopic dermatitis is a chronic inflammatory skin condition that is estimated to affect 8-19% of children and 2-5% of adults in U.S., Europe, and East Asia. The Phase I study in healthy volunteers was initiated in July 2022 in Australia.

IMG-004 in immunological diseases - This is a non-covalent, reversible small molecule inhibitor targeting BTK. Designed specifically for inflammatory and autoimmune diseases that usually require long-term treatment, IMG-004 is potent, highly selective and brain permeable. BTK is involved in innate and adaptive immune responses related to certain immune-mediated diseases. Given the central role of BTK in immunity pathways, BTK inhibitors may offer a potential therapeutic approach for the treatment of a wide range of inflammatory and autoimmune diseases. The Phase I study in healthy volunteers IND has been cleared by the U.S. FDA and enrollment is imminent.

OTHER VENTURES

Our Other Ventures include drug marketing and distribution platforms covering about 290 cities and towns in China with around 2,900 mainly manufacturing and commercial personnel. Built over the past 20 years, it primarily focuses on prescription drug and science-based nutrition products through several joint ventures and subsidiary companies.

In the first six months of 2022, our Other Ventures consolidated revenues were $110.9 million (H1-21: $114.5m), with the decrease mainly due to lower sales of consumer products to $5.3 million (H1-22: $11.8m). Consolidated net income attributable to HUTCHMED from our Other Ventures increased by 19% (16% at CER) to $35.4 million (H1-21: $29.8m, excluding net income attributable to HUTCHMED of $11.5 million contributed from HBYS which was disposed in September 2021).

Hutchison Sinopharm74: Our prescription drugs commercial services business, which in addition to providing certain commercial services for our own products, provides services to third-party pharmaceutical companies in China, grew sales by 3% (2% at CER) to $99.3 million in the first half of 2022 (H1-21: $96.2m).

In 2021, the Hong Kong International Arbitration Centre made a final award in favor of Hutchison Sinopharm against Luye75 in the amount of RMB253.2 million ($38.0 million), plus costs and interest (the "Award"), in connection with the termination of Hutchison Sinopharm's right to distribute SEROQUEL® in China. In June 2022, Luye provided a bank guarantee of up to RMB286.0 million to cover the Award, pending the outcome of an application by Luye to the High Court of Hong Kong to set aside the Award. On July 26, 2022, Luye's application to set aside the Award was dismissed by the High Court with costs awarded in favor of Hutchison Sinopharm and if Luye does not appeal the dismissal, Hutchison Sinopharm will be seeking to enforce the Award by drawing down on the bank guarantee.

SHPL: Our own-brand prescription drugs business, operated through our non-consolidated joint venture SHPL, grew sales by 18% (16% at CER) to $212.4 million (H1-21: $180.4m). This sales growth and favorable product mix led to an increase of 17% (15% at CER) in net income attributable to HUTCHMED to $33.6 million (H1-21: $28.6m).

The SHPL operation is large-scale, with a commercial team of over 2,200 staff managing the medical detailing and marketing of its products not just in hospitals in provincial capitals and medium-sized cities, but also in the majority of county-level hospitals in China. SHPL's Good Manufacturing Practice-certified factory holds 74 drug product manufacturing licenses and is operated by about 530 manufacturing staff.

SXBX76 pill: SHPL's main product is SXBX pill, an oral vasodilator prescription therapy for coronary artery disease. SXBX pill is the third largest botanical prescription drug in this indication in China, with a national market share in January to April 2022 of 21.5% (2021: 19.6%). Sales increased by 19% (17% at CER) to $197.9 million in the first half of 2022 (H1-21: $167.0m).

SXBX pill is protected by a formulation patent that expires in 2029, but also retains certain state protection that extends indefinitely, and is one of less than two dozen proprietary prescription drugs represented on China's National Essential Medicines List (NEML). Inclusion on this list means that all Chinese state-owned health care institutions are required to carry it. SXBX pill is fully reimbursed in all China.

Dividends: Our share of SHPL's profits are passed to the HUTCHMED Group through dividend payments. In the first six months of 2022, dividends of $22.7 million (H1-21: $42.1m) were paid from SHPL to the HUTCHMED Group level with aggregate dividends received by HUTCHMED since inception of over $260 million.

Weiguo SuChief Executive Officer and Chief Scientific OfficerAugust 1, 2022

USE OF NON-GAAP FINANCIAL MEASURES AND RECONCILIATION

In addition to financial information prepared in accordance with U.S. GAAP, this announcement also contains certain non-GAAP financial measures based on management's view of performance including:

· Adjusted Group net cash flows excluding financing activities

· CER

Management uses such measures internally for planning and forecasting purposes and to measure the HUTCHMED Group's overall performance. We believe these adjusted financial measures provide useful and meaningful information to us and investors because they enhance investors' understanding of the continuing operating performance of our business and facilitate the comparison of performance between past and future periods. These adjusted financial measures are non-GAAP measures and should be considered in addition to, but not as a substitute for, the information prepared in accordance with U.S. GAAP. Other companies may define these measures in different ways.

Adjusted Group net cash flows excluding financing activities: We exclude deposits in and proceeds from short-term investments for the period, and exclude the net cash generated from financing activities for the period to derive our adjusted Group net cash flows excluding financing activities. We believe the presentation of adjusted Group net cash flows excluding financing activities provides useful and meaningful information about the change in our cash resources excluding those from financing activities which may present significant period-to-period differences.

CER: We remove the effects of currency movements from period-to-period comparisons by retranslating the current period's performance at previous period's foreign currency exchange rates. Because we have significant operations in China, the RMB to U.S. dollar exchange rates used for translation may have a significant effect on our reported results. We believe the presentation at CER provides useful and meaningful information because it facilitates period-to-period comparisons of our results and increases the transparency of our underlying performance.

Reconciliation of GAAP change in net cash used in operating activities to Adjusted Group net cash flows excluding financing activities:

Reconciliation of GAAP revenues and net income attributable to HUTCHMED to CER:

GROUP CAPITAL RESOURCES

LIQUIDITY AND CAPITAL RESOURCES

To date, we have taken a multi-source approach to fund our operations, including through cash flows generated and dividend payments from our Oncology/Immunology and Other Ventures operations, service and milestone and upfront payments from our collaboration partners, bank borrowings, investments from third parties, proceeds from our listings on various stock exchanges and follow-on offerings.

Our Oncology/Immunology operations have historically not generated significant profits and have operated at a net loss, as creating potential global first-in-class or best-in-class drug candidates requires a significant investment of resources over a prolonged period of time. As such, we incurred net losses of $162.9 million for the six months ended June 30, 2022 and net losses of $102.4 million for the six months ended June 30, 2021.

As of June 30, 2022, we had cash and cash equivalents and short-term investments of $826.2 million and unutilized bank facilities of $177.8 million. As of June 30, 2022, we had $0.4 million in bank borrowings.

Certain of our subsidiaries and joint ventures, including those registered as wholly foreign-owned enterprises in China, are required to set aside at least 10.0% of their after-tax profits to their general reserves until such reserves reach 50.0% of their registered capital. In addition, certain of our joint ventures are required to allocate certain of their after-tax profits as determined in accordance with related regulations and their respective articles of association to the reserve funds, upon approval of the board.

Profit appropriated to the reserve funds for our subsidiaries and joint ventures incorporated in the PRC was nil and approximately $8,000 for the six months ended June 30, 2022 and 2021, respectively. In addition, as a result of PRC regulations restricting dividend distributions from such reserve funds and from a company's registered capital, our PRC subsidiaries are restricted in their ability to transfer a certain amount of their net assets to us as cash dividends, loans or advances. This restricted portion amounted to $0.2 million as of June 30, 2022.

In addition, our non-consolidated joint venture, SHPL, held an aggregate of $58.1 million in cash and cash equivalents and no bank borrowings as of June 30, 2022. Such cash and cash equivalents are only accessible by us through dividend payments from the joint venture. The level of dividends declared by the joint venture is subject to agreement each year between us and our joint venture partner based on the profitability and working capital needs of the joint venture.

CASH FLOW

Net cash used in operating activities was $71.3 million for the six months ended June 30, 2021, compared to net cash used in operating activities of $89.9 million for the six months ended June 30, 2022. The net change of $18.6 million was primarily attributable to an increase in net loss of $63.6 million from $99.3 million for the six months ended June 30, 2021 to $162.9 million for the six months ended June 30, 2022. The foregoing was partially offset by an increase in changes of working capital of $46.8 million from $11.0 million for the six months ended June 30, 2021 to $57.8 million for the six months ended June 30, 2022.

Net cash used in investing activities was $155.9 million for the six months ended June 30, 2021, compared to net cash generated from investing activities of $259.7 million for the six months ended June 30, 2022. The net change of $415.6 million was primarily attributable to short-term investments which had net deposits of $163.5 million for the six months ended June 30, 2021 as compared to net withdrawals of $275.5 million for the six months ended June 30, 2022. The net change was partially offset by the deposit received for the divestment of an equity investee of $15.9 million during the six months ended June 30, 2021.

Net cash generated from financing activities was $578.3 million for the six months ended June 30, 2021, compared to net cash used in financing activities of $74.6 million for the six months ended June 30, 2022. The net change of $652.9 million was mainly attributable to net proceeds from issuances of shares of $614.9 million primarily from a private placement in April 2021 and our public offering on the HKEX in June 2021. The net change was also attributable to an increase in purchases of ADSs of $21.3 million by a trustee for the settlement of equity awards of the Company which totaled $26.8 million for the six months ended June 30, 2021 as compared to $48.1 million for the six months ended June 30, 2022, as well as a net decrease in bank borrowings of $26.5 million due to a repayment of bank borrowings of $26.9 million partly offset by proceeds from bank borrowings of $0.4 million during the six months ended June 30, 2022.

LOAN FACILITIES 

In November 2018, our subsidiary renewed a three-year revolving loan facility with HSBC77. The facility amount of this loan was HK$234.0 million ($30.0 million) with an interest rate at HIBOR78 plus 0.85% per annum. This credit facility was guaranteed by us and includes certain financial covenant requirements. The revolving loan facility expired in November 2021.

In May 2019, our subsidiary entered into a credit facility arrangement with HSBC for the provision of unsecured credit facilities in the aggregate amount of HK$400.0 million ($51.3 million). The 3-year credit facilities include (i) a HK$210.0 million ($26.9 million) term loan facility and (ii) a HK$190.0 million ($24.4 million) revolving loan facility, both with an interest rate at HIBOR plus 0.85% per annum. These credit facilities are guaranteed by us and include certain financial covenant requirements. The term loan was drawn in October 2019 and was repaid in May 2022. The revolving loan facility also expired in May 2022.

In August 2020, our subsidiary entered into a 24-month revolving credit facility with Deutsche Bank AG79 in the amount of HK$117.0 million ($15.0 million) with an interest rate at HIBOR plus 4.5% per annum. This revolving facility is guaranteed by us and includes certain financial covenant requirements. As of June 30, 2022, no amount was drawn from the revolving loan facility.

In October 2021, our subsidiary entered into a 10-year fixed asset loan facility agreement with Bank of China Limited for the provision of a secured credit facility in the amount of RMB754.9 million ($113.2 million) with an annual interest rate at the 5-year China Loan Prime Rate less 0.80% (which was supplemented in June 2022). This credit facility is guaranteed by another subsidiary of the Group, and secured by the underlying leasehold land and buildings, and includes certain financial covenant requirements. As of June 30, 2022, RMB2.8 million ($0.4 million) was drawn from the fixed asset loan facility.

In May 2022, our subsidiary entered into a 12-month revolving credit facility with HSBC in the amount of HK$390.0 million ($50.0 million) with an interest rate at HIBOR plus 0.5% per annum. This revolving facility is guaranteed by us. As of June 30, 2022, no amount was drawn from the revolving loan facility.

Our non-consolidated joint venture SHPL had no bank borrowings outstanding as of June 30, 2022.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The following table sets forth our contractual obligations as of June 30, 2022. Our purchase obligations relate to property, plant and equipment that are contracted for but not yet paid. Our lease obligations primarily comprise future aggregate minimum lease payments in respect of various factories, warehouses, offices and other assets under non-cancellable lease agreements.

The following table sets forth the contractual obligations of our non-consolidated joint venture SHPL as of June 30, 2022. SHPL's purchase obligations comprise capital commitments for property, plant and equipment contracted for but not yet paid. SHPL's lease obligations primarily comprise future aggregate minimum lease payments in respect of various offices under non-cancellable lease agreements.

FOREIGN EXCHANGE RISK

A substantial portion of our revenues and expenses are denominated in renminbi, and our consolidated financial statements are presented in U.S. dollars. We do not believe that we currently have any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge our exposure to such risk. In general, our exposure to foreign exchange risks is limited.

The value of the renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions. The conversion of renminbi into foreign currencies, including U.S. dollars, has been based on rates set by the PBOC80. If we decide to convert renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the renminbi would have a negative effect on the U.S. dollar amounts available to us. On the other hand, if we need to convert U.S. dollars into renminbi for business purposes, e.g. capital expenditures and working capital, appreciation of the renminbi against the U.S. dollar would have a negative effect on the renminbi amounts we would receive from the conversion. In addition, for certain cash and bank balances deposited with banks in the PRC, if we decide to convert them into foreign currencies, they are subject to the rules and regulations of foreign exchange control promulgated by the PRC government.

CREDIT RISK

Substantially all of our bank deposits are in major financial institutions, which we believe are of high credit quality. We limit the amount of credit exposure to any single financial institution. We make periodic assessments of the recoverability of trade and other receivables and amounts due from related parties. Our historical experience in collection of receivables falls within the recorded allowances, and we believe that we have made adequate provision for uncollectible receivables.

INTEREST RATE RISK

We have no significant interest-bearing assets except for bank deposits. Our exposure to changes in interest rates is mainly attributable to our bank borrowings, which bear interest at floating interest rates and expose us to cash flow interest rate risk. We have not used any interest rate swaps to hedge our exposure to interest rate risk. We have performed sensitivity analysis for the effects on our results for the period from changes in interest rates on floating rate borrowings. The sensitivity to interest rates used is based on the market forecasts available at the end of the reporting period and under the economic environments in which we operate, with other variables held constant. According to the analysis, the impact on our net loss of a 1.0% interest rate shift would be a maximum increase/decrease of $0.1 million for the six months ended June 30, 2022.

OFF-BALANCE SHEET ARRANGEMENTS

We did not have during the periods presented, and we do not currently have, any material off-balance sheet arrangements

CONTINGENT LIABILITIES

Other than as disclosed in note 11 to the interim financial statements, the Group does not have any other significant commitments or contingent liabilities.

GEARING RATIO

The gearing ratio of the Group, which was calculated by dividing total interest-bearing loans by total equity, was 0.05% as of June 30, 2022, a decrease from 2.6% as of December 31, 2021. The decrease was primarily attributable to the decrease in interest-bearing loans.

SIGNIFICANT INVESTMENTS HELD

Except for our investment in a non-consolidated joint venture SHPL with a carrying value of $82.5 million including details below and those as disclosed in note 7 to the interim financial statements, we did not hold any other significant investments in the equity of any other companies as of June 30, 2022.

Our own-brand prescription drugs business under our Other Ventures is operated through SHPL. Dividends received from SHPL for the six months ended June 30, 2022 were $22.7 million.

FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS

Note 11 to the interim financial statements discloses our planned expenditures on capital assets as of June 30, 2022. At this date there were no other plans to incur material expenditures on additional investments or capital assets.

MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

During the six months ended June 30, 2022, we did not have any other material acquisitions and disposals of subsidiaries, associates and joint ventures.

PLEDGE OF ASSETS

Our 10-year fixed asset loan facility agreement with Bank of China Limited is secured by the underlying leasehold land and buildings. RMB2.8 million ($0.4 million) was drawn from the fixed asset loan facility as of June 30, 2022.

INFLATION

In recent years, China has not experienced significant inflation, and thus inflation has not had a material impact on our results of operations. According to the National Bureau of Statistics of China, the Consumer Price Index in China increased by 0.2%, 1.5% and 2.5% in 2020, 2021 and the first half of 2022, respectively. Although we have not been materially affected by inflation in the past, we can provide no assurance that we will not be affected in the future by higher rates of inflation in China.

INTERIM DIVIDEND

The Board does not recommend any interim dividend for the six months ended June 30, 2022.

OTHER INFORMATION

CORPORATE STRATEGY

The primary objective of the Company and its subsidiaries (the "Group") is to become a fully integrated global leader in the discovery, development and commercialization of targeted therapies and immunotherapies for the treatment of cancer and immunological diseases. The strategy of the Company is to leverage the highly specialized expertise of the drug discovery division, known as the Oncology/Immunology operations, to develop and expand its drug candidate portfolio for the global market while also building on the first-mover advantage in the development and launch of novel cancer drugs in China. This is aligned with the Company's culture of innovation and high engagement and empowerment with a high focus on reward and recognition. The Chairman's Statement and the Operations Review contain discussions and analyses of the Group's opportunities, performance and the basis on which the Group generates or preserves value over the longer term and the basis on which the Group will execute its strategy for delivering the objective of the Group. Further information on the sustainability initiatives of the Group and its key relationships with stakeholders can also be found in the standalone sustainability report of the Group.

HUMAN RESOURCES

As at June 30, 2022, the Group employed approximately 2,110 (December 31, 2021: ~1,760) full time staff members. Staff costs during the six months ended June 30, 2022, including directors' emoluments, totaled $118.9 million (H1-21: $85.5 million).

The Group fully recognizes the importance of high-quality human resources in sustaining market leadership. Salary and benefits are kept at competitive levels, while individual performance is rewarded within the general framework of the salary, bonus and incentive system of the Group, which is reviewed annually. Employees are provided with a wide range of benefits that include medical coverage, provident funds and retirement plans, and long-service awards. The Group stresses the importance of staff development and provides training programs on an ongoing basis. Employees are also encouraged to play an active role in community care activities.

SUSTAINABILITY

As an innovative, commercial-stage biopharmaceutical company, HUTCHMED embraces sustainability at the core of how we operate. Over the past two decades and on an ongoing basis, we are working hard to contribute to the enhancement of healthcare systems by continuously providing quality and accessible drugs. As the world is gradually adapting to the changes and new normal brought about by the COVID-19 pandemic, it has highlighted the importance of incorporating sustainability factors into our strategy. HUTCHMED embarked on our sustainability journey in 2020 by making voluntary disclosures in our inaugural sustainability report to demonstrate our efforts, and establishing a board level Sustainability Committee in 2021 to support the Board of Directors (the "Board") in fulfilling their responsibilities. Our second sustainability report for 2021, with enhanced disclosures, was published in May 2022.

Going forward, HUTCHMED will be working with our stakeholders to embrace sustainable business practices and develop a sustainability strategy that will help focus our efforts on areas which are most relevant to our business. Through a materiality assessment exercise for 2021, we identified the following priority areas: business ethics; drug research-related topics; drug development; commercial operations responsibilities; environmental topics; and people management. Over the course of 2022, we will continue to engage our stakeholders to identify areas for improvement in these sustainability fronts.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

During the period from January 1, 2022 to June 30, 2022, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the listed securities of the Company.

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

The Company strives to attain and maintain high standards of corporate governance best suited to the needs and interests of the Group as it believes that effective corporate governance framework is fundamental to promoting and safeguarding interests of shareholders and other stakeholders and enhancing shareholder value. Accordingly, the Company has adopted and applied corporate governance principles and practices that emphasize a quality Board, effective risk management and internal control systems, stringent disclosure practices, transparency and accountability as well as effective communication and engagement with shareholders and other stakeholders. It is, in addition, committed to continuously enhancing these standards and practices and inculcating a robust culture of compliance and ethical governance underlying the business operations and practices across the Group.

The Company has complied throughout the six months ended June 30, 2022 with all code provisions of the Hong Kong Corporate Governance Code contained in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Hong Kong Listing Rules").

COMPLIANCE WITH THE SHARE DEALINGS CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Board has adopted the Code on Dealings in Shares which is on terms no less exacting than the required standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Hong Kong Listing Rules as the protocol regulating Directors' dealings in securities of the Company. In response to specific enquiries made, all Directors have confirmed their compliance with the required standards set out in such code regarding their securities transactions throughout their tenure during the six months ended June 30, 2022.

USE OF NET PROCEEDS

On June 30, 2021, the Company issued 104,000,000 new ordinary shares for total gross proceeds of approximately $534.7 million from the listing and offering of the Company's ordinary shares on HKEX. 

On July 15, 2021, the over-allotment option was fully exercised and the Company issued an aggregate of 15,600,000 ordinary shares for total gross proceeds of approximately $80.2 million.

The intended use of total net proceeds of approximately $585.2 million from the offering and the over-allotment option for the purposes and in the amounts (adjusted on pro rata basis based on the actual net proceeds) as disclosed in the prospectus issued by the Company dated June 18, 2021 is as below:

Note: There was no change in the intended use of net proceeds as previously disclosed, and the Company plans to gradually utilize the remaining net proceeds in accordance with such intended purposes depending on actual market conditions and business needs, which is expected to be fully utilized by the end of year 2023.

REVIEW OF INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The interim unaudited condensed consolidated financial statements of the Group for the six months ended June 30, 2022 have been reviewed by the auditor of the Company, PricewaterhouseCoopers, in accordance with Hong Kong Standard on Review Engagements 2410 - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants for the Hong Kong filing. The interim unaudited condensed consolidated financial statements of the Group for the six months ended June 30, 2022 have also been reviewed by the Audit Committee of the Company.

IMPORTANT EVENTS AFTER THE REPORTING DATE

Save as disclosed above, no important events affecting the Company occurred since June 30, 2022 and up to the date of this announcement.

PUBLICATION OF INTERIM RESULTS AND INTERIM REPORT

This interim results announcement is published on the websites of HKEX (www.hkexnews.hk), the U.S. Securities and Exchange Commission (www.sec.gov/edgar), the London Stock Exchange (www.londonstockexchange.com) and the Company (www.hutch‑med.com). The interim report of the Group for the six months ended June 30, 2022 will be published on the websites of HKEX and the Company, and dispatched to the Company's shareholders in due course.

REFERENCES AND ABBREVIATIONS

1 NSCLC = Non-small cell lung cancer.

2 MET = Mesenchymal epithelial transition factor.

3 CRC = Colorectal cancer.

4 epNET = extra-pancreatic neuroendocrine tumor.

5 pNET= pancreatic neuroendocrine tumor.

6 R&D = Research and development.

7 FDA = Food and Drug Administration.

8 EMA = European Medicines Agency.

9 MAA = Marketing Authorization Application.

10 In-market sales = total sales to third parties provided by Eli Lilly (ELUNATE®), AstraZeneca (ORPATHYS®) and HUTCHMED (SULANDA® and TAZVERIK®).

11 NRDL = National Reimbursement Drug List.

12 Lilly = Eli Lilly and Company.

13 ITP = Immune thrombocytopenia purpura.

14 NMPA = National Medical Products Administration.

15 NDA = New Drug Application.

16 EU = European Union.

17 EGFR = Epidermal growth factor receptor.

18 WCLC = World Conference on Lung Cancer.

19 DoR = Duration of response.

20 PFS = Progression-free survival.

21 OS = Overall survival.

22 ELCC = European Lung Cancer Congress.

23 VEGFR = Vascular endothelial growth factor receptor.

24 ASCO GI = ASCO (American Society of Clinical Oncology) Gastrointestinal Cancers Symposium.

25 PMDA = Pharmaceuticals and Medical Devices Agency.

26 FGFR = Fibroblast growth factor receptor.

27 CSF-1R = Colony-stimulating factor 1 receptor.

28 ASCO = American Society of Clinical Oncology.

29 PI3Kδ = Phosphoinositide 3-kinase delta.

30 Syk = Spleen tyrosine kinase.

31 AIHA = autoimmune hemolytic anemia.

32 Epizyme = Epizyme Inc.

33 IDH = Isocitrate dehydrogenase.

34 BTK = Bruton's tyrosine kinase.

35 MAPK pathway = RAS-RAF-MEK-ERK signaling cascade.

36 IND = Investigational New Drug (application).

37 We also report changes in performance at constant exchange rate ("CER") which is a non-GAAP measure. Please refer to "Use of Non-GAAP Financial Measures and Reconciliation" below for further information relevant to the interpretation of these financial measures and reconciliations of these financial measures to the most comparable GAAP measures.

38 SHPL = Shanghai Hutchison Pharmaceuticals Limited.

39 HBYS = Hutchison Whampoa Guangzhou Baiyunshan Chinese Medicine Company Limited.

40 ADS = American depositary share.

41 HKEX = The Main Board of The Stock Exchange of Hong Kong Limited.

42 GAAP = Generally Accepted Accounting Principles.

43 SG&A Expenses = selling, general and administrative expenses.

44 NHSA = China National Healthcare Security Administration.

45 NET = Neuroendocrine tumor.

46 CSCO = Chinese Society of Clinical Oncology.

47 PRCC = Papillary renal cell carcinoma.

48 EGFRm+ = Epidermal growth factor receptor mutated.

49 TKI = Tyrosine kinase inhibitor.

50 FISH5+ = MET amplification as detected by FISH with MET copy number ≥ 5 and/or MET: CEP signal ratio ≥ 2.

51 IHC50+ = MET overexpression as detected by IHC with 3+ in ≥ 50% tumor cells.

52 FISH10+ = MET amplification as detected by FISH with MET copy number ≥ 10.

53 IHC90+ = MET overexpression as detected by IHC with 3+ in ≥ 90% tumor cells.

54 ORR = Objective response rate.

55 RCC = Renal cell carcinoma.

56 HCC = Hepatocellular carcinoma.

57 TN = Triple negative.

58 HR+ = Hormone receptor positive.

59 Her2- = Human epidermal growth factor receptor 2 negative.

60 MSS = Microsatellite Stable.

61 DCR = Disease Control Rate.

62 NR = not reached.

63 NEC = Neuroendocrine carcinoma.

64 NEN = Neuroendocrine neoplasms.

65 ESMO = European Society for Medical Oncology.

66 IO = Immuno-oncology.

67 SCLC = Small cell lung cancer.

68 NHL = Non-Hodgkin's Lymphoma.

69 ASH = American Society of Hematology.

70 TAZVERIK® is a methyltransferase inhibitor indicated for the treatment of: adults and pediatric patients aged 16 years and older with metastatic or locally advanced epithelioid sarcoma not eligible for complete resection; adult patients with relapsed or refractory follicular lymphoma whose tumors are positive for an EZH2 mutation as detected by an FDA-approved test and who have received at least two prior systemic therapies; and adult patients with relapsed or refractory follicular lymphoma who have no satisfactory alternative treatment options. These indications are approved under accelerated approval based on overall response rate and duration of response. Post marketing studies are required to confirm the anticipated clinical benefit and retain the labeled Accelerated Approval indications. The most common (≥20%) adverse reactions in patients with epithelioid sarcoma are pain, fatigue, nausea, decreased appetite, vomiting and constipation. The most common (≥20%) adverse reactions in patients with follicular lymphoma are fatigue, upper respiratory tract infection, musculoskeletal pain, nausea and abdominal pain. View the U.S. Full Prescribing Information at https://www.epizyme.com/wp-content/uploads/2021/06/TAZVERIK.pdf.

71 CLL = Chronic lymphocytic leukemia.

72 SLL = Small lymphocytic lymphoma.

73 IHCC = Intrahepatic cholangiocarcinoma.

74 Hutchison Sinopharm = Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Company Limited.

75 Luye = Luye Pharma Hong Kong Ltd.

76 SXBX = She Xiang Bao Xin.

77 HSBC = The Hongkong and Shanghai Banking Corporation Limited.

78 HIBOR = Hong Kong Interbank Offered Rate.

79 Deutsche Bank AG = Deutsche Bank AG, Hong Kong Branch.

80 PBOC = People's Bank of China.

HUTCHMED (CHINA) LIMITEDCONDENSED Consolidated Balance Sheets(in US$'000, except share data)

The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

HUTCHMED (CHINA) LIMITEDCONDENSED Consolidated Statements of Operations(UNAUDITED, in US$'000, except share and per share data)