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RNS Number : 8354N
Hutchison China Meditech Limited
31 October 2016
Chi-Med Commercial Platform Joint Venture Receives US$59.5
Million Land Compensation Payment
l Shanghai agreement triggers a one-time gain to Chi-Med of
US$38.2 million in Q4 2016
l Shanghai factory relocation complete: now operational with
three-fold increase in capacity
l Cash from Chi-Med Commercial Platform supports development of
innovative therapies - first pivotal Phase III read-out expected
early 2017
London: Monday, October 31, 2016: Hutchison China MediTech
Limited ("Chi-Med") (AIM/Nasdaq: HCM) today announces that Shanghai
Hutchison Pharmaceuticals Limited ("SHPL"), its 50:50 Prescription
Drug joint venture with a subsidiary of Shanghai Pharmaceuticals
Holding Co., Limited ("Shanghai Pharma"), has today received
US$59.5 million from the Shanghai government under the terms of
their December 2015 land compensation agreement (the "Compensation
Agreement").
As announced on December 9, 2015, SHPL and the Shanghai
government entered into the Compensation Agreement for the
surrender of SHPL's remaining 35 year land-use rights on its
approximately 58,000 square meter old factory site 12 kilometers
northwest of Shanghai city center (the "Site"). The Site was
re-zoned in 2014 from industrial use into usage as a new science
and technology, commercial and residential development area.
Total compensation to SHPL, including cash and subsidies, is
US$113.1 million. SHPL has to date received an aggregate of US$97.2
million in cash, including a US$31.1 million first installment
received in December 2015, US$6.6 million in subsidies already
in-hand and today's US$59.5 million second installment at current
exchange rates. The final US$15.9 million is expected to be
received by the end of 2016 or early 2017.
Chi-Med Group will now book an estimated one-time gain on the
transaction of US$38.2 million in the fourth quarter of 2016. This
represents Chi-Med's share of the compensation less the US$10.3
million net book value of the old site and its buildings, as well
as taxes and other costs.
The re-zoning of the Site prompted SHPL to build a new factory
with an approximate three-fold production capacity increase outside
Shanghai city. The new factory cost approximately US$95 million and
was financed over the past three years mainly with operating cash
flow and limited bank debt. SHPL fully transitioned its 500-person
manufacturing unit to, and began production at, the new factory in
September 2016. After repayment of bank debt and taxes,
approximately US$80 million of the compensation is expected to be
distributed equally to Chi-Med and Shanghai Pharma next year.
Christian Hogg, CEO of Chi-Med, said, "Under the Chi-Med
Commercial Platform, our SHPL Prescription Drug business has grown
sales over ten-fold during the past 10 years to US$126.8 million in
the first half of 2016. The establishment of a new production
facility in Shanghai, with expanded production capacity, is
important to support this profitable and cash generative business.
This cash flow, along with the cash provided by our partners
AstraZeneca PLC, Eli Lilly & Company and Nestlé Health Science
S.A., is what supports our core strategic objective of sustained
investment in clinical development of Chi-Med's seven innovative
small molecule drug candidates. Chi-Med is currently enrolling
patients in 25 clinical trials around the world, including four
pivotal Phase III studies the first of which, fruquintinib in
third-line colorectal cancer, will report top-line results in early
2017."
About Chi-Med
Chi-Med is an innovative biopharmaceutical company which
researches, develops, manufactures and sells pharmaceuticals and
healthcare products. Its Innovation Platform, Hutchison MediPharma
Limited, focuses on discovering and developing innovative
therapeutics in oncology and autoimmune diseases for the global
market. Its Commercial Platform manufactures, markets, and
distributes prescription drugs and consumer health products in
China.
Chi-Med is majority owned by the multinational conglomerate CK
Hutchison Holdings Limited (SEHK: 0001). For more information,
please visit: www.chi-med.com.
About Shanghai Hutchison Pharmaceuticals Limited
SHPL is one of the key companies in the Commercial Platform of
Chi-Med which engages in the manufacture and sale of prescription
drugs. SHPL operates a commercial organization of over 1,800
medical sales representatives across about 300 cities and towns in
China detailing both its own prescription drug products as well as
those of third party companies such as Seroquel(R) (AstraZeneca)
and Concor(R) (Merck Serono).
References
Unless the context requires otherwise, references in this
announcement to the "Group," the "Company," "Chi-Med," "Chi-Med
Group," "we," "us" and "our" refer to Chi-Med and its consolidated
subsidiaries and joint ventures unless otherwise stated or
indicated by context.
Forward-Looking Statements
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 reflect Chi-Med's current expectations regarding future
events and can be identified by words like: "will," "expects,"
"believes" or similar terms, or by express or implied 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. Such risks and
uncertainties include, among other things, the risk that SHPL does
not receive the third installment of cash compensation and
subsidies, in whole or in part, owed for the surrender of its
land-use rights. For further discussion of these and other risks,
see Chi-Med's filings with the U.S. Securities and Exchange
Commission and on AIM. Chi-Med 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.
Contacts
Investor Enquiries
Christian Hogg, CEO +852 2121 8200
International Media Enquiries
Anthony Carlisle, +44 7973 611 888 (Mobile) anthony.carlisle@cdrconsultancy.co.uk
Citigate Dewe Rogerson
U.S. Based Media Enquiries
Brad Miles, BMC Communications +1 (917) 570 7340 (Mobile) bmiles@bmccommunications.com
Susan Duffy, BMC Communications +1 (917) 499 8887 (Mobile) sduffy@bmccommunications.com
Investor Relations
Matt Beck, The Trout Group +1 (917) 415 1750 (Mobile) mbeck@troutgroup.com
David Dible, +44 7967 566 919 (Mobile) david.dible@citigatedr.co.uk
Citigate Dewe Rogerson
Panmure Gordon (UK) Limited
Richard Gray / Andrew Potts +44 (20) 7886 2500
This information is provided by RNS
The company news service from the London Stock Exchange
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October 31, 2016 03:00 ET (07:00 GMT)