Chinese oncology company with 'great potential'

Hutchison China MediTech (Nasdaq: HCM), often referred to as Chi-Med, is a major Chinese company with an established market in that country, writes Avisol Capital Partners on the Seeking Alpha blog, adding that the relative ignorance in the US about the company’s potential makes it a great investment right now.

The thesis is quite simple, says Avisol partner Dr Udaya Maiya, an oncologist: Hutchison China MediTech is a Hong Kong based company with a market cap just shy of $3 billion that is partnering with Eli Lilly (NYSE: LLY) to develop a drug candidate targeting third line metastatic colorectal cancer (mCRC), which, if approved, will bring in peak sales of roughly $250mn per year.

That doesn't sound like much, but the market is missing sight of the huge pipeline, and ignoring that this drug candidate, fruquintinib, not only did extremely well in its pivotal Phase III trial but it actually did better than current US standard of care Bayer’s Stivarga (regorafenib) in both efficacy and safety, although not in a head-to-head trial.