In 2025, despite a significant second-half pullback, the Hang Seng Healthcare Index still managed to close the year with over a 50% gain. In stark contrast, HUTCHMED (00013), an innovative pharmaceutical company with three commercialized drugs and a pioneering antibody-drug conjugate in its pipeline, ended the year with an 8.56% decline, significantly underperforming the index. The stock's peak gain for 2025 was a modest 36.36%, and it exhibited a pattern of "falling with the market but not rising with it." From its annual high of HKD 30.75 in the second half of the year, the share price plunged to a low of HKD 19.95, marking a maximum decline of 35.12% over just four and a half months. However, just as the market anticipated continued weakness, HUTCHMED kicked off 2026 with a rally characterized by both rising prices and increasing trading volume. Observations reveal that HUTCHMED gained momentum over the first five trading days of 2026, stringing together five consecutive days of gains. During this period, the single-day trading volume surged to a peak of 15.4516 million shares, setting a new record for daily turnover since last October.
Southbound Stock Connect investors appear to be shifting towards a "right-side" trading strategy for HUTCHMED. Since early April of last year, when external market volatility pushed the stock below the lower Bollinger Band, its price has primarily fluctuated between the middle and upper bands, aligning with the broader rally in Hong Kong's innovative drug sector during 2025. The disclosure of the 2025 interim results, however, marked a pivotal turning point for the stock's secondary market performance. Before the US market opened on August 7 last year, HUTCHMED released its interim report for 2025. The financials showed revenue of $278 million, a decrease of 9.2% year-on-year; meanwhile, boosted by gains from the sale of non-core joint venture equity, the company recorded a net profit of $455 million, a staggering 16.6-fold increase. Behind these headline figures, domestic sales of its three core innovative drugs—fruquintinib, surufatinib, and savolitinib—plummeted by 30-50%, leading to a 22% year-on-year decline in the company's own product sales.
The weakness in HUTCHMED's innovative drug business during the reporting period somewhat dampened the market's assessment of its long-term value, a sentiment reflected in the increasingly pronounced exchange of holdings that corresponded with the stock's price movements. Chart analysis shows that following the interim report, HUTCHMED's share price underwent a month of adjustment. A rebound seemed imminent by mid-September as the negative earnings news appeared fully priced in, but this recovery was abruptly halted when the Hang Seng Healthcare Index peaked on September 8 and subsequently turned downward. Consequently, HUTCHMED's share price resumed its decline alongside the sector's broader correction. From October 2 to December 16, technical indicators showed the Bollinger Band opening downward and gradually narrowing compared to the previous period, guiding the stock into a sustained, volatile downtrend. During this phase, the stock price essentially oscillated mechanically along the middle and lower Bollinger Bands, exhibiting a pattern of declining on low volume. Even a brief rally in early November that challenged the upper Bollinger Band lacked significant volume support and failed to form a solid bullish candlestick breakout, constituting a technical "false breakout" before the stock continued its volatile descent until December 16.
Analyzing trading volume reveals persistently anemic daily turnover for HUTCHMED during this stage, indicating that potential investors were holding cash and adopting a wait-and-see approach. The lack of market support resulted in the phenomenon of the stock price falling erratically on thin volume. This consistent pattern of underperformance led to a shift in investment strategy among existing holders. Taking Southbound Stock Connect funds as an example, while these investors in the Hong Kong market typically favor "left-side" trading—buying on dips and selling on rallies—their trading behavior in HUTCHMED beginning last November started to align more closely with the stock's price trends, a pattern that has continued into 2026. It is evident that as HUTCHMED's "five-day rally" at the start of 2026 signaled a clearer reversal trend, Southbound funds accelerated their momentum buying. Broker trading data indicates that over the past five trading days, the Shenzhen and Shanghai Stock Connect channels were the first and third largest net buyers of HUTCHMED, with net purchases of 1.858 million shares and 82.65%, respectively. Latest figures show that Southbound holdings now account for 27.28% of HUTCHMED's total shares.
The root cause of HUTCHMED's overall weak stock performance in 2025 lies in its interim report, which revealed steep declines in domestic sales for all three of its flagship innovative drugs. Furthermore, with the subsequent performance of fruquintinib slated for confirmation in the full-year 2025 report, the second half of the year became a void period lacking commercial performance catalysts. This was a key reason behind the stock's maximum drawdown of 35.12% in 2H25. In reality, however, HUTCHMED has built a diversified pipeline spanning oncology to autoimmune diseases, with several drug candidates advancing into critical clinical stages, such as sovleplenib, HMPL-453 (fanregratinib), HMPL-306 (ranosidenib), and the Menin inhibitor HMPL-506. The recent flurry of updates on the progress of both new and existing pipeline assets has been the primary driver behind the stock's rebound.
It has been noted that on December 29, 2025, HUTCHMED announced that the New Drug Application (NDA) in China for fanregratinib (HMPL-453) as a second-line treatment for intrahepatic cholangiocarcinoma had been accepted and granted priority review. The following day, the company further announced that the NDA for savolitinib for treating gastric cancer patients with MET amplification was also accepted and granted priority review. On January 5, 2026, HUTCHMED issued an announcement disclosing the initiation of the Phase III portion of its China-based Phase II/III study evaluating surufatinib in combination with camrelizumab, nab-paclitaxel, and gemcitabine for PDAC patients, with the first patient having received their initial dose on December 30, 2025. On January 7, the company announced again that the Phase III registration stage of the ESLIM-02 study for its novel spleen tyrosine kinase (Syk) inhibitor, sovleplenib, in treating adults with warm antibody autoimmune hemolytic anemia (wAIHA) achieved positive top-line results, meeting the primary endpoint of durable hemoglobin (Hb) response from week 5 to 24.
Compared to the expansion studies for the already-commercialized drugs savolitinib and surufatinib, the market has shown greater interest in HMPL-453 and sovleplenib as potential new commercial growth drivers. Sovleplenib, in particular, is of keen interest due to its nearer-term expected approval. This highly selective oral SYK inhibitor is anticipated to gain approval within the year for second-line treatment of adult patients with relapsed/refractory primary immune thrombocytopenia (ITP), promising a new revenue stream. Results from the ESLIM-01 study showed a sustained response rate of 51.4% and an overall response rate of 81.0% for sovleplenib, significantly outperforming other ITP drugs with different mechanisms of action currently under development. Notably, fostamatinib is currently the only SYK inhibitor approved globally for ITP treatment. In terms of development progress, sovleplenib ranks first in China and second globally. Additionally, sovleplenib is undergoing a Phase III ESLIM-02 study in China for wAIHA. Previous Phase II results indicated an overall response rate of 66.7% for sovleplenib in wAIHA, along with a favorable safety profile. Based on these two indications, Puai International estimates sovleplenib's peak sales potential in China could reach approximately RMB 1 billion.
The other recently updated drug, HMPL-453, is a novel, highly selective, and potent FGFR1/2/3 inhibitor with an expected approval timeline around 2027. Judging by the recent performance in the secondary market, HUTCHMED has exhibited a discernible trend of rising prices accompanied by increasing volume, a contrast to the significantly reduced daily turnover seen previously. This suggests a shift away from uniform观望 among external investors towards a more divided view, with some cash holders beginning to establish positions. However, following the surge in both price and volume on January 7, daily trading volume for HUTCHMED retreated again on January 8 and 9. This indicates that after some investors entered the market, the remaining potential investors are maintaining a cautious, wait-and-see stance towards this current rebound. Perhaps more investors are waiting for a clearer confirmation of a right-side trend before making their move.
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