Crohn's drug gives MediTech big break

Hutchison China MediTech, an AIM-listed drug discovery group majority owned by Hutchison, the Hong Kong-based conglomerate and Asia's largest company, is on the verge of making its first breakthrough after successful Phase II trials of HMPL-004, its ulcerative colitis and Crohn's disease treatment.

Hutchison set up China MediTech as a first foray into the international pharmaceutical market and the positive trial data is derived from a compound found in traditional Chinese medicine, seen as a rich source of new drugs by many in the pharmaceutical industry. As a result of its long history of use among Chinese patients, the drug was able to bypass Phase I trials and move straight into FDA-approved Phase II.

Ulcerative colitis and Crohn's disease are both autoimmune conditions that affect the bowels and upper and lower intestines. Both are chronic conditions, meaning there is no known cure and that both get progressively worse. Currently, most pharmaceutical treatments are only effective on approximately 60 per cent of patients, and for the 40 per cent unlucky enough to be immune to the treatment the only option open to them is surgery. Both conditions can prove to be fatal in extreme cases.

In trials conducted on 120 patients, China MediTech's drug showed itself to be at least as effective as the current crop of treatments, with fewer side effects and better colonoscopic results. Yesterday's trial results only covered ulcerative colitis - results for the drug's efficacy on Crohn's disease are expected shortly.

The broker Investec believes that the successful commercialisation of the drug could result in it taking at least 20 per cent of the global market by 2012 - a market that is currently worth a combined $3bn per year, and that the drug could be worth an extra 80p per share for China MediTech. Shares in the company closed 2.5p better yesterday at 155p.