WuXi AppTec Reports Record First-Half Results in 2022

Revenue Up 68.5% Year-Over-Year to RMB17,756 Million
Net Profit Attributable to Owners of the Company Up 73.3% Year-Over-Year to RMB4,636 Million
Diluted Earnings Per Share (EPS) Up 62.6% Year-Over-Year to RMB1.48
Adjusted Non-IFRS Net Profit Attributable to Owners of the Company Up 75.7% Year-Over-Year to RMB4,301 Million
Adjusted Non-IFRS Diluted EPS Up 73.8% Year-Over-Year to RMB1.46^[1]

SHANGHAI, July 26, 2022 /PRNewswire/ -- WuXi AppTec (stock code: 603259.SH / 2359.HK), a global company that provides a broad portfolio of R&D and manufacturing services that enable companies in the pharmaceutical, biotech and medical device industries to advance discoveries and deliver groundbreaking treatments to patients, is pleased to announce its financial results for the first half of the year ending June 30, 2022 ("Reporting Period").

This release provides a summary of the results and is not intended to be a comprehensive report. For additional information, please refer to the 2022 Interim Report and other relevant announcements published on the websites of the Shanghai Stock Exchange (www.sse.com.cn) and the Stock Exchange of Hong Kong (www.hkexnews.hk), and the designated media for dissemination of the relevant information. Investors are advised to exercise caution and be aware of the investment risks in trading Company shares.

All financial information disclosed in this press release is prepared based on International Financial Reporting Standards (IFRS), in currency of RMB.

The 2022 First-Half Report of the Company has not been audited.

First-Half 2022 Financial Highlights

Revenue grew 68.5% year-over-year to RMB17,756 million. This is primarily attributable to the Company's continued focus on leveraging its unique Contract Research, Development and Manufacturing Organization (CRDMO) business model to achieve synergy and strong growth across our business segments: 

• WuXi Chemistry revenue grew 101.9% to RMB12,974 million and adjusted non-IFRS gross profit grew 94.3% to RMB5,314 million, with a gross profit margin of 41%.
• WuXi Testing revenue grew 23.6% to RMB2,605 million and adjusted non-IFRS gross profit grew 26.1% to RMB927 million, with a gross profit margin of 35.6%.
• WuXi Biology revenue grew 18.5% to RMB1,091 million and adjusted non-IFRS gross profit grew 30.7% to RMB444 million, with a gross profit margin of 40.7%.
• WuXi ATU revenue grew 35.7% to RMB615 million and adjusted non-IFRS gross profit was RMB(43) million, with a gross profit margin of -6.9%.
• WuXi DDSU revenue declined 26.7% to RMB455 million and adjusted non-IFRS gross profit declined 52.4% to RMB140 million, with a gross profit margin of 30.7%.

• IFRS gross profit increased 65.5% year-over-year to RMB6,427 million. Gross profit margin was 36.2%.^[2]
• Adjusted Non-IFRS gross profit increased 65.5% year-over-year to RMB6,790 million. Adjusted Non-IFRS gross margin was 38.2%.
• EBITDA increased 64.4% year-over-year to RMB6,483 million.
• Adjusted EBITDA increased 66.6% year-over-year to RMB6,077 million.
• Net profit attributable to owners of the Company increased 73.3% year-over-year to RMB4,636 million.
• Adjusted non-IFRS net profit attributable to owners of the Company increased 75.7% year-over-year to RMB4,301 million.
• Diluted EPS increased 62.6% year-over-year to RMB1.48, while adjusted diluted non-IFRS EPS increased by 73.8% year-over-year to RMB1.46.

First-Half 2022 Business Highlights

- In the first half of 2022, demand for our services was strong and we grew our customer base to more than 5,850 active accounts by adding over 650 new customers. We continued to optimize cross-platform synergies to better serve our customers worldwide, strengthen our unique competitive advantage as a fully integrated CRDMO (Contract Research, Development and Manufacturing Organization) and CTDMO (Contract Testing, Development and Manufacturing Organization), and provide one-stop services for our clients from discovery to development and manufacturing. Revenue growth was demonstrated across our expanding global customer base:

• Revenue from US-based customers grew 104% to RMB11,909 million; revenue from Europe-based customers grew 24% to RMB1,853 million; revenue from China-based customers grew 27% to RMB3,175 million; and revenue from other regions grew 15% to RMB819 million.
• We continued to expand our customer base and retain existing clients. During the Reporting Period, revenue from existing clients grew 79% to RMB17,366 million and new clients contributed RMB391 million in revenue.
• During the Reporting Period, revenue from the top 20 global pharmaceutical companies grew 165%, up to RMB7,856 million; revenue generated from all other customers grew 31% to RMB9,900 million.
• Our unique positioning across the pharmaceutical development value chain drove our "follow-the-customer" and "follow-the-molecule" strategies and enhanced synergies across our business segments. Customers using services from multiple business units contributed RMB15,744 million in revenue, growing 82% year-over-year.

- WuXi Chemistry: CRDMO integrated business model drives revenue to double

• Revenue grew 101.9% to RMB12,974 million and adjusted non-IFRS gross profit grew 94.3% to RMB5,314 million, with a gross margin of 41.0%. Excluding COVID-19 commercial projects, WuXi Chemistry revenue grew 36.8%.
• Revenue from small molecule discovery services ("R") grew 36.5% to RMB3,504 million.
  i. Our industry-leading small molecule drug discovery platform delivered more than 180,000 custom synthesized compounds to our clients in first half 2022. Through our small molecule discovery services, we enabled our customers to accelerate their research while generating opportunities for our downstream business units. As part of our "follow the customer" and "follow the molecule" strategies, we established trusted partnerships with our global customers, which supported the rapid and sustainable growth of our CRDMO business.
  ii. We continued executing our "long-tail" strategy, and those customers continue to have strong demands for our discovery services in small molecules, oligonucleotides and peptides.
• Revenue from our small molecule development and manufacturing (D&M) service grew 145.4% to RMB9,470 million.
  i. During the Reporting Period, the Company added 473 new molecules to our D&M pipeline funnel for a total of 2,010 molecules, including 43 in commercial stage, 52 in phase III, 288 in phase II and 1,627 in phase I and pre-clinical stages.
  ii. D&M services for new modalities is also gaining strong momentum. During the reporting period, the number of oligonucleotide and peptide D&M clients increased 123% to 98, and the number of oligonucleotide and peptide molecules increased 63% to 142. Revenue from oligonucleotide and peptide D&M reached RMB705 million.
• Capacity expansion of WuXi Chemistry continued to accelerate in the first half of 2022 to meet demands. In June 2022, we announced the opening of another high-potency API plant at our Changzhou site. The new plant will meet growing demand for high-potency API process R&D and manufacturing services. In July 2022, we announced the opening of a new large-scale oligonucleotide and peptide manufacturing facility at our Changzhou campus. The new facility underscores our ongoing commitment to enhancing our capacity and capability to meet the fast-growing customer needs for oligonucleotide and peptide therapeutics development and manufacturing worldwide. In addition, we opened a continuous manufacturing (flow chemistry) plant at our Changzhou campus for large-scale API and advanced intermediate production. This new expansion marks our ongoing effort to enhance our flow chemistry platform in response to increasing customer demand for safe and sustainable pharmaceutical manufacturing.  

- WuXi Testing: strong growth in lab testing services

• Revenue from WuXi Testing grew 23.6% to RMB2,605 million and adjusted non-IFRS gross profit grew 26.1% to RMB927 million, with a gross margin of 35.6%.
• Revenue from lab testing services grew 34.6% year-over-year to RMB1,890 million.
  i. The Company provides a full range of laboratory testing services to our customers, including DMPK (drug metabolism and pharmacokinetics), toxicology, and bioanalysis for drug development testing as well as medical device testing. We leveraged our integrated WuXi AppTec Investigational New Drug (IND) program (WIND) to generate preclinical data and prepare global regulatory submissions of IND packages, expediting the IND application process for many customers worldwide. Customers signed 72 WIND service packages with us in the first half of 2022.
  ii. Drug safety evaluation services achieved strong revenue growth of 53% year-over-year. We maintained our industry-leading position in Asia for drug safety evaluation services that meet global regulatory requirements.
  iii. Our largely US-based medical device testing business has turned around and grew 31% year-over-year.
• Revenue growth of 1.7% from clinical CRO & SMO (Site Management Organization) slowed down significantly, mainly due to Covid-19 Omicron variants outbreak in many cities in China during the second quarter of 2022.
  i. For clinical CRO, the Company provided services to 170 projects, enabling our customers to obtain 10 IND approvals.
  ii. For SMO, the Company continued its rapid expansion. Our SMO maintained more than 4,600 staff in around 150 cities in China, providing services in more than 1,000 hospitals. The team size increased 16% year-over-year, demonstrating strong demand for our SMO services. In the first half of 2022, SMO supported our clients for 16 new drug approvals.

- WuXi Biology: new modalities-related biology services drive growth

• Revenue from WuXi Biology grew 18.5% to RMB1,091 million and adjusted non-IFRS gross profit grew 30.7% to RMB444 million, with a gross margin of 40.7%.
• The Company has the largest discovery biology enabling platform, with more than 2,500 experienced scientists who provide comprehensive biology services covering all stages and therapeutic areas of drug discovery. The Company has established 3 centers of excellence for non-alcoholic steatohepatitis (NASH), anti-viral, neuroscience & aging.
• The Company has a leading DNA Encoded Library (DEL) and compound generation platform, providing services for more than 1,200 customers globally. We leverage our global network across Asia, Europe and North America, to develop and use new technologies such as OBOC ("One-Bead-One-Compound") to drive growth.
• The Company continues to build new biology capabilities related to new modalities, including target protein degradation, nucleic acid-based and conjugated modalities, vector platform, and novel drug delivery vehicles. During the Reporting Period, WuXi Biology revenue from new modalities and large molecules grew 67%, and its revenue contribution rose to 19.0% in the first half of 2022 from 14.6% in 2021, suggesting that new modalities-related biology services have become an increasingly important growth driver.

- WuXi ATU: CTDMO business model drives growth

• Revenue from WuXi ATU grew 35.7% year over year to RMB615 million and adjusted non-IFRS gross profit was RMB(43) million, with a gross margin of -6.9%. Gross profit declined largely due to under-utilized capacities of the newly built Shanghai Lingang site. With capacity utilization ramping up in the coming quarters, gross profit is expected to turn positive and improve.
• During the Reporting Period, the Company focused on improving our CTDMO integrated enabling platform and strengthened testing services, capabilities, and capacities. We provided development and manufacturing services for 67 projects, including 51 pre-clinical and Phase I projects, 9 Phase II projects, and 7 Phase III projects (4 projects are in BLA preparation stage).
• The Company announced the launch of Tetracycline-Enabled Self-Silencing Adenovirus (TESSA™) in March 2022. TESSA™ technology is a revolutionary and novel process for transfection-free, scalable manufacturing of adeno-associated virus (AAV). Process now scaled to 200L that produces more than 10 times AAV products compared to traditional plasmid-based manufacture. At the end of the first half of 2022, we had 30 TESSA™ evaluation projects by customers.

- WuXi DDSU: business evolving to focus on innovative drug discovery services

• Revenue from WuXi DDSU declined 26.7% to RMB455 million and adjusted non-IFRS gross profit declined 52.4% to RMB140 million, with a gross margin of 30.7%. DDSU's revenue decline was mainly attributed to business evolution that aim to better serve the growing needs of clients in China for novel and innovative products, which will take longer to deliver INDs.
• During the first half of 2022, our success-based drug discovery service unit filed INDs for 9 drug candidates and obtained 19 CTAs on behalf of China-based customers. As of June 30, 2022, we have cumulatively submitted 153 new chemical entity IND filings with the NMPA and obtained 129 CTAs, with 1 project in NDA review stage, 5 projects in Phase III clinical trials, 18 projects in Phase II clinical trials, and 77 projects in Phase I clinical trials. Upon these products' successful launch to the market by our customers, we will begin receiving royalty income.
• We are now putting our efforts towards the discovery of potential best-in-class molecules and new modalities molecules for customers. In the first half of 2022, we worked for customers on 15 pre-clinical projects in new modalities that include Peptide/Peptide-Drug-Conjugation (PDC), protein degraders and oligonucleotides. Several of these projects are expected to file an IND in late 2022 or early 2023.

Our commitment to ESG

As an innovation enabler, a trusted partner, and a contributor to the global healthcare industry, WuXi AppTec Co., Ltd. ("WuXi AppTec", or "we") is committed to environmental protection and sustainability, and to be a good global corporate citizenship.

In the first half of 2022, WuXi AppTec was recognized as a "Top Rated" ESG company by Sustainalytics, a leading ESG research, ratings and data firm. In the same assessment, WuXi AppTec was placed in the top four percent of companies in the global pharmaceutical industry with a "Low Risk" of experiencing material financial impacts due to ESG factors.

We continuously strengthen sustainability management and technologies, and actively build green chemical technology platforms such as biocatalysis, flow chemistry and direct isolation. In the first half of 2022, our energy consumption intensity, carbon emission intensity and water use intensity reduced by 18.8%, 22.5% and 23.6%, respectively, as compared to that of 2021.

Management Comment

Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, "We achieved record growth in the first half of 2022. Our revenue increased 68.5% year-over-year and our adjusted Non-IFRS net profit increased 75.7% year-over-year. WuXi AppTec's performance during the first half of 2022 underscores that our unique CRDMO and CTDMO business models continue to drive rapid growth for our company and allow us to better serve customers worldwide."

"After Shanghai experienced an Omicron outbreak in the second quarter, we effectively implemented our business continuity plan and leveraged our global capacities and comprehensive capabilities to ensure the health of our employees and continue our business operations. Since June 1st, we have resumed operations of our facilities in Shanghai, and continue to meet project delivery timelines and capture new business opportunities. We have increased our revenue growth target for year end 2022 to the range of 68-72% from 65-70% year-over-year, and we are confident to deliver strong growth in 2022 and beyond."

"We have made good progress in achieving excellent results in ESG. Looking forward, we remain committed to 'doing the right thing and doing it right.' We will continue to focus on delivering our ESG commitments and ensuring that ESG remains a priority across our business operations today and in the future."

About WuXi AppTec

As a global company with operations across Asia, Europe, and North America, WuXi AppTec provides a broad portfolio of R&D and manufacturing services that enable the global pharmaceutical and healthcare industry to advance discoveries and deliver groundbreaking treatments to patients. Through its unique business models, WuXi AppTec's integrated, end-to-end services include chemistry drug CRDMO (Contract Research, Development and Manufacturing Organization), biology discovery, preclinical testing and clinical research services, cell and gene therapies CTDMO (Contract Testing, Development and Manufacturing Organization), helping customers improve the productivity of advancing healthcare products through cost-effective and efficient solutions. WuXi AppTec received an AA ESG rating from MSCI in 2022 and its open-access platform is enabling more than 5,850 collaborators from over 30 countries to improve the health of those in need – and to realize the vision that "every drug can be made and every disease can be treated." Please visit: https://www.wuxiapptec.com

Forward-Looking Statements

This press release may contain certain "forward-looking statements" which are not historical facts, but instead are predictions about future events based on our beliefs as well as assumptions made by and information currently available to our management. Although we believe that our predictions are reasonable, future events are inherently uncertain and our forward-looking statements may turn out to be incorrect. Our forward-looking statements are subject to risks relating to, among other things, the ability of our service offerings to compete effectively, our ability to meet timelines for the expansion of our service offerings, our ability to protect our clients' intellectual property, unforeseeable international tension, competition, the impact of emergencies and other force majeure. Our forward-looking statements in this press release speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements except as required by applicable law or listing rules. Accordingly, you are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. All forward-looking statements contained herein are qualified by reference to the cautionary statements set forth in this section. All information provided in this press release is as of the date of this press release and are based on assumptions that we believe to be reasonable as of this date, and we do not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Use of Non-IFRS and Adjusted Non-IFRS Financial Measures

We provide non-IFRS gross profit, exclude the impact in revenue and cost from effective hedge accounting, share-based compensation expenses and amortization of intangible assets acquired in business combinations, and non-IFRS net profit attributable to owners of the Company, which exclude share-based compensation expenses, issuance expenses of convertible bonds, fair value gain or loss from derivative component of convertible bonds, foreign exchange-related gains or losses, amortization of intangible assets acquired in business combinations and goodwill impairment. We also provide adjusted non-IFRS net profit attributable to owners of the Company and earnings per share, which further exclude realized and unrealized gains or losses from our venture capital investments and joint ventures. Neither is required by, or presented in accordance with IFRS.

We believe that the adjusted financial measures used in this press release are useful for understanding and assessing our core business performance and operating trends, and we believe that management and investors may benefit from referring to these adjusted financial measures in assessing our financial performance by eliminating the impact of certain unusual, non-recurring, non-cash and non-operating items that we do not consider indicative of the performance of our core business. Such adjusted non-IFRS net profit attributable to owners of the Company, the management of the Company believes, is widely accepted and adopted in the industry the Company is operating in. However, the presentation of these adjusted non-IFRS financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. You should not view adjusted results on a stand-alone basis or as a substitute for results under IFRS, or as being comparable to results reported or forecasted by other companies.

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SOURCE WuXi AppTec