WuXi AppTec Reports Record First-Quarter In 2022

Revenue Up 71.2% Year-Over-Year to RMB8,474 Million

Net Profit Attributable to Owners of the Company Up 9.5% Year-Over-Year to RMB1,643 Million

Diluted Earnings Per Share (EPS) Up 3.9% Year-Over-Year to RMB0.53

Adjusted Non-IFRS^[1] Net Profit Attributable to Owners of the Company Up 85.8% Year-Over-Year to RMB2,053 Million

Adjusted Non-IFRS Diluted EPS Up 81.6% Year-Over-Year to RMB0.69^[2]

SHANGHAI, April 25, 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 quarter ending March 31, 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 First-Quarter 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 dealing in the shares of the Company.

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

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

First-Quarter 2022 Financial Highlights

Revenue grew 71.2% year-over-year to RMB 8,474 million. This is primarily attributable to the Company's continued focus on leveraging its unique CRDMO business model to achieve synergy and strong growth across our business segments: 

• WuXi Chemistry revenue grew 102.1% to RMB 6,118 million and adjusted non-IFRS gross profit grew 89.8% to RMB 2,466 million, with a gross profit margin of 40.3%.
• WuXi Testing revenue grew 31.7% to RMB1,279 million and adjusted non-IFRS gross profit grew 36.9% to RMB456 million, with a gross profit margin of 35.7%.
• WuXi Biology revenue grew 26.2% to RMB533 million and adjusted non-IFRS gross profit grew 40.4% to RMB220 million, with a gross profit margin of 41.4%.
• WuXi ATU revenue grew 37.0% to RMB299 million and adjusted non-IFRS gross profit declined to RMB-22 million, with a gross profit margin of -7.5%.
• WuXi DDSU revenue declined 21.6% to RMB241 million and adjusted non-IFRS gross profit declined 45.1% to RMB80 million, with a gross profit margin of 33.1%.

Unit: RMB million

• IFRS gross profit increased 64.0% year-over-year to RMB3,015 million. Gross profit margin was 35.6%.^[3]
• Adjusted Non-IFRS gross profit increased 65.3% year-over-year to RMB3,202 million. Adjusted Non-IFRS gross margin was 37.8%.
• EBITDA increased 16.8% year-over-year to RMB 2,441 million.
• Adjusted EBITDA increased 67.5% year-over-year to RMB2,854 million.
• Net profit attributable to owners of the Company increased 9.5% year-over-year to RMB1,643 million.
• Adjusted non-IFRS net profit attributable to owners of the Company increased 85.8% year-over-year to RMB2,053 million.
• Diluted EPS increased 3.9% year-over-year to RMB0.53, while adjusted diluted non-IFRS EPS increased by 81.6% year-over-year to RMB0.69.

First-Quarter 2022 Business Highlights

- In the first quarter of 2022, demand for our services was strong and we grew our customer base to more than 5,800 active accounts by adding more than 320 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 84% to RMB5,278 million; revenue from Europe-based customers grew 83% to RMB1,217 million; revenue from China-based customers grew 37% to RMB1,587 million; and revenue from other regions grew 51% to RMB393 million.
• We continued to expand our customer base and retain existing clients. During the Reporting Period, revenue from existing clients grew 75% to RMB8,322 million and new clients contributed RMB153 million in revenue.
• During the Reporting Period, revenue from the top 20 global pharmaceutical companies grew 140%, up to RMB3,807 million in revenue; revenue generated from all other customers grew 39% to RMB4,668 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 RMB7,392 million in revenue, growing 87% year-over-year.

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

• Revenue grew 102.1% to RMB6,118 million and adjusted non-IFRS gross profit grew 89.8% to RMB2,466 million, with a gross margin of 40.3%. Excluding COVID-19 commercial projects, WuXi Chemistry revenue grew 52.3%.
• Revenue from small molecule discovery services ("R") grew 46.6% to RMB1,745 million.
       i. Our industry-leading small molecule drug discovery platform delivered more than
          90,000 custom synthesized compounds to our clients in first quarter 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 helped sustain
          support for clinical and commercial projects and opportunities for the company.
          The small molecule discovery service provided a solid foundation to support 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 138.1% to RMB4,373 million.
       i. During the Reporting Period, the Company added 217 new molecules to our 'D&M"
          pipeline funnel for a total of 1,808 molecules, including 42 in commercial stage, 49
          in phase III, 271 in phase II and 1,446 in phase I and pre-clinical stages.
       ii. D&M service for new modalities is also gaining strong momentum. During the
           reporting period, the number of oligonucleotide and peptide D&M clients increased
           72% to 86, and the number of oligonucleotide and peptide molecules increased 98%
           to 121. Revenue from oligonucleotide and peptide D&M reached RMB251 million.
• Capacity expansion of WuXi Chemistry continued to accelerate in first quarter 2022. During the reporting period, we began to operate our facility in Changshu for drug substance manufacturing, and also began to operate part of Changzhou Phase 3 facility including a new R&D center and 2 plants.

- WuXi Testing: strong growth in lab testing services

• Revenue from WuXi Testing grew 31.7% to RMB1,279 million and adjusted non-IFRS gross profit grew 36.9% to RMB456 million, with a gross margin of 35.7%.
• Revenue from lab testing services grew 39.9% year-over-year to RMB909 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 of our customers
          worldwide. Customers signed 47 WIND service packages with us in the first quarter
          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
            27% year over year.
• Revenue from clinical CRO & SMO (site management organization) grew 15.2% year-over-year to RMB370 million.
       i. For clinical CRO, the Company provided services to around 160 projects, enabling
          our customers to obtain 4 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 over 1,000
           hospitals. The team size increased 26% year-over-year, demonstrating strong
           market demand for our SMO services. In the first quarter of 2022, SMO enabled 4
           new drug approvals.

- WuXi Biology: new modalities biology services drive growth

• Revenue from WuXi Biology grew 26.2% to RMB533 million and adjusted non-IFRS gross profit grew 40.4% to RMB220 million, with a gross margin of 41.4%.
• 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. More than 1,100 customers globally now use our DEL services. We leverage our global network of sites in China, US and Germany to develop and use new technologies such as OBOC ("One-Bead-One-Compound") to drive growth and maintain business continuity.
• 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, revenue from new modalities and large molecules in WuXi Biology grew 110%, and its revenue contribution rose to 17.6% in the first quarter 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 37.0% to RMB299 million and adjusted non-IFRS gross profit declined to RMB-22 million, with a gross margin of -7.5%.
• 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 74 projects, including 59 pre-clinical and Phase I projects, 7 Phase II projects, and 8 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), and the new data recently published in Nature Communications supports the benefits of this technology. It highlights that in the same manufacturing volume, TESSA™ vectors produced 10 times more AAV than plasmid-based technology. By end of first quarter 2022, we have 14 TESSA™ evaluation projects.
• Gross profit declined in Q1-2022 largely due to under-utilized capacities of the newly built Shanghai Lin-gang site and the new testing facility in Philadelphia. With capacity utilization ramping up in the coming quarters, gross profit is expected to turn positive and increase.

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

• Revenue from WuXi DDSU declined 21.6% to RMB241 million and adjusted non-IFRS gross profit declined 45.1% to RMB80 million, with a gross margin of 33.1%. DDSU's revenue decline was mainly attributed to business adjustments that aim to better serve the growing needs of clients in China for novel and differentiated products that will take longer to deliver INDs.
• During the Reporting Period, our success-based drug discovery service unit filed INDs for 2 drug candidates and obtained 16 CTAs on behalf of China-based customers. As of March 31, 2022, we have cumulatively submitted 146 new chemical entity IND filings with the NMPA and obtained 126 CTAs, with 1 project in NDA review stage, 3 projects in Phase III clinical trials, 16 projects in Phase II clinical trials, and 74 projects in Phase I clinical trials. Upon these products' successful launch to the market by our customers, we will begin receiving royalty income.
• Among the 146 projects for which INDs were filed or are currently in clinical stage, about 70% of them rank in the top three in China in terms of drug development progress among same-class drug candidates.

Continuous Improvements in ESG Management and Performance

As an enabler of innovation, a trusted partner, and a contributor to the global healthcare community, WuXi AppTec is deeply committed to sustainability and actively practices global corporate citizenship.

In the first quarter 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 4 percent of companies in the global pharmaceutical industry with a "Low Risk" of experiencing material financial impacts from ESG factors.

Looking forward, we remain committed to "doing the right thing and doing it right." We will continue to focus on delivering on our ESG commitments and ensuring that sustainability remains a priority across our business operations today and in the future.

Management Comment

Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, "We achieved record growth in the first quarter of 2022. Our revenue increased 71.2% YoY and our adjusted Non-IFRS net profit increased 85.8% YoY. WuXi AppTec's performance during the first quarter of 2022 underscores that our unique CRDMO and CTDMO business models continue to drive the rapid growth for our company and allow us to better enable customers worldwide."

"After the outbreak of Omicron in Shanghai at the end of the first quarter, we quickly implemented our business continuity plan to ensure the health of our employees whilst operating our business continuously. We effectively leveraged our global capacities and comprehensive capabilities to meet project delivery timelines and capture new business opportunities. If the Omicron outbreak in Shanghai can be largely contained by April, we expect 63-65% YoY revenue growth for the second quarter and 65-70% revenue growth for the full year of 2022. Our management team will closely monitor the development of the outbreak and will provide business updates when appropriate."

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 2021 and its open-access platform is enabling more than 5,800 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 investments and joint ventures. Neither is required by, or presented in accordance with IFRS.

To better reflect the operation results and key performance, the Company has adjusted the scope of the foreign exchange related gains or losses by adjusting only the gains or losses that the management believes irrelevant to the core business. The comparative financial figures for the comparable periods have been adjusted to reflect the change of the scope.

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.

For more information, please contact:

Mr. Kyler Lei (for investors)
IR Director
Email: kyler_lei@wuxiapptec.com

Mr. Davy Wu (for media)
PR Director
Email: davy_wu@wuxiapptec.com

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SOURCE WuXi AppTec