On March 11, 2024, GenScript Biotech Corporation (HK.1548), a world’s leading technology and service provider of life science R&D and manufacturing, reported its annual results for the year ended December 31, 2023 (Press release, GenScript, MAR 12, 2023, View Source [SID1234644730]). During the reporting period, GenScript Group’s revenue continued to grow at a fast pace, with a year-on-year increase of 34.2%, reaching approximately $840 million, and the five-year CAGR stands at 30%. The group’s global operations are robust, with stable cash flow, laying a solid foundation for long-term development. In particular, the group’s cell therapy segment saw significant revenue growth, and the life science, industrial synthetic biology, and other businesses also achieved varying levels of growth. As the core competitiveness and key to GenScript’s continuous development, the group will continue to strengthen its innovation capabilities and remain committed to creating more value for customers.
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Continued High Growth, Empowering Customers
From the performance during the 2023 reporting period, GenScript Group’s overall development is optimistic, with each business segment having its own highlights.
Legend Biotech, a subsidiary of GenScript in the cell therapy segment, achieved external revenue of $285 million in 2023, representing an increase of 144.2%. Currently, Legend Biotech has cash reserves of about $1.3 billion, which is expected to fund operating activities and capital expenditure plans till the end of 2025. CARVYKTI has demonstrated strong commercial potential, and the company is confident in advancing the product’s global launch with its partner Janssen, and further advancing it to the frontline. Peak annual sales of the CARVYKTI are expected to reach at least $5 billion.
In 2023, GenScript’s life science services and products segment continued to grow steadily, with improved profitability. External revenue exceeded $400 million, a year-on-year increase of 15.6%, and excluding the impact of currency fluctuations, the revenue growth at constant currency was about 16.4%. The company continued to leverage its strengths-molecular biology, protein and peptide grew at a faster pace, contributing to a higher percentage of overall revenue growth. Adjusted gross profit increased by approximately 11.6% year-on-year, reaching about $225 million. The adjusted gross margin for the life science was approximately 54.4%. Thanks to automation, lean projects and labor efficiency improvement, the life science gross profit margin remained stabilized. Notably, the adjusted operating profit of the life science business increased by approximately 19.4% year-on-year, reaching $78.3 million, which outpaced revenue growth. The adjusted operating profit margin increased to about 21% in 2H 2023, continuing a healthy trend of improvement in the last two years.
To help the company focus on innovation capacity building, the GenScript Scientific Advisory Board welcomed two world-renowned members—Dr. Carl June, an immunotherapy pioneer, Director of the Parker Institute for Cancer Immunotherapy at the University of Pennsylvania, and Dr. David R. Liu, a leader in genome editing, Professor at Harvard University, Broad Institute, and HHMI.
Bestzyme, GenScript’s industrial synthetic biologic product segment, achieved a year-on-year increase of 12.2% in external revenue, reaching about $42.9 million, and core enzyme portfolio constant currency revenue growth was about 22.6%.
The Bestzyme’s key account sales revenue contribution further improved by 4%. The newly launched innovative detergent enzyme showed steady growth in the last few quarters, and successfully earned industry-leading household product manufacturers as customers. In terms of product portfolio, Bestzyme has launched products with new features, and upgraded microorganism strains to increase production efficiency.
External revenue of the ProBio business achieved about $107 million in 2023, with a year-end cash position close to $260 million, ProBio has ample resources to execute the company’s business plans. ProBio recently received its first 2000L CMO order, marking a significant milestone for GenScript’s CDMO business. The experience from this project will enhance the company’s commercial manufacturing capabilities and strengthen the commercial quality systems, paving the way for the company to become a global CDMO.
Innovation Leads, Deepening Global Development
For a long time, GenScript has regarded innovation as the core competitive force driving corporate growth. It has not only achieved sustained high revenue growth for the group but also accomplished comprehensive development in the life science domain, continuously creating more value for customers. To support innovation, over 10% of the group’s workforce of more than 6900 global employees is dedicated to R&D. Their unwavering dedication has led to the accumulation of over 300 patents and 900 patent applications across the globe.
Innovation is also key to GenScript’s sustained development. In response to the increasing demand for CRISPR-related services and products, GenScript has launched a comprehensive suite for in vivo gene editing. The company’s offerings include editing tools, related enzymes, knock-in templates, library services, and cell line development. This platform enables the company’s clients to accelerate research in this field. In CGT-related instruments and consumables, the company also advanced its cell isolation platform CytoSinct and launched magnetic beads for NK/SA/CD4/CD8 cell separation, beads for T cell activation, and columns for cell separation.
Turnaround time is crucial to the company’s customers. GenScript not only accelerate customer projects by innovative solutions, but also by launching new platforms to shorten the company’s turnaround time. With launching GenSmart 2.0 online ordering platform to improve customer experience and simplify the ordering process. It has also combined TurboCHO 2.0 platform with high-throughput DNA synthesis platform, setting an industry-leading turnaround time of 5 business days for gene-to-protein services.
Currently, the Life Science has over 57,000 active global customers, with a significant increase in new customers compared to the same period last year, demonstrating continuous global recognition of its services and products. In 2024, GenScript expects the revenue of the life science to continue grow at a decent pace 15% to 20%, and gross profit margin to be around 55% plus or minus 1%. And the operating profit to grow faster than revenue.
Thanks to the Series A financing for Bestzyme last year, the company will further invest in its capacity to address manufacturing bottlenecks. Once finished the expansion project will increase its manufacturing capacity by 30-40%. In order to better address R&D needs for enzymes and synthetic biology, the R&D team of Bestzyme has expanded by about 20%.
In terms of the synthetic biologic pipeline, Bestzyme’s first 2 synthetic biology candidates, natural sweeteners and lactoferrin are making promising results throughout the year. The natural sweeteners and lactoferrin are expected to be launched in 2024 and 2025, respectively. Bestzyme will continue its growth trend in 2024. It is expected to have 20%-30% constant currency revenue growth for enzyme business lines, and gross profit margin to be around 39% plus or minus 1%. The anticipated operating profit margin to be close to 4-5%.
GenScript ProBio, has further enhanced its capabilities in protein and antibody drug and CGT platform and will continue to expand production scale to better serve global customers. At the same time, to support the global expansion, the company has invested resources in the quality management systems to ensure compliance with GMP regulations of the US FDA, EMA and NMPA. The company’s revenue in 2024 is expected to be flat compared to 2023. For ProBio, 2024 will be a year of investment. The Group will invest in commercial efforts, R&D and capacity to reaccelerate order growth.
In the field of cell therapy, Legend Biotech’s CARVYKTI has outperformed other CAR-T products in the market during the seven quarters of its launch. Cilta-cel has cumulatively treated over 2,500 patients. In 2023, Legend continued its efforts to support market penetration of CARVYKTI. At the same time, Legend Biotech continues to strengthen manufacturing capabilities to further meet market needs. Currently, the company’s new site in Ghent, has started clinical production, and the cell processing capacity has doubled compared to the beginning of 2023. In terms of capacity expansion, the company’s target is to support production capacity of 10,000 annual doses for CARVYKTI by the end of 2025. In pipeline updates, Legend Biotech’s BCMA-directed autologous therapy program, LB1908 targeting gastric cancer, and LB2103 project for treating multiple myeloma have made positive progress.
Sherry Shao, GenScript’s rotating CEO, said, "Despite market challenges in 2023, the Group achieved 34.2% revenue growth and a five-year CAGR of 30%. This achievement was made possible by continuing to create value for our customers through high-impact innovation and our dedicated global team.
Again, on behalf of the management team, I would like to express our gratitude to our customers for their continued trust in our services and products, to our employees for their unwavering dedication, and to our stakeholders for their faith in our vision and goals.
Looking ahead, we are excited about the opportunities ahead and will remain committed to innovation, improvement, and exceeding your expectations. Thank you all for being part of our journey towards continued growth and success."
Looking ahead to 2024, GenScript Group will continue to use innovation as the engine to deepen global operations, promote new development in various business segments, and create more value for customers and society. At the same time, the group will achieve profit growth that surpasses revenue growth through robust operations and efficient management, laying a solid foundation for future development. With the deepening of the globalization strategy and the strengthening of innovation capabilities, GenScript will embrace a broader development prospect.