On August 28, 2019 Viva Biotech Holdings ("the "Group" or "Viva Biotech"; stock code: 1873.HK), reported its interim results for the six months ended 30 June 2019 (the "Review Period"). During the Review Period, amid the boom of global patent drug market, Viva Biotech firmly seized the rising opportunities in the industry and realized significant growth leveraging on its world-leading structure-based early stage drug discovery platform (Press release, Viva Biotech, AUG 28, 2019, View Source [SID1234539078]). The Group’s revenue recorded a significant increase of 83.9% to approximately RMB142.3 million compared with the same period last year, and the net profit excluding extraordinary profit or loss increased by 47.4% to approximately RMB98.6 million.
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Upholding the mission of becoming a cradle for promising biotechnology startups around the world, Viva Biotech has developed a scalable business model combining the conventional cash-for service (CFS) model and unique equity-for-service (EFS) model, under which the Group can effectively promote the development of biotech start-ups with promising prospects while maintaining stable cash inflows from CFS customers, and enjoy the rising potential of its intellectual property value.
Solid Growth of CFS Business Provided Sustained and Stable Cash flow
For the CFS business segment, leveraging on its world-leading technology platforms and premium services, sound reputation among peers, and extensively diverse and ever-growing quality customer base, Viva Biotech realized the growth in both the number of customers and customer orders, fueling the revenue from CFS business segment to increase significantly by 72.2% to approximately RMB105 million, contributing a steadily growing cash flow to the Group. As of June 30, 2019, the Company’s orders on hand reached 243 with total contract value amounting to RMB207 million, representing an increase of approximately 59% from the corresponding period last year.
Actively Expand EFS Project Sources for Future Growth
For the EFS business segment, the Group has established a systemic, scientific and modularized incubation platform with strong technical barriers, and participated in the drug discovery process of incubated companies to benefit from their growth. During the Review Period, the Group actively sought for project expansion and subsequent financing channels with greater focus on bio-macromolecule, gene and cell therapy. In the first half of 2019, the Group added 10 startups to its incubation portfolio and contributed additional investment in two incubated companies, building momentum to its future growth. In 1H2019, revenue from the EFS business segment reached approximately RMB36.94 million, representing a year-on-year increase of 127.8%.
Actively Improving Technology Platforms and Incubation Platform Capacity
In terms of technology platforms, the Group is taking the initiative in building new technology platforms such as the Cryo-SEM and HDX MS, and is also committed to further expanding the technology fields such as new drug discovery and biological detection of bio-macromolecules. The Group is expanding the area of its laboratories in the Zhangjiang High-Tech Park, Shanghai, by approximately 5,000 square meters. As of now, the new laboratories are under trial operation. The Group proposes to constantly optimize and improve the scalability and sustainability of its EFS model and enhance the platform capacity of incubation system. It will also strengthen the technology platform linkage of CFS model, participate in and accelerate its research and development progress in real time, and advise the incubated companies on strategy formulation and commercialization channels.
Dr. Mao Chen, Chairman, Chief Executive Officer and Executive Director of Viva Biotech Holdings said: "The constant boom in the global patent drug market and emergence of innovative biotechnology serves as the major drivers of the drug development outsourcing market. The PRC is also setting the stage for R&D of global innovative drug and attracting capital inflows. Leveraging on Viva Biotech’s R&D services of early stage drug development and incubation services of innovative drug startups, we are well-positioned at the early R&D stage of new drugs and are able to have access to the entrance of the flow of quality customers and potential startups. We will grasp the historical opportunity by enhancing operating efficiency, reinforcing talent recruitment and introducing new technologies, thus to proactively establish and constantly improve the sustainability and scalability of our technology platforms and incubation platforms. The Company will also leverage on its superior positioning in the upstream of the industry, constantly strengthen the penetration to the downstream, and establish a win-win ecological circle through the ‘Service + Capital’ multi-dimensional layout alongside the industry chain integration. We will strive to realize sustainable and quality growth to maximize the return for investors."
"Service + Capital" Multi-dimensional Layout Alongside the Industry Chain Integration
Looking forward to the future, Viva Biotech will be committed to a multi-domain, multi-level and light-asset industrial chain layout, and an investment layout of the whole industrial chain with multi-fund and multi-professional platforms. The Group will maintain a high degree of stickiness with customers and incubation portfolio companies, build an open cooperation platform for global biopharmaceuticals innovators, and establish an ecological circle composed of scientists, biotechnology startups, large pharmaceutical enterprises, research institutes, investment institutions, academic institutions, clinical institutions, hospitals and other industry participants.