On April 29, 2021 WuXi AppTec Co., Ltd. (stock code: 603259.SH / 2359.HK), a company that provides a broad portfolio of R&D and manufacturing services that enable companies in the pharmaceutical, biotech and medical device industries worldwide to advance discoveries and deliver groundbreaking treatments to patients, reported its unaudited financial results for the First-Quarter of 2021 ("Reporting Period") (Press release, WuXi AppTec, APR 29, 2021, View Source [SID1234578851]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
All financials disclosed in this press release are prepared based on International Financial Reporting Standards (or "IFRSs"), in currency of RMB.
[1] In the three months ended March 31, 2021 and three months ended March 31, 2020, we had a fully-diluted weighted average share count of 2,466,120,614 and 2,291,373,043 ordinary shares, respectively
First-Quarter 2021 Financial Highlights
Revenue soared 55.3% year-over-year to RMB4.95 billion on the back of robust demand brought on by strengthened customer market penetration and accelerated customer expansion. Revenue up 4.9% quarter-over-quarter continued our strong quarterly-based growth track record in the past twelve quarters. China-based laboratories and contract development and manufacturing organization (CDMO) facilities maintained high utilization to meet customer demands. Clinical research services experienced a strong rebound, but headwinds remain strong for US-based laboratory services which has continued to be negatively impacted by the COVID-19 pandemic.
– China-based laboratory services revenue grew 49.0% to RMB2.56 billion.
– CDMO services revenue grew 100.0% to RMB1.70 billion.
– U.S.-based laboratory services declined 15.3% to RMB329 million.
– Clinical research and other contract research organization (CRO) services revenue grew 56.8% to RMB359 million.
IFRS gross profit increased 67.6% year-over-year to RMB1.84 billion. Gross profit margin was 37.1% vs 34.4% in first-quarter 2020.[2]
Adjusted Non-IFRS gross profit increased 58.3% year-over-year to RMB1.94 billion. Adjusted Non-IFRS gross margin was 39.1% vs 38.4% in first-quarter 2020.
EBITDA increased 180.2% year-over-year to RMB2.09 billion.
Adjusted EBITDA increased 46.1% year-over-year to RMB1.51 billion.
Net profit attributable to owners of the Company increased 394.9% year-over-year to RMB1.50 billion. Our gain from venture investment portfolios and loss from associates totally contributed a net gain of RMB1.02 billion, due primarily to the stock price increase of certain listed companies and some portfolio companies successfully went IPO during the Reporting Period that led to an increase in their fair market value and an RMB4 million loss from our joint ventures. Conversely, in the first-quarter 2020, we reported a RMB171 million fair value loss from investment portfolios and associates, and a RMB7 million loss from our joint ventures.
Adjusted Non-IFRS net profit attributable to owners of the Company increased 63.6% year-over-year to RMB943 million.
Diluted EPS increased 369.2% year-over-year to RMB0.61, while adjusted diluted non-IFRS EPS increased by 52.0% year-over-year to RMB0.38.
[2] If prepared under Accounting Standard for Business Enterprises of PRC, 2021 the gross profit grew 67.2% year-over-year to RMB1.84 billion. Gross profit margin was 37.1%.
First-Quarter 2021 Business Highlights
We continued to relentlessly execute our strategy of enabling customers to innovate and accelerate drug discovery and development by leveraging our global integrated R&D services platform. We added over 360 new customers in the first-quarter of 2021, giving us a total of more than 4,400 active customers.
– Our global platform continued to enable innovation worldwide. During the Reporting Period, our overseas customers contributed RMB3.62 billion in revenues, increasing 49.5% year-over-year. Our China-based customers contributed RMB1.33 billion in revenues, increasing 73.9% year-over-year.
– We continued to expand our customer base and retain existing customers. During the Reporting Period, our existing customers contributed RMB4.75 billion in revenue, representing a year-over-year growth of 54.3%. Our newly added customers in the first-quarter of 2021 contributed RMB197 million in revenue.
– We aim to simultaneously increase service penetration in large global pharmaceutical companies, whilst increasing the size of our "long-tail" customer base. This strategy has continued to be successful. During the Reporting Period, the top 20 global pharmaceutical companies contributed RMB1.58 billion in revenue, increasing 66.6% year-over-year. Our "long-tail" and other customers contributed RMB3.37 billion in revenue, growing 50.5% year-over-year.
– We continued to increase customer conversion and deliver synergies across our entire platform. During the Reporting Period, customers using services from more than one of our business units contributed RMB3.94 billion in revenue, growing 58.4% year-over-year.
China-Based Laboratory Services: robust growth in all business lines on the back of strengthened customer market penetration and expansion
Chemistry FFS (Fee for Services) achieved over 58% revenue growth while concurrently transferring multiple new projects to our CDMO segment.
Through comprehensive integration of our DNA-encoded library (DEL), protein production and structure-based drug design capabilities, our Target-to-Hit platform(HitS) has enabled over 600 customers globally, and diverted multiple, incremental business opportunities to our downstream business units.
As of March 31, 2021, our success-based drug discovery service unit had cumulatively submitted 120 IND filings with the National Medical Products Administration (NMPA) and obtained 91 Clinical Trial Applications (CTAs) and had two projects in Phase III clinical trials.
Safety assessment / toxicology services revenue grew rapidly at approximately 114% due to strong demand and increased animal room capacity.
We signed over 40 integrated WIND packages (the WuXi IND program or "WIND") in the first-quarter of 2021.
CDMO Services: first-quarter 2021 growth doubled due to core business model execution and capacity increase
We added 169 new molecules into our small molecule CDMO pipeline, including 11 new projects that were transferred from clients’ facilities or other CDMOs. We provided CDMO services to over 1,340 active projects, including 46 projects in Phase III clinical trials and 28 projects in commercial manufacturing.
In the first-quarter 2021, new construction at Taixing city has begun and will provide a large scale API and oligonucleotide and peptide API production once complete. Taixing site is designed to provide over 140,000 square meters of manufacturing space in 2022.
The drug product manufacturing facility in Wuxi city slated to begin operation in 2021 will not only improve the development and production capacity of solid dosages, but will also be capable of sterile drug product development, clinical trial material production and commercial scale manufacturing.
The high-potency API manufacturing facility, large-scale oligonucleotide API manufacturing facility and large-scale peptide API manufacturing facility located in Changzhou city began operations, supporting process R&D and small molecule manufacturing, as well as oligonucleotide and peptide APIs from preclinical to commercial.
US-based Laboratory Services: Continued development of a comprehensive US-based cell and gene therapy CTDMO platform, with the integration of OXGENE
Our cell and gene therapy Contract Testing Development and Manufacturing Organization (CTDMO) services enabled customers globally. During the Reporting Period:
– Our laboratories and facilities in the U.S. provided services for 36 clinical stage projects, including 22 projects in Phase I clinical trials and 14 projects in Phase II/III clinical trials.
– The current quarter revenue decline in our U.S. cell and gene therapy business was mainly due to delay in approval of commercial projects and impacted by the pandemic. Some late stage/commercial clients also did not pass clinical trials; however, we are building up our new projects pipeline through significantly enhanced viral vector platforms and through integration with the newly acquired new OXGENE platforms. We expect strong rebound in revenue growth in the second half of 2021.
– In our Medical Device Testing business, the impact of the pandemic continued first-quarter. The delay of elective/non-essential surgeries impacted key projects caused shortfall of the testing demand. We are actively working and supplementing with new opportunities, particularly the EU Medical Device Regulation (MDR) to grow the medical device testing business in the second half of 2021.
Clinical Research CRO/SMO Services: strong rebound in revenue driven by focused backlog execution and timely project delivery
Our clinical research services continued to enable customers globally during the Reporting Period:
– Clinical development services (CDS) backlog increased approximately 56% on a year-over-year basis and our site management organization (SMO) backlog increased approximately 47% on a year-over-year basis.
– China based clinical research services[3] delivered strong growth in the first-quarter, at 64.7% year over year, while US based clinical trial services continued to suffer from the impact of the pandemic impact.
– CDS team provided services to more than 130 projects for our clients in China and the U.S. and completed registration trials for 3 products.
– Our SMO team maintained its No.1 leadership position in China, with more than 3,500 clinical research coordinators stationed in 150 cities providing services in ~1,000 hospitals. The team assisted in the market approval of 5 customer products that were approved by NMPA in the first quarter in 2021.
[3] China based clinical research services included CDS China and SMO businesses.
Management Comments
Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, "Another record quarter has once again demonstrated the strength and resilience of our platform. We continue to flawlessly execute our business model, increasing customer penetration while increasing "long-tail" customer numbers with the highest quality of our service offerings. For CDMO, we are seeing benefits of aggressive investment in capacity and new modalities come to fruition with revenues doubling in the first-quarter. Our China-based laboratory services and clinical research services segments also out-performed, growing 49.0% and 56.8% respectively. We expect the upward trajectory of these business segments to continue, mitigating any continuing COVID-19 related challenges that U.S. based laboratory services may face."
"A continued strong biotech funding environment, coupled with incremental demand from the pandemic, reinforces our decision to further invest in and expand our integrated platform solidifying our leading position to meet strong and fast growing demands in 2021 and beyond."
Dr. Ge Li concluded, "This is a good start to 2021 and we anticipate this momentum to continue in the coming quarters. Going forward, we will continue to bolster our integrated business model by expanding our platform through investments in new modalities, further enabling our customers to bring the most innovative medicines to patients – fulfilling our vision that: ‘every drug can be made and every disease can be treated.’"