Results Highlights for Interim Results ended 30 June 2024
Revenue reached RMB981.8 million
Gross profit amounted to RMB339.1 million
Net profit grew by 956.0 YoY to RMB144.2 million
Adjusted non-IFRS net profit reached RMB168.2 million, increased by 15.1% YoY
HONG KONG, Aug. 29, 2024 /PRNewswire/ -- On August 29, 2024, Viva Biotech Holdings Group ("Viva Biotech", "the Group" or "the Company", stock code: 1873.HK) announced that the Group achieved a revenue RMB981.8 million; and the Group's gross profit of RMB339.1 million. The Group's net profit amounted to RMB144.2 million, a significant improvement from the net profit of RMB13.7 million for the corresponding period of last year, mainly benefiting from the elimination of relevant financial adjustments due to the full repayment of convertible bonds; Adjusted non-IFRS net profit improved from RMB146.1 million for the corresponding period of last year to an adjusted non-IFRS net profit of RMB168.2 million, representing a year-on-year increase of nearly 15.1%. This was mainly attributable to the investment income from the group successful exit of certain portfolio companies as well as the positive contribution from initiatives to reduce costs and increase efficiency.
In addition, since the Group completed the introduction of strategic investors such as Temasek, HighLight Capital, True Light Capital and Investment Corporation of Dubai in 2023, the strategic investors have brought synergies in corporate governance, business operations, investment and financing plans and strategic development of the Group.
CRO Growth to Gradually Recover in the Future Despite Fluctuations in the Short to Medium Term
In the first half of 2024, the Company's revenue from CRO business amounted to RMB385.9 million and achieved a corresponding adjusted gross profit of RMB167.2 million. The revenue for the first half of 2024 decreased compared to last year, primarily due to the short-term impact from challenges in global biopharmaceutical investment and financing on the R&D of innovative drugs, as well as the strategic contraction of the Company's EFS business last year. Nevertheless, the Company effectively implemented measures such as cost reduction and efficiency enhancement to maintain a solid profitability for the CRO business. The gradual recovery of new CRO orders since the second quarter of 2024 will provide a strong support for the Company's business results in the second half of the year.
As at June 30, 2024, the Company has cumulatively delivered more than 74,109 protein structures to our clients, approximately 9,074 of which were newly delivered in the first half of 2024. The Company's R&D has accumulated over 2,065 independent drug targets, 79 of which were newly delivered in the first half of 2024. Currently, the Company maintains a leading global position in the industry in the field of protein structure analysis.
The cumulative number of CRO clients served had increased to 1,465, including the global top 10 pharmaceutical companies (by reported total revenue for the first half of 2024), and revenue from the top 10 customers accounted for 25.7% of our total revenue. Clients of CRO business are geographically diverse, overseas clients contributed approximately 88.8% of our total revenue, while those from the Chinese Mainland contributed approximately 11.2% of our total revenue.
During the Reporting Period, our utilization of synchrotron radiation source reached 873 hours. The Company established long-term cooperation with 13 synchrotron radiation source centers around the world, which are distributed in ten countries/regions, i.e., Shanghai, China, the United States, Canada, Japan, Australia, the United Kingdom, France, Germany, Switzerland and Taiwan, China, thus guaranteeing uninterrupted data collection all year round.
Continuing to Expand CDMO Capacity and Increase CMC Projects
The Group is committed to building a one-stop service platform for global innovative drugs from research and development to production, and improved the production layout through acquisition of the entire equity interests in Langhua Pharmaceutical. In particular, we continued to expand CDMO capacity to prepare for commercial production of new molecules in the future. In addition, constant efforts were made to optimize and channel resources towards the CMC business during the Reporting Period.
In the first half of 2024, Langhua Pharmaceutical's revenue amounted to RMB595.9 million, and its adjusted gross profit amounted to RMB179.0 million, primarily attributable to the impact from the delivery schedule of certain CDMO orders, most of which are expected to be delivered in the second half of 2024.
As at June 30, 2024, Langhua Pharmaceutical had served a total of 885 clients, with the top ten clients accounting for 63.2% of its total revenue and a 100% retention rate of top ten clients. In addition, Langhua Pharmaceutical provided CMC and CDMO services to 12 incubator companies of the Group as well as companies channeled from CRO business. During the Reporting Period, in respect of production capacity, our current available total capacity reaches 860 cubic meters. Furthermore, Langhua Pharmaceutical plans to establish a new production capacity of 400 cubic meters between 2024 and 2025 to cater to commercial production of new molecules. The civil engineering project is largely completed while internal fire control facilities are under installation, and the next phase will involve procurement and installation of equipment. This endeavor will provide sufficient guarantee for the Company's revenue growth with the launch of new products and release of reserved capacity.
The number of CMC projects continued to grow, but the new business is still in the profit ramp-up phase. Since its establishment, CMC has completed and is currently progressing with a total of 218 new drug projects. During the Reporting Period, CMC generated revenue of nearly RMB21.0 million. In the future, the Group plans to strengthen BD and channeling efforts for acquiring high-quality CMC projects. By fully utilizing internal project resources and implementing cost reduction and efficiency enhancement measures, the Group aims to achieve a balanced financial outcome for its CMC business. In addition, in terms of the number of customer orders, external BD accounted for nearly 75.0%, while channeled accounts from Viva represented approximately 25.0%. In terms of order amount, external BD contributed 49.0%, while channeled accounts from Viva contributed 51.0%.
Successful Exits of Certain Incubation Portfolio Companies Continued to Realize Investment Returns, Accretive to the Group's Profits
During the Reporting Period, the Company achieved partial investment exits from a number of portfolio companies (Focus-X, Saverna, Dogma and Riparian), realizing corresponding investment returns and generating total proceeds of nearly RMB144.1 million. In addition, the Company also achieved investment exit from one portfolio company (Nerio) subsequent to the Reporting Period in the end of July 2024, but the investment income therefrom will not be recognized in the interim report for the Reporting Period. As at June 30, 2024, the Group had invested in a total of 92 portfolio companies. The portfolio companies are mainly from the United States, Canada, Europe and China. 67.0% of the portfolio companies are from North America and 26.0% are from China.
In the first half of 2024, five of our portfolio companies completed or were close to completing a new round of financing, raising approximately US$117.0 million in total. The R&D efforts of the portfolio companies were advancing smoothly, with the total number of pipeline projects reaching close to 222, of which 185 pipelines are in the preclinical stage and 37 pipelines in the clinical stage. So far, the Group has successfully realized 13 investment exits or partial exits. Furthermore, the Group may have several potential exits of our portfolio companies, and it also can be foreseen that a peak season of investment exits will arrive in the next three years.
As at the end of the Reporting Period, Viva has strategically invested in a series of high-quality assets, including portfolio companies such as Dogma, Arthrosi, Basking, Triumvira, Deka, Mediar, Cybrexa, VivaVision, Haya and Nerio. In the future, as these portfolio companies continue to develop successfully, secure ongoing financing, and realize exits, the initial investments will gradually enter the harvesting phase, providing sustained cash returns and investment income for the Group.
Technological highlights and R&D Breakthroughs
Riding on the rapid development of artificial intelligence (AI) technology recently, Viva has further introduced AI technology on the basis of structure-based drug discovery (SBDD) technology, focusing on new targets, novel mechanisms of action (MOA) and new modality to develop a unique AI-enabled SBDD one-stop R&D service platform for innovative novel drugs.
Firstly, from the perspective of current research on new targets, new targets are the most important source of original innovation. During the Reporting Period, our R&D has accumulated over 2,065 independent drug targets, 79 of which were newly delivered in the first half of 2024. So far, the Company has delivered to clients a series of target protein structures that have not been reported in the Protein Structure Database (PDB), and clarified the structural principles of these proteins in functioning, laying a solid foundation for subsequent drug molecular design. For example, in the cancer therapeutic area, industry players are still searching for new targets as breakthroughs, in addition to traditional target proteins such as kinases, proto-oncogenes/tumor suppressor genes, immune checkpoints, etc. In the fields of new tumor target proteins related to cell division control and mRNA stability, we successfully analyzed many previously unreported protein structures and complex structures of proteins and drug candidate molecules, and explained structural details of the interaction between target proteins and compounds, which provide clear guidance for designing more effective compounds and lead to the emergence of a range of new drug candidate molecules. Besides, the Company contributed a number of new structures in the molecular glue protein complex structural field, which further provide effective clues for rational design and improvement of molecular glue drugs.
Secondly, regarding novel MOA research progress, our CRO business has successfully established a one-stop platform for novel MOA-based drug discovery and research, and set up relevant technical platforms covering protein production, preparation and structure research, Cryo-EM technology, membrane protein research technology, drug screening technology, bioassay and so on. Moreover, based on the validation and tests of hit compounds, the Company can rely on its strong pharmaceutical chemistry team and computing team to help clients further optimize the structure of hit compounds until they reach the preclinical candidate (PCC) milestone. Meanwhile, the Company's pharmacology and pharmacokinetics platform can also provide clients with systematic compound druggability evaluation services for the development of novel MOA-based compounds.
Thirdly, regarding current progress of new modality related technology platforms, during the Reporting Period, Viva Biotech drew upon a wealth of projects completed over the years to gradually integrate its macromolecular drug/antibody platform, peptide platform and micromolecule drug platform into a cross-field XDC platform. Deeply integrating computational chemistry and artificial intelligence technology with XDC technology, the Company explored in a wide range of innovative fields such as coupling site screening design, linker-drug payload design, overall hydrophobicity and stability modification of XDC drugs, and development of novel coupling reactions, expanding new directions for XDC drug R&D. On this basis, the Company further integrated the XDC platform with DNA encoded library (DEL) technology, leveraging strong screening capabilities of the Viva DEL platform to help screen special micromolecule linkers and drugs, and relying on its team's unique experience in nucleic acid conjugation to establish an antibody-oligonucleotide conjugate (AOC) platform. So far, based on full integration of our existing technology platforms across multiple fields, we have established a powerful, comprehensive and one-stop XDC technology service platform.
Besides, regarding construction progress in the peptide technology platform, the Company has achieved the capability to synthesize a wide range of peptides, particularly the challenging and technologically advanced peptide chains. Extensive research and technical expertise have been accumulated in peptide coupling, peptide drug conjugates (PDC), radionuclide drug conjugates (RDC), monocyclic peptides, stapled peptides and other complex multi-cyclic peptides (involving peptide folding and selective cyclization), biotin-labeled peptides and fluorescent-labeled peptides. In terms of peptide coupling, our peptide platform works with antibody department to expand the peptide platform to the field of peptide antibody coupled APC, and has delivered relevant products. In the future, Viva's peptide technology platform envisions a collaborative approach with Viva's phage display platform and V-DEL platform, aiming to provide customers with one-stop comprehensive services encompassing the entire process from the discovery and validation of hit peptide chains to the identification and optimization of lead compounds, and ultimately the determination of candidate compounds.
In addition, Viva also provides services relevant to PROTAC/molecular glue drug R&D, and revenue generated in this regard accounted for almost 10.87% of total revenue from the CRO business. Our services primarily include studies on protein preparation and structure, screening of PROTAC/molecular glue, kinetics, drug metabolism, pharmaceutical chemistry, Bioassay, computer-aided drug discovery (CADD)/ artificial intelligence in drug discovery (AIDD), etc. As at June 30, 2024, the Company has studied more than 50 E3 ligase complexes and delivered 140 PROTAC ternary complex structures. The PROTAC business also became a revenue contributor to the growth of our CRO business.
Last but not least, regarding our AI-enabled SBDD one-stop R&D service platform for innovative novel drugs, our CADD and AIDD platforms employ physical chemistry models and artificial intelligence algorithms to advance drug R&D projects, based on deep understanding of structures and mechanisms of action to truly practice computation-driven drug R&D. Our computing platform has developed a series of project-specific advanced algorithms to solve practical problems in drug design such as covalent and non-covalent free energy perturbations (FEP), resulting in higher computational accuracy and larger adjustable parameter range. Addressing gaps in the traditional computational chemistry methodology, the computing platform introduced generative artificial intelligence algorithms, which break through the limitation of chemical space with ab initio generation, enabling drug design to achieve the breakthrough from zero to one with the aid of computation. Furthermore, ADME/PK prediction models were developed under the platform, enabling comprehensive coverage of various drug R&D stages and systematic integration of computing tools. The methods developed under the computational chemistry and artificial intelligence platform have been applied in the R&D of various drug modalities, such as small molecules, antibodies, peptides and RNA-targeting small molecules. In the process of algorithm development, our platforms maintain the integration of dry-lab and wet-lab and the computational results are verified through experimental validation, during which computational models are iteratively optimized to ultimately achieve breakthroughs. Generally, Viva's CADD and AIDD platforms have the capability to develop proprietary algorithms and enhance platforms and the experience in exploring various drug modalities, and fully leverage our advantages in SBDD, which can comprehensively empower various early drug R&D aspects with the computing power supported by the Shanghai supercomputing cluster.
Staff and Facilities
As at June 30, 2024, the Group had a total of 2,043 employees, of whom the number of CRO R&D personnel reached 1,117, and the headcount of Langhua Pharmaceutical was 704. The Company has well-established office and laboratory facilities in line with its workforce expansion plans, and is expanding production capacity to meet the fast-growing business needs, including:
Dr. Cheney Mao, Chairman and Chief Executive Officer of Viva Biotech Holdings, stated, "With unique advantages in structure-based drug discovery (SBDD), the company will increase the cross-sell between biological and chemical businesses, continue to strengthen the construction of its one-stop innovative novel drug R&D platform and manufacturing service platform, deepen the synergy between CRO and CDMO business, improve the capacity building for front-end services and drive business to back-end services to further enhance the business funnel effect. Actively building an open collaboration platform and a win-win ecosystem for global biopharma innovators."
About Viva Biotech
Established in 2008, Viva Biotech (01873.HK) provides one-stop services ranging from early-stage Structure-Based Drug R&D to commercial drug delivery to global biopharmaceutical innovators. We offer leading early-stage to late-phase drug discovery expertise by integrating our dedicated team of experts, cutting-edge technology platforms, and state-of-the-art equipment in X-ray crystallization, Cryo-EM, DEL, ASMS, SPR, HDX-MS, AIDD/CADD, and much more. Our business covers all aspects of therapeutic strategies and drug modalities, including small molecules and biologics across the pharma and biotech spectrum. The experienced chemistry team, led by senior medicinal chemists and drug discovery biologists, provides services for drug design, medicinal chemistry (hit to lead and lead optimization), custom synthesis, chemical analysis and purification, kilogram scale-up, peptide synthesis and corresponding bioassays. With our subsidiary Langhua Pharmaceutical, we offer worldwide pharmaceutical and biotech partners a one-stop integrated CMC (Chemical, Manufacturing, and Control) service from preclinical to commercial manufacturing. Additionally, Viva Biotech embedded an equity for service (EFS) model to high potential startups to address unmet medical needs.
As of June 30, 2024, Viva Biotech had cumulatively provided drug R&D and manufacturing services to 2,350 biotech and pharmaceutical clients around the world. We have invested and incubated 92 biotech start-ups in total. In the future, the company will continue to strengthen its technological barriers and improve R&D, production levels, and our service capacity to provide high-quality and diversified services for more drug discovery start-ups, as well as medium and large pharmaceutical enterprises around the world.
