GenScript Biotech Reports First Half 2024 Results

Strong Revenue Growth and Strategic Advances Across Key Segments, Enhances Commitment to ESG and Sustainable Development 

• Impressive Financial Growth: The group reported a 43.5% increase in revenue, driven by a 156% boost in cell therapy revenue and a 75.4% rise in gross profit, showcasing strong performance across key segments.
• Focused on Innovation and Efficiency: Investing heavily in R&D and market expansion, aiming to drive sustainable growth, enhance global presence, and continue its leadership in technology and ESG practices.
• Strong ESG Commitment: Joined the UNGC and ranked in the top 35% in EcoVadis' sustainability ratings. It's also committed to science-based climate targets and holds international certifications for environmental and data security management.

PISCATAWAY, N.J., Aug. 9, 2024 /PRNewswire/ -- GenScript Biotech Corporation (HKEX: 1548.HK), a leading global technology and service provider of life science R&D and manufacture, today reported its first half 2024 financial results for the six months ended June 30, showcasing impressive revenue growth, significant improvements in gross profit, and strategic advances across its business segments. GenScript is also deepening its commitment to environmental, social, and governance (ESG) practices, marking a significant step towards sustainable development.

Sherry Shao, GenScript's rotating CEO, said, "In the first half of 2024, the Group showcased strong market adaptability and growth potential. With a diversified business strategy, exceptional innovation, and efficient operations, GenScript not only maintained solid profitability in the life sciences sector but also saw promising growth in cell therapy product sales. Our subsidiary, Bestzyme, has also outperformed the industry, thanks to years of hard work from the team. While the CDMO sector has been under pressure due to current investment challenges, we're starting to see signs of recovery. We're ready to accelerate our business in the second half of the year. GenScript will continue to strengthen its core competencies across all business lines and foster synergies across divisions to achieve shared growth with our global partners."

Strong Financial Performance

During the Reporting Period, GenScript generated revenue of approximately US$561.4 million, reflecting a robust 43.5% increase from US$391.3 million in the Prior Period. This growth was largely driven by the cell therapy segment, which saw a remarkable 156% increase, reaching approximately US$280.3 million compared to US$109.5 million previously. On the other hand, revenue from the non-cell therapy business was around US$281.1 million.

Gross profit surged to approximately US$307 million, a 75.4% increase from US$175 million in the Prior Period. The cell therapy segment was a key contributor to this growth, with its gross profit soaring by 323.4% to approximately US$175.3 million.

Improved Loss and Adjusted Net Loss

GenScript's loss for the Reporting Period narrowed to approximately US$215.6 million, compared to US$245.8 million in the Prior Period. The adjusted net loss saw a significant improvement, decreasing to approximately US$69 million from US$162 million.

For the non-cell therapy business, the adjusted net profit before eliminations was approximately US$29.2 million, a 13.1% decrease from US$33.6 million. Meanwhile, the adjusted net loss for the cell therapy business before eliminations narrowed to approximately US$98.3 million from US$195.7 million.

Segment Highlights

1. Life-Science Services and Products: Revenue in this segment grew by 9.6% to approximately US$222.4 million, driven by major upgrades in platforms and automation, especially in molecular biology, peptide, and protein technologies. Enhanced manufacturing efficiency in Singapore, Mainland China, and the U.S., along with strong commercial operations in the U.S. and Europe, fueled this growth. Adjusted gross profit increased by 8.5% to approximately US$119.9 million, maintaining a stable margin. Adjusted operating profit rose significantly by 23.8% to approximately US$47.8 million.
2. Biologics Development Services: This segment saw a revenue decline of 37.9% to approximately US$40.4 million, impacted by reduced demand and increased competition. Adjusted gross profit fell by 69.7% to approximately US$5.9 million, with the adjusted gross profit margin decreasing to 14.7%. Adjusted operating loss widened to approximately US$18.9 million, driven by higher operating costs related to U.S. expansion and strategic investments. The Company plans to refine pricing strategies and enhance global market presence to address these challenges.
3. Industrial Synthetic Biology Products: Revenue increased by 43.4% to approximately US$26.1 million, driven by a market rebound and growing demand in Mainland China and beyond. Adjusted gross profit rose by 52.8% to approximately US$11 million, with the adjusted gross profit margin improving to 42.2%. Adjusted operating profit improved to approximately US$2.3 million, reflecting higher capacity utilization and process improvements.
4. Cell Therapy: Revenue from the cell therapy segment grew by 155.7% to approximately US$280.5 million. This growth was fueled by collaboration revenue from CARVYKTI sales under the Janssen Agreement and increased license revenue from agreements with Janssen and Novartis Pharma AG. The adjusted operating loss narrowed to approximately US$119.4 million from US$205.9 million. The Company invested approximately US$196.3 million in research and development, focusing on cilta-cel and solid tumor programs, and incurred approximately US$52.4 million in adjusted selling and distribution expenses and US$49.1 million in adjusted administrative expenses.

Deepening ESG Commitment

In addition to its financial achievements, GenScript is advancing its commitment to sustainability and ESG practices. This year, the Company officially joined the United Nations Global Compact (UNGC), underscoring its commitment to adhere to ten sustainable development principles and drive more responsible, inclusive, and sustainable global business practices.

The Group has also been recognized for its ESG performance, ranking in the top 35% in EcoVadis' sustainability assessments. This recognition highlights the Company's efforts in environmental protection, labor rights, supply chain management, fair operations, and the execution of sustainable development strategies. Further demonstrating its dedication, the Company has joined the Science Based Targets initiative (SBTi) and submitted its Science-Based Targets Commitment, reflecting its proactive stance on global climate change and commitment to aligning with the Paris Agreement's temperature goals.

In environmental management, GenScript is focused on optimizing its carbon footprint through international certifications such as ISO 14064, ISO 14001, and ISO 50001. These certifications enhance energy efficiency and cut greenhouse gas emissions. Additionally, the Company has earned ISO 27001 certification, ensuring top-notch data security and customer privacy protection.

Looking Ahead

GenScript remains focused on driving sustainable growth through strategic investments, operational efficiency, and innovation. The Group will continue to enhance its global market presence, optimize supply chain management, and leverage its cutting-edge technologies to deliver exceptional value to its stakeholders while advancing its ESG objectives.