omniture

WuXi AppTec Reports First Half 2019 Interim Results

2019-08-19 19:20 1464
  • Revenue Accelerated 33.7% Year-Over-Year to RMB 5,894 Million
  • Gross Profit Up 30.0% Year-Over-Year to RMB 2,284 million[1]
  • Adjusted Non-IFRS Net Profit Attributable to Owners of the Company Up 32.0% Year-Over-Year to RMB 1,179 Million
  • Small Molecule CDMO/CMO Pipeline has Grown to 800+ Active Projects With 16 Already in Commercial Manufacturing
  • Cumulatively Submitted 65 New-Chemical-Entity IND Filings with NMPA and Obtained 45 CTAs for Customers[2]

SHANGHAI, Aug. 19, 2019 /PRNewswire/ -- WuXi AppTec Co., Ltd. (stock code: 603259.SH / 2359.HK), a platform 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, announces its financial results for the six months ended June 30, 2019 ("Reporting Period").

This document serves purely as a summary and is not intended to provide a complete representation of the relevant matters. For further information, please refer to the 2019 interim report and relevant announcements published on the websites of the Shanghai Stock Exchange (www.sse.com.cn) and the Stock Exchange of Hong Kong (www.hkexnews.hk), and the designated media for dissemination of the relevant information. Investors are advised to exercise caution and be aware of the investment risks in dealing in the shares of the Company.

All financials disclosed in this press release are prepared based on International Financial Reporting Standards (or "IFRSs").

First Half 2019 Financial Highlights

  • Accelerated revenue growth of 33.7% year-over-year to RMB 5,894 million which was broad-based across all our business segments. During the Reporting Period, we added nearly 600 new customers and our active customers during this period exceeded 3,600. By fully leveraging the strength of our integrated end-to-end R&D services platform, we were able to create further synergies across all our business segments as we continued to adhere to our "Follow the Project" and "Follow the Molecule" strategies.
  • Gross profit grew 30.0% year-over-year to RMB 2,284 million. Gross profit margin was 38.7%[3]
  • Adjusted non-IFRS net profit attributable to owners of the Company grew 32.0% year-over-year to RMB 1,179 million.
  • Net profit attributable to owners of the Company was lower 16.9% year-over-year to RMB 1,057 million, due to a RMB 55 million loss from changes in fair value of our investment portfolio, versus a RMB 432 million gain in the same period last year.
  • Adjusted non-IFRS EPS increased by 9.1% versus the same period last year while diluted EPS was down 31.2%.[4]

First Half 2019 Operational Highlights

  • We acquired nearly 600 new customers, and our active customer count reached more than 3,600. We attracted and enabled numerous innovative biotech companies on our platform. We focused on and increased customer conversion, creating further synergies across all our business segments.
  • In small molecule drug discovery services, we continued to assist global customers develop pre-clinical candidate molecules and patent applications, with multiple research papers published in leading scientific journals. Our DNA-Encoded library ("DEL") now contains 90 billion compounds, enabling a growing number of customers globally to discover innovative small molecule drugs.
  • In our success-based drug discovery unit, we filed INDs for 10 new-chemical-entities for domestic customers with the China National Medical Products Administration (the "NMPA") and obtained 11 clinical trial authorizations ("CTAs"). As of June 30, 2019, we have cumulatively submitted 65 new-chemical-entity IND filings with the NMPA for our customers and obtained 45 CTAs.
  • In our laboratory testing services, we fully leveraged our platform, combining our technical experience, program management and regulatory expertise to prepare and facilitate submissions of our customers' IND packages (the WuXi IND program or "WIND"). For the first time, we also helped our customers obtain clinical trial approval from the FDA under eCTD format.
  • Our small molecule CDMO/CMO pipeline has grown to more than 800 active projects, including 11 under China's MAH pilot program. Furthermore, 40 projects are in Phase III clinical trials and 16 are already in commercial manufacturing.
  • Our cell and gene therapies CDMO business provided services for 30 clinical stage projects, including 21 projects in Phase I and 9 projects in Phase II/III.
  • We continued to build our global clinical research capabilities. Since our acquisition of Research Point Global, we are now providing multi-regional clinical development services to multiple customers. In May 2019, we also acquired Pharmapace, Inc., a clinical research services company with significant expertise in providing high quality biometrics services, allowing us to further diversify our global clinical trial service offering.
  • In April 2019, we appointed Dr. Frederick H. Hausheer as our Chief Medical Officer. With his decades of extensive clinical experience in both the US and China, Dr. Hausheer is already having a big impact on the design of our customers' medical and clinical development programs. His skills enable us to provide a seamless integration of drug development projects from preclinical translational R&D into first-in-human studies along with Phase I-IV clinical development plans for our customers.
  • We hired Dr. Zhigang Chen as our Chief Digital Officer. As digital technology within the healthcare field becomes an increasingly important asset, Dr. Chen will put the infrastructure in place for WuXi AppTec to capitalize on the copious information synergies within our platform.
  • During the Reporting Period, we also continued to enhance our capacities and capabilities across all segments and facilities. Our newly built Qidong research and development center began operation. Three of our Laboratory Testing Division's facilities - Drug Safety Testing, Bioanalytical Services and Medical Device Testing - completed regulatory inspections by the FDA, OECD, and CNAS, all with excellent results. Our cell and gene therapies CDMO/CMO facility in Wuxi city began operation, providing services to customers in China. Our small molecule CDMO/CMO STA's new drug product manufacturing facility in Shanghai passed its first GMP inspection by the European MPA and, in July 2019, STA's ASU facility in Shanghai and API process R&D and manufacturing facility in Changzhou, successfully passed two inspections by the FDA, with no Form 483 issued.

Management Comment

Mr. Edward Hu, Co-CEO of WuXi AppTec, said, "We achieved accelerated growth in the first half of 2019 across all of our businesses. Our revenue grew 33.7% to RMB 5,894 million and our adjusted non-IFRS net profit attributable to owners of the Company grew 32.0% to RMB 1,179 million. Both revenue and adjusted net profit growth rate accelerated compared with growth rate from the same period last year. In addition, we increased our focus on customer conversion, enabling further synergies across all our business segments."

Mr. Edward Hu further commented, "Our China-based laboratory services segment expanded its global and domestic customer base, improved customer penetration, and maintained a steady revenue growth rate of 23.7% to RMB 2,989 million. Our small molecule CDMO/CMO services portfolio increased from 650+ molecules at the end of 2018 to over 800 molecules as of June 30, 2019, and revenue grew 42.0%. US-based laboratory services revenue growth increased 30.0%, compared to a drop of 1.9%, in the same period last year. This was primarily due to cell and gene therapies CDMO services progressing more projects to later stage. Likewise, our medical device testing business returned to more historical levels of growth. Clinical research services was our fastest growing segment. Revenue grew 104.2%, driven by strong development of the domestic new drug clinical trial market, and contribution from acquired clinical CRO business."

Dr. Ge Li, Chairman and CEO of WuXi AppTec, concluded, "While achieving strong revenue growth, we continued to invest in new capacity and capabilities, including talent, laboratories, manufacturing facilities and technologies. Our integrated platform enables more entrepreneurs, scientists, and doctors around the world to participate in innovation to bring the best and newest medicines to those patients in need."

2019 Interim Results

  • Revenue increased 33.7% year-over-year to RMB 5,894 million.
    - China-based laboratory services realized revenue of RMB 2,989 million, representing a year-over-year growth of 23.7%. We have one of the largest and most experienced small molecule drug R&D organizations globally, along with a comprehensive testing platform.
    - CDMO/CMO services realized revenue of RMB 1,718 million, representing a year-over-year growth of 42.0%. The Follow-the-Molecule" strategy continues to perform very well. We establish close, cooperative relationships with our customers during the pre-clinical and early clinical development stage, and are then able to advance these projects into later clinical and commercialization stages if the molecules succeed in clinical development.
    - U.S.-based laboratory services realized revenue of RMB 710 million, representing year-over-year growth of 30.0%. For cell and gene therapies CDMO services, we acquired more customers and more projects progressed to late stage, allowing revenue growth to accelerate. For medical device testing services, we actively developed new customers and capitalized on incremental demand resulting from the European Union Medical Device Regulation change.
    - Clinical research and other CRO services realized revenue of RMB 472 million, representing year-over-year growth of 104.2%. Growth was mainly driven by continued rapid development of the domestic new drug clinical trial market, and acquired US clinical CRO business contributed RMB 84 million for the six months ended June 30, 2019. Excluding the effect of acquisition, the revenue of our clinical research and other CRO services grew 67.7%.
  • Gross profit increased 30.0% year-over-year to RMB 2,284 million. Gross profit margin was 38.7%, slightly lower than 39.8% in the six months ended June 30, 2018.[5]
    - China-based laboratory services realized gross profit of RMB 1,301 million, representing year-over-year growth of 20.0%. Gross profit margin was 43.5%, lower by 1.34 percentage points[6], due to an increase in share-based compensation expenses and project mix.
    - CDMO/CMO services realized gross profit of RMB 698 million, representing a year-over-year growth of 42.7%, in line with revenue growth. Gross profit margin was 40.6%[7], the same as last year. |
    - U.S.-based laboratory services realized gross profit of RMB 191 million, representing year-over-year growth of 52.3%. Gross profit margin was 26.9%, up 3.93 percentage points[8], because of new customer acquisition and higher utilization rate of cell therapy manufacturing facilities.
    - Clinical research and other CRO services realized gross profit of RMB 92 million, representing year-over-year growth of 65.5%. Gross profit margin was 19.4%, down 4.54 percentage points,[9] mainly due to the effect of pass-through revenue and amortization cost of intangible assets associated with M&A.
  • Net profit attributable to owners of the Company decreased 16.9% year-over-year to RMB 1,057 million, mainly due to a RMB 55 million loss in fair value of our investment portfolio, compared with a RMB 432 million gain in the same period last year. Excluding the impact of changes in fair value of our investment portfolio, the net profit attributable to owners of the Company in the current period increased by 32.4% compared with the same period last year.

2019 Interim Non-IFRS Results

  • 2019 interim non-IFRS net profit attributable to owners of the Company decreased 10.7% year-over-year to RMB 1,213 million. This adjusts for share-based compensation expenses, listing expenses, foreign exchange-related effects and amortization of intangible assets acquired in business combinations.

2019 Interim Adjusted Non-IFRS Results

  • Excluding realized/unrealized gains or losses from our venture investments and realized/unrealized gains or losses from our joint ventures, 2019 interim adjusted non-IFRS net profit attributable to owners of the Company increased 32.0% year-over-year to RMB 1,179 million.

 

Reconciliation of Non-IFRS and Adjusted Non-IFRS Net Profit Attributable
to Owners of the Company
[10]


RMB Million

Six Months
Ended June 30,
2019

Six Months
Ended June 30,
2018

Profit Attributable to the owners of the Company

1,056.8

1,271.9

Add:



      Share-based compensation expenses

62.7

16.0

      Listing expenses for offering of our A Shares and H Shares

-

6.4

      Foreign exchange related gains/losses

81.3

56.1

      Amortization of intangible assets acquired in business
combinations

12.4

8.0

Non-IFRS Net Profit Attributable the owners of the Company

1,213.2

1,358.4

Add:



      Realized and unrealized gains/losses from venture
investments

(54.7)

(474.2)

      Realized and unrealized share of gains/losses of joint ventures

20.2

8.8

Adjusted non-IFRS net profit attributable to the owners of the
Company

1,178.7

893.0

 

 

Condensed Consolidated Statement of Profit or Loss[11]


RMB million

Six Months
Ended June 30,
2019

Six Months
Ended June 30,
2018

YoY
Change





Revenue (note i)

5,894.4

4,409.2

33.7%

Cost of services

(3,610.8)

(2,653.1)

36.1%

Gross profit

2,283.6

1,756.1

30.0%

Other income

124.9

54.7

128.2%

Other gains and losses

(22.5)

389.6

-105.8%

Impairment losses under
expected credit losses ("ECL")
model, net of reversal

(1.2)

5.6

-120.4%

Selling and marketing expenses  

(208.5)

(152.7)

36.6%

Administrative expenses 

(671.2)

(435.3)

54.2%

Research and development expenses

(243.6)

(177.5)

37.2%

Operating Profit

1,261.4

1,440.7

-12.4%

Share of profits (losses) of
associates

73.0

38.7

88.8%

Share of losses of joint ventures

(20.2)

(8.8)

130.8%

Finance costs

(32.8)

(45.5)

-28.0%

Profit before tax

1,281.5

1,425.0

-10.1%

Income tax expense

(176.5)

(121.0)

45.9%

Profit for the period

1,105.0

1,304.1

-15.3%





Attributable to:




Owners of the Company

1,056.8

1,271.9

-16.9%

Non-controlling interests

48.2

32.2

49.8%


1,105.0

1,304.1

-15.3%


 

 

Condensed Consolidated Statement of Profit or Loss (continued)[12]


RMB

Six Months
Ended June 30,
2019

Six Months
Ended June 30,
2018

YoY
Change





Weighted average number of
ordinary shares for the purpose
of calculating (express in
shares)




– Basic

1,628,964,071

1,361,259,141

19.7%

– Diluted

1,631,360,114

1,361,259,141

19.8%





Earnings per share attributable
to ordinary equity holders of the
parent (expressed in RMB per
share)




– Basic

0.65

0.93

-30.1%

– Diluted

0.64

0.93

-31.2%

 

 

Note:

(i) The table below sets forth a breakdown of our revenue by segment:


RMB million

Six Months
Ended June 30,
2019

Six Months
Ended June 30,
2018

  - China-based laboratory services

2,988.9

2,416.3

  - U.S.-based laboratory services

709.8

546.1

  - Clinical research and other CRO
services

472.1

231.2

  - CMO/CDMO services

1,717.7

1,209.4

  - Others

5.8

6.3


5,894.4

4,409.2

 

 

Condensed Consolidated Statement of Financial Position[13]


RMB million

June 30,

December 31,


2019

2018




Non-current Assets



 Property, plant and equipment

6,702.6

6,057.6

 Right of use assets

1,111.8

-

 Goodwill

1,248.8

1,144.1

 Other intangible assets

430.6

347.9

 Prepaid lease payments

-

272.3

 Interest in associates

747.4

618.7

 Interest in joint ventures

39.3

36.8

 Deferred tax assets

253.8

250.2

 Financial assets at fair value through profit
or loss ("FVTPL")

2,516.4

2,079.3

 Other non-current assets

62.1

47.4

Derivative financial instruments

0.6

-


13,113.5

10,854.4




Current Assets



 Inventories

972.5

854.8

 Contract costs

119.9

97.7

 Amounts due from related parties

7.6

13.9

 Trade and other receivables

3,014.0

2,498.7

 Contract assets

322.4

384.5

 Prepaid lease payments

-

6.2

 Income tax recoverable

8.8

34.0

 Financial assets at FVTPL

3,152.4

2,125.3

 Derivative financial instruments

13.3

37.1

 Pledged bank deposits

4.4

2.9

 Bank balances and cash 

3,699.8

5,757.7


11,314.9

11,812.8

 

 

Condensed Consolidated Statement of Financial Position (continued)[14]


RMB million

June 30,

2019

December 31,

2018




Current Liabilities



 Trade and other payables

2,476.8

2,610.6

 Amounts due to related parties

11.9

12.0

 Derivative financial instruments

103.3

153.3

 Contract liabilities

697.2

681.9

 Borrowings

1,294.9

120.0

 Income tax payables

167.2

184.3

 Financial liabilities at FVTPL

17.6

-

 Lease liabilities

101.0

-


4,869.9

3,762.1




Non-current Liabilities



 Borrowings

15.0

15.0

 Deferred tax liabilities

158.1

111.7

 Deferred income 

404.3

418.8

 Other long-term liabilities

95.9

194.3

 Financial liabilities at FVTPL

14.8

-

 Lease liabilities

741.4

-

Total Non-current liabilities

1,429.4

739.9




Total Liabilities

6,299.3

4,502.0




Net Assets

18,129.2

18,165.2




Capital and Reserves



 Share capital 

1,170.0

1,164.7

 Reserves

16,586.1

16,523.3

 Equity attributable to owners of the Company

17,756.1

17,688.0

 Non-controlling interests

373.1

477.2

Total Equity

18,129.2

18,165.2

About WuXi AppTec

WuXi AppTec 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. As an innovation-driven and customer-focused company, WuXi AppTec helps our partners improve the productivity of advancing healthcare products through cost-effective and efficient solutions. With industry-leading capabilities such as R&D and manufacturing for small molecule drugs, cell and gene therapies, and testing for medical devices, WuXi AppTec's open-access platform is enabling more than 3,600 collaborators from over 30 countries to improve the health of those in need – and to fulfill our dream that "every drug can be made and every disease can be treated."

Forward-Looking Statements

This press release may contain certain "forward-looking statements" which are not historical facts, but instead are predictions about future events based on our beliefs as well as assumptions made by and information currently available to our management. Although we believe that our predictions are reasonable, future events are inherently uncertain and our forward-looking statements may turn out to be incorrect. Our forward-looking statements are subject to risks relating to, among other things, the ability of our service offerings to compete effectively, our ability to meet timelines for the expansion of our service offerings, our ability to protect our clients' intellectual property, and unforeseeable international tension. Our forward-looking statements in this press release speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements except as required by applicable law or listing rules. Accordingly, you are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. All forward-looking statements contained herein are qualified by reference to the cautionary statements set forth in this section.

Use of Non-IFRS and Adjusted Non-IFRS Financial Measures

We provide non-IFRS net profit attributable to owners of the Company and earnings per share, which exclude share-based compensation expenses, listing expenses for offering of our A shares and H shares, foreign exchange-related gains or losses and amortization of intangible assets acquired in business combinations. We further provide an adjusted non-IFRS net profit attributable to owners of the Company and earnings per share, which exclude realized and unrealized gains or losses from our venture investments and joint ventures. Neither is required by, or presented in accordance with IFRS. We believe that the adjusted financial measures used in this press release are useful for understanding and assessing our core business performance and operating trends, and we believe that management and investors may benefit from referring to these adjusted financial measures in assessing our financial performance by eliminating the impact of certain unusual and non-recurring items that we do not consider indicative of the performance of our core business. However, the presentation of these adjusted non-IFRS financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. You should not view adjusted results on a stand-alone basis or as a substitute for results under IFRS, or as being comparable to results reported or forecasted by other companies.

[1] If prepared under Accounting Standard for Business Enterprises of PRC, the gross profit grew 29.4% year-over-year to RMB 2,286 million.

[2] Our success-based services, as of June 30, 2019.

[3] If prepared under Accounting Standard for Business Enterprises of PRC, the gross profit grew 29.4% year-over-year to RMB 2,286 million. Gross profit margin was 38.8%.

[4] Six months ended June 30, 2018 and six months ended June 30, 2019, we had a fully-diluted weighted average share count of 1,361,259,141 and 1,631,360,114 ordinary shares, respectively.

[5] If prepared under Accounting Standard for Business Enterprises of PRC, six months ended June 30, 2019 gross profit increased 29.4% year-over-year to RMB 2,286 million. Gross profit margin was 38.8%, slightly lower than 40.1% in six months ended June 30, 2018.

[6] If prepared under Accounting Standard for Business Enterprises of PRC, China-based laboratory services realized gross profit of RMB 1,302 million, representing a YoY growth of 19.4%. Gross profit margin was 43.6%, down by 1.57 percentage points.

[7] If prepared under Accounting Standard for Business Enterprises of PRC, CDMO/CMO services realized gross profit of RMB 698 million, representing a YoY growth of 41.7%. Gross profit margin was 40.7%.

[8] If prepared under Accounting Standard for Business Enterprises of PRC, U.S.-based laboratory services realized gross profit of RMB 191 million, representing a YoY growth of 52.2%. Gross profit margin was 26.9%, up by 3.93 percentage points.

[9] If prepared under Accounting Standard for Business Enterprises of PRC, clinical research and other CRO services realized gross profit of RMB93 million, representing a YoY growth of 65.7%, down 4.61 percentage points.

[10] If the sum of the data below is inconsistent with the total, it is caused by rounding.

[11] If the sum of the data below is inconsistent with the total, it is caused by rounding.

[12] If the sum of the data below is inconsistent with the total, it is caused by rounding.

[13] If the sum of the data below is inconsistent with the total, it is caused by rounding.

[14] If the sum of the data below is inconsistent with the total, it is caused by rounding.

 

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Source: WuXi AppTec
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