WuXi AppTec Reports Solid First-Quarter 2020 Results

SHANGHAI, April 29, 2020 /PRNewswire/ -- 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, announces its unaudited financial results for the First-Quarter 2020 ("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 2020 first quarterly 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 "IFRS").

First-Quarter 2020 Financial Highlights

• Revenue grew 15.1% year-over-year to RMB3,188 million, driven by solid growth of our China-based laboratory services and US-based laboratory services.
• IFRS gross profit grew 3.9% year-over-year to RMB1,097 million. Gross profit margin was 34.4%, lower than the 38.1% achieved in the same period of 2019^[2], mainly because of: (1) the COVID-19 impact on our Wuhan site and clinical research services business, and (2) an increase in share-based compensation expenses.
• Non-IFRS gross profit grew 10.3% year-over-year to RMB1,224 million. Non-IFRS gross profit margin was 38.1% compared to 39.9% for the same period in 2019.
• EBITDA grew 2.7% year-over-year to RMB746 million.
• Adjusted EBITDA grew 22.1% year-over-year to RMB1,035 million.
• IFRS net profit attributable to owners of the Company was down 21.6% year-over-year to RMB303 million. In First-Quarter 2020, we experienced a RMB105 million loss from the fair value change of our investment portfolio and a RMB84 million loss of equity pick up from our joint ventures and associates, primarily due to a decline in stock price as of March 31, 2020, of certain public companies in our investment portfolio. During the same period in 2019, we reported a RMB189 million loss from the fair value change of our investment portfolio and a RMB181 million gain of equity pick up from our joint ventures and associates.
• Adjusted non-IFRS net profit attributable to owners of the Company grew 10.8% year-over-year to RMB576 million.
• Adjusted diluted non-IFRS EPS increased by 9.4% to RMB0.35 versus the same period last year, while diluted EPS was down 25.0% to RMB0.18.^[3]

Management Comment

Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, "We achieved solid growth in the first quarter of 2020, in spite of the COVID-19 impact on our Wuhan site, which was closed for almost two months, and dramatically reduced activities in our China clinical research services business. Our revenue grew 15.1% year-over-year to RMB3,188 million and our adjusted Non-IFRS net profit grew 10.8% year-over-year to RMB576 million, which was attributable to the timely implementation of our Business Continuity Plan. We maintained and continue to be in close communication with our global customers through video conferencing."

"For the three months ended March 31, 2020, we added over 240 new customers, including 128 global customers, and our number of active customers continued to exceed 3,900. We also continued to make progress across all business segments. As of March 31, 2020, our small molecule CDMO/CMO pipeline has grown to more than 1,000 active projects, including 42 projects in Phase III clinical trials and 22 in commercial manufacturing, and our cell and gene therapies CDMO business provided services for 35 clinical stage projects, including 24 projects in Phase I and 11 projects in Phase II/III. During the Reporting Period, our success-based drug discovery unit filed INDs for 6 new-chemical-entities for our customers and obtained 5 CTAs. As of March 31, 2020, we have cumulatively submitted 91 new-chemical-entities IND filings for our customers and obtained 62 CTAs."

Dr. Ge Li concluded, "The fundamentals of our business remain very strong. Our laboratories and facilities in China are fully operational and we expect to deliver a strong second quarter. Due to the spread of COVID-19 in the United States, our US operations will be negatively impacted in the second quarter, however, we expect the continued implementation of our Business Continuity Plan to mitigate some of this impact. We are determined to navigate through the COVID-19 crisis in partnership with our global customers, and to assume an even greater responsibility for keeping the R&D and manufacturing engine humming. We are confident that we will win back 2020 and deliver another year of strong growth."

First-Quarter 2020 Adjusted Non-IFRS Results

• First-Quarter 2020 adjusted non-IFRS net profit attributable to owners of the Company grew 10.8% year-over-year to RMB576 million. This adjusts for share-based compensation expenses, listing expenses and convertible bonds issuance expenses, fair value gain or loss from conversion option of convertible bonds, foreign exchange-related effects, amortization of intangible assets acquired in business combinations, realized/unrealized gains or losses from our venture investments and realized/unrealized gains or losses from our joint ventures.

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 3,900 collaborators from over 30 countries to improve the health of those in need – and to realize our vision that "every drug can be made and every disease can be treated." Please visit: http://www.wuxiapptec.com

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, unforeseeable international tension, competition, the impact of emergencies and other force majeure. 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. All information provided in this press release is as of the date of this press release and are based on assumptions that we believe to be reasonable as of this date, and we do not undertake any obligation to update any forward-looking statement, except as required under applicable law.

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

We provide Non-IFRS gross profit, exclude the impact in revenue and cost from effective hedge accounting, share-based compensation expenses and amortization of intangible assets acquired in business combinations, and Non-IFRS net profit attributable to owners of the Company, which exclude share-based compensation expenses, listing expenses and issuance expenses of convertible bonds, fair value gain or loss from derivative component of convertible bonds, foreign exchange-related gains or losses and amortization of intangible assets acquired in business combinations. We also provide adjusted Non-IFRS net profit attributable to owners of the Company and earnings per share, which further 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, non-recurring, non-cash and non-operating items that we do not consider indicative of the performance of our core business. Such adjusted Non-IFRS net profit attributable to owners of the Company, the management of the Company believes, is widely accepted and adopted in the industry the Company is operating in. 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.

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