WuXi AppTec Reports Strong 2019 Annual Results
Revenue Growth Accelerated 33.9% Year-Over-Year to RMB12,872 Million
Adjusted Non-IFRS Net Profit Attributable to Owners of the Company Up 38.2% Year-Over-Year to RMB2,407 Million
Adjusted Diluted Non-IFRS EPS Up by 19.7% to RMB1.46
SHANGHAI, March 24, 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 audited annual results for the year ended December 31, 2019 ("Reporting Period").
All financials disclosed in this press release are prepared based on International Financial Reporting Standards (or "IFRSs").
2019 Financial Highlights
- Accelerated revenue growth of 33.9% year-over-year to RMB12,872 million. All our business segments experienced strong growth in 2019. During the reporting period, we added over 1,200 new customers and our active customer count reached more than 3,900.
- Non-IFRS gross profit grew 35.1% year-over-year to RMB5,259 million. Non-IFRS gross margin was 40.6%.
- Gross profit grew 32.5% year-over-year to RMB5,006 million. Gross profit margin was 38.9%.
- Adjusted EBITDA grew 42.4% year-over-year to RMB4,015 million.
- EBITDA grew 3.3% year-over-year to RMB3,428 million.
- Adjusted Non-IFRS net profit attributable to owners of the Company grew 38.2% year-over-year to RMB2,407 million.
- Net profit attributable to owners of the Company was down 18.0% year-over-year at RMB1,855 million. In 2019, we experienced a RMB180 million loss from the fair value change of our investment portfolio and a RMB21 million loss of equity pick up from our joint ventures and associates, primarily due to stock price decline of certain public companies in our investment portfolio. In 2018, we reported a RMB616 million gain from the fair value change of our investment portfolio and a RMB77 million gain of equity pick up from our joint ventures and associates.
- Adjusted diluted Non-IFRS EPS increased by 19.7% to RMB1.46 versus 2018 while diluted EPS was down 29.1% to RMB1.12.
2019 Business Highlights
- During the Reporting Period, we added over 1,200 new customers and our active customer count reached more than 3,900. By leveraging the strengths of our integrated end-to-end R&D services platform, we were able to create further synergies across our business units.
- Our repeat customers contributed RMB11,735 million revenue, representing 91.2% of total revenue. Our newly added customers contributed RMB1,137 million revenue, representing 8.8% of total revenue.
- 32.3% of our customers used services from more than one of our business units, representing 87.4% of total revenue.
- 60% of our revenue came from U.S. customers, 23% of our revenue came from China customers, 12% of our revenue came from Europe customers and 5% of our revenue came from customers from rest of the world.
- We anticipated the industry trend early and built our capabilities early. For example, our PROTAC drug discovery and testing platform enabled many global biotech customers to discover PROTAC drugs, which generated RMB474 million revenue in 2019, an increase of 90% over the prior year.
- In small molecule drug discovery services, we continued to assist global customers discover pre-clinical drug candidates and patent applications, with multiple research papers published in leading scientific journals. Our DNA-Encoded library ("DEL") now contains 90 billion compounds. Since the first year we launched DEL services, 110 customers globally have used our platform to discover innovative small molecule drug hits, including 7 of the top 20 global pharmaceutical companies.
- In our success-based drug discovery service unit, we filed INDs for 30 new-chemical-entities for China customers and obtained 23 clinical trial authorizations ("CTAs"). As of December 31, 2019, we have cumulatively submitted 85 new-chemical-entity IND filings with the NMPA for China customers and obtained 57 CTAs. We now have 1 project in Phase III clinical trials, 6 projects in Phase II clinical trials, and 38 projects in Phase I clinical trials.
- We leveraged our platform to prepare and facilitate submissions of our customers' IND packages (the WuXi IND program or "WIND"). We provided 52 integrated WIND packages for our customers, helping many of our global and domestic customers file IND applications with the FDA for clinical trial approval.
- Our small molecule CDMO/CMO pipeline continues to grow. We now provide CDMO services for about 1,000 active projects, including 40 projects in Phase III clinical trials, and we provide commercial manufacturing services for 21 approved drugs.
- We continue to make progress in cell and gene therapies CDMO services. Our laboratories and facilities in the U.S. provided services to 31 clinical stage projects, including 23 projects in Phase I clinical trials and 8 projects in Phase II clinical trials. Our laboratories and facilities in China also assisted our partner in submitting 2 IND filings for its cell therapy products with the NMPA.
- Our clinical research services segment maintained rapid growth. During the Reporting Period, we helped many customers complete NDAs with the NMPA and received approvals, including one breakthrough product for the treatment of ovarian cancer and a variety of new drugs for cancers, hematology diseases and chronic diseases. Since the NMPA released its regulations on self-auditing and inspection of clinical trial data of drugs on July 22, 2015, over 40 projects undertaken by our clinical research services and site management organization (SMO) unit were inspected by NMPA and all passed inspections. Among those projects, 38 new drugs have been approved.
2019 Capabilities Enhancement and Capacities Expansion
- We continued to strengthen our small molecule process development capabilities. Our flow chemistry platform began its first commercial manufacturing campaign. In biocatalysis services, our 500 liter biocatalysis bioreactor API manufacturing facility in Jinshan also began operation.
- We continued to build our oligonucleotide and polypeptide CDMO capabilities. Our oligonucleotide and polypeptide cGMP pilot facility began operation and completed multiple cGMP manufacturing projects for clinical use materials.
- In August 2019, we established a strategic cooperation with GeneSail Biotech (Shanghai) Co., Ltd., to co-develop a manufacturing platform for oncolytic viral vectors.
- We continued to strengthen our global clinical research capabilities. Since our acquisition of Research Point Global., we now provide multi-regional clinical development services to our customers. In May 2019, we acquired Pharmapace, Inc., a clinical research services company in San Diego focusing on biometrics services. Since the Pharmapace acquisition, our biometrics services started gaining momentum and have signed up one major customer already.
- We continued to expand our capacities across all segments and facilities globally to sustain our growth momentum.
- During the Reporting Period, our newly-built Nantong research center began operation.
- In March, 2020, we established our medicinal chemistry services capabilities in the U.S.
- We expanded the capacity of our Suzhou drug safety evaluation center by 80% to meet global customers' preclinical testing needs.
- We expanded CDMO/CMO services capacities. Our CDMO subsidiary STA's 5th API manufacturing facility in Changzhou began operation in the third quarter of 2019.
- In January 2020, STA opened its large-scale oligonucleotide API manufacturing facility in Changzhou, China, supporting the process R&D and manufacture of oligonucleotide APIs from preclinical to commercial.
- Early in 2019, our newly-built cell and gene therapies CDMO/CMO facility in Wuxi city began operation, providing services to customers in China.
- We have made investments to increase our gene therapy CDMO capability. In January 2020, our Philadelphia facility expanded its service capabilities by offering a fully integrated adeno-associated virus (AAV) Vector Suspension Platform, which will help customers accelerate the timeline for gene therapy product development, manufacturing and release. Its 500L and 1,000L bio-reactor gene therapy manufacturing lines are expected to be operational in the third quarter of 2020.
Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, "We achieved accelerated growth in 2019, attributable to the continued execution of our 'long-tail' strategy and our CDMO business model. Our revenue growth accelerated 33.9% over the prior year to RMB12,872 million and our adjusted Non-IFRS net profit attributable to owners of the Company growth accelerated 38.2% to RMB2,407 million. We leveraged the strength of our integrated, end-to-end R&D services platform to increase customer conversion, creating further synergies across all our business segments."
"By relentlessly executing our 'Follow the Project / Follow the Molecule / Follow the Customer' strategy, the power of our integrated business model allowed us to achieve robust growth. Meanwhile, we also continued to invest in new capabilities and capacity, including talent, laboratories, facilities and technologies globally. We believe these investments will enable us to sustain our long-term growth objectives."
Commenting on the impact of COVID-19 pandemic, Dr. Ge Li said, "We encountered the outbreak of COVID-19, which has affected almost every company and individual. We lost about one month of operations in China, with the greatest impact on our Wuhan site, and to some degree on our clinical CRO/SMO business as most hospitals in China stopped study monitoring visits and patient enrollment during the outbreak. However, the Company implemented our Business Continuity Plan very early on to minimize the impact to customers' project delivery timelines. We made extraordinary efforts to prepare for the resumption of operations across all of our sites in China, with our top priority being compliance with government regulations and protecting our employees' health and safety. By leveraging our multi-site operations, certain high priority projects were transferred from our Wuhan site to other sites to sustain project delivery timelines as much as possible, with our customers' agreement. Prior to the COVID-19 outbreak, we were expecting yet another year of strong revenue growth in 2020. As a result of the timely implementation of our Business Continuity Plan, we expect that we will win back some lost time and reduce the COVID-19 impact to potentially two to three weeks of operations."
Dr. Ge Li continued, "The fundamentals of our business remain very strong, and we expect that we can continue to meet customer demand and project delivery schedules going forward, even as our U.S. facilities begin to experience impacts from COVID-19 pandemic. At present, our China facilities are demonstrating strong resiliency, as China moves into a next phase in rising to the challenge of the pandemic. We therefore expect that our China operations will assume even greater responsibilities than usual for keeping the R&D and manufacturing engine humming. Looking ahead, we are exploring opportunities to expand our manufacturing capabilities and capacities in the U.S., including via acquisitions and new site build-outs in order to meet global customers' future supply chain needs. We are also actively using new communication technologies like Zoom to keep in close communication with our global customers. With our global footprint and telecommunication technologies, we are enabling our customers to work at home while they collaborate with us to advance their R&D programs."
Dr. Ge Li concluded, "This situation has served as a good reminder that the current methods of disease prevention, diagnosis and treatment are still limited, and the efficiency of new drug research and development needs to be improved. As a global company with open-access enabling platform in the global healthcare industry, we must continue to do the right things for patients – a goal that we have pursued since our founding. We will continue to focus on enabling global partners and assisting them to bring the best medicines to patients in need. With our healthy balance sheet, strong operating cash flow, broad R&D platform and the application of modern telecommunication technology, we will navigate through this COVID-19 crisis with our customers and strengthen our industry-leading position."
2019 IFRS Results
- Revenue increased 33.9% year-over-year to RMB12,872 million.
- During the Reporting Period, our China-based laboratory services realized revenue of RMB6,473 million, representing a YoY growth of 26.6%. We fully leveraged our platform to attract more customers while expanding services to our existing customers. Our "long-tail" strategy continued to perform very well. Many of our success-based services projects moved into late stage, from which we expect to achieve milestones and royalties in the future.
- During the Reporting Period, the revenue of our CDMO/CMO services amounted to RMB3,752 million, representing a YoY growth of 39.0%. We continued to implement our strategy of "expanding services along with the drug development value chain." We won more projects from customers and many of our early stage projects moved into late stage clinical trial and commercial manufacturing, and our revenue grew rapidly. We further strengthened our integrated CMC services, and our drug product manufacturing services became one of the new growth engine.
- During the Reporting Period, our U.S.-based laboratory services realized revenue of RMB1,563 million, representing a YoY growth of 29.8%. In particular, as more projects moved to late phase and our utilization rate increased, our cell and gene therapies CDMO services revenue growth accelerated. In addition, due to strengthening of the management and sales team and increased business opportunities resulting from the European Union Medical Device Regulation change, our medical device testing services revenue grew rapidly.
- During the Reporting Period, our clinical research and other CRO services realized revenue of RMB1,063 million, representing a YoY growth of 81.8%. Growth was mainly driven by continued rapid development of the domestic new drug clinical trial market, and acquired U.S. clinical CRO business contributed RMB199 million in revenue. Excluding the effect of acquisition, the revenue of our clinical research and other CRO services grew 61.4%.
- Gross profit increased 32.5% year-over-year to RMB5,006 million. Gross profit margin was 38.9%, slightly lower than the 39.3% achieved in 2018, mainly because of: (1) increase in share-based compensation expenses, and (2) pass-through revenue of clinical research and other CRO services which has no margins.
- Net profit attributable to owners of the Company decreased 18.0% year-over-year to RMB1,855 million. In 2019, we reported a RMB180 million loss from the fair value change of our investment portfolio and a RMB21 million loss of equity pick up from our joint ventures and associates, primarily due to stock price decline of certain public companies held in the investment portfolio. In 2018, we reported a RMB616 million gain from the fair value change of our investment portfolio and a RMB77 million gain from our joint ventures and associates.
2019 Non-IFRS Results
- 2019 Non-IFRS net profit attributable to owners of the Company decreased 8.2% year-over-year to RMB2,261 million. This adjusts for share-based compensation expenses, listing expenses, convertible bonds issuance and distribution expenses, fair value gain or loss from derivative component of convertible bonds, foreign exchange-related effects and amortization of intangible assets acquired in business combinations.
2019 Adjusted Non-IFRS Results
- Excluding realized/unrealized gains or losses from our venture investments and realized/unrealized gains or losses from our joint ventures and associates, 2019 adjusted Non-IFRS net profit attributable to owners of the Company increased 38.2% year-over-year to RMB2,407 million.
Reconciliation of Non-IFRS and Adjusted Non-IFRS Net Profit Attributable
Profit Attributable to the owners of the Company
Share-based compensation expenses
Listing expenses and issuance expenses of
Fair value gains or losses from derivative
Foreign exchange related gains/losses
Amortization of intangible assets acquired in
Non-IFRS Net Profit Attributable the owners of the
Realized and unrealized gains/losses from
Realized and unrealized share of gains/losses
Adjusted non-IFRS net profit attributable to the
Profit before tax
Depreciation and amortization
% EBITDA margin
Listing expenses and issuance
Fair value gain or loss from
Foreign exchange related
Realized and unrealized
Realized and unrealized share of
% Adjusted EBITDA margin
Consolidated Statement of Profit or Loss
Cost of services
Other gains and losses
Impairment losses under expected credit
Selling and marketing expenses
Research and development expenses
Share of profits (losses) of associates
Share of losses of joint ventures
Profit before tax
Income tax expense
Profit for the period
Owners of the Company
Consolidated Statement of Profit or Loss (continued)
Earnings per share
Consolidated Statement of Financial Position
Property, plant and equipment
Right of use assets
Other intangible assets
Prepaid lease payments
Interest in associates
Interest in joint ventures
Deferred tax assets
Financial assets at fair value through profit
Other non-current assets
Amount Due from Related Parties-NonCur
Amounts due from related parties
Trade and other receivables
Prepaid lease payments
Income tax recoverable
Financial assets at FVTPL
Derivative financial instruments
Pledged bank deposits
Bank balances and cash
Consolidated Statement of Financial Position (continued)
Trade and other payables
Amounts due to related parties
Derivative financial instruments
Income tax payables
Financial liabilities at FVTPL
Convertible bonds – debt component
Convertible bonds-embedded derivative
Deferred tax liabilities
Other long-term liabilities
Financial liabilities at FVTPL
Total Non-current liabilities
Capital and Reserves
Equity attributable to owners of the Company
- 30 Mar 2020Return to news
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