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56.6% Year-on-Year Revenue Growth to RMB2,534.5 Million
Net Profit 249.6% of Same Period Last Year to RMB 630.5 Million
Adjusted Net Profit 173.6% of Same Period Last Year to RMB751.5 Million
Total Backlog Surged 146.2% to US$ 3.6 Billion
* * *
Continued to Gain Market Share and Added 57 New Integrated Projects
Total Integrated Projects Increased to 205 Including 13 Late-Phase Projects
Chinese Market Accelerated to 105.7% Growth in H2 2018
WuXiBody™ Platform Successfully Launched
“Global Dual Sourcing within WuXi Bio” Demonstrated Success
Construction of All New Facilities on Track
Sufficient Capacities to Start any Project in 4 Weeks
HONG KONG, March 18, 2019 –WuXi Biologics (Cayman) Inc. (“WuXi Biologics” or “the Group”, stock code: 2269.HK), a leading global open-access biologics technology platform company offering end-to-end solutions for biologics discovery, development and manufacturing, announces its audited annual results for the year ended December 31, 2018 today.
We finished the year 2018 with strong business momentum. The number of integrated projects and customers continued to expand significantly. Meanwhile, we enhanced our biologics capabilities by successfully launching three globally leading technology platforms to better enable our partners. We made plans to expand our global capacity through investments in state-of-the-art facilities in the U.S., Ireland, China and Singapore. These new technology platforms and biomanufacturing facilities will further enhance the Group’s mission of accelerating and transforming biologics discovery, development and manufacturing.
Robust Growth of Projects Driving Revenue and Net Profit to a Record High
In 2018, the Group’s business scale and revenue both achieved record highs, further demonstrating the success of our “Follow-the-Molecule” strategy. Revenue increased by 56.6% year-on-year to RMB 2,534.5 million. Our growth has outpaced the industry’s growth rate by approximately three-fold. Our net profit substantially increased by 149.6% year-on-year to RMB 630.5 million with net profit margin also increasing significantly to 24.9% from 15.6%.
As of December 31, 2018, the service revenue backlog surged 243.1% year-on-year to US$1,633 million due to the signing of significant commercial manufacturing contracts and adding 57 new projects in the year. This service revenue backlog continues to provide high visibility for sustainable and strong growth momentum. Moreover, the upcoming potential milestone fees doubled to US$2,006 million in 2018, demonstrating that the Group’s advanced technology platforms continue to attract customers that recognize their value, thus driving potential milestones and royalty payments to us. These milestone payments will continue to boost our profit margin and improve profitability. The Group had a total of 205 integrated projects, of which the number of late-phase projects increased substantially to 13, including one project in the commercial manufacturing stage.
Accelerating Technology Innovations Generate Consistent Breakthroughs and Empower Partners around the World
The biologics industry still enjoys rapid worldwide growth fueled by increasing demands of customers and patients. To meet our customers’ demands for innovative technologies, the Group successfully launched three new proprietary technology platforms, namely the highly efficient continuous cell culture process platform, WuXiUP; the bispecific antibody platform, WuXiBody™; and the CHO cell line platform, WuXia. Through these platforms, the Group can accelerate the R&D process, improve efficiency and reduce development and manufacturing costs.
The Group is enabling the next wave of innovation in biopharmaceuticals with the launch of an innovative, proprietary bispecific antibody platform called WuXiBody™ in August 2018. The platform has since been quickly adopted by the global biologics industry and our customers’ response has far exceeded the Group’s expectations. Currently, the Group has commenced strategic collaborations with seven global customers since the launch of the platform. This new platform is expected to be one of the key engines to drive our sustainable growth and reinforce the Group’s leadership position in innovation.
Furthermore, the Group has made more breakthroughs in bioprocess productivity and in reducing the R&D timeline. In December 2018, the Group’s WuXiUP platform achieved a titer of 51g/L bioreactor volume in cell culture productivity, more than 10 times the productivity of 3-5g/L traditional fed-batch processes. This exciting technology enables 2000L disposable manufacturing to compete effectively with traditional 20000L stainless steel bioreactors in per batch output and cost. We expect that the 1st IND using WuXiUP will be filed to the U.S. FDA by December 2019. This new platform can expedite product launches and significantly reduce manufacturing costs. In the same month, the Group enabled our customer Tychan to set another record for completing the entire process from project initiation to IND filing for their yellow fever mAb in just 7 months. These records demonstrate the Group’s value-added expertise and capabilities.
Our World-class Proven Quality System is Core to being a Leading Biomanufacturing Player
The Group is dedicated to building a world-class quality system, which has led to the successful completion of over 100 client GMP audits as well as the U.S. FDA cGMP certification in March 2018 and completion of a Pre-Approval Inspection by EMA in February 2019. The latter marked another milestone in making the Group the first cGMP biologics DS and DP facilities in China to be approved by the EMA for commercial manufacturing.
“Global Dual Sourcing within WuXi Bio” will be another differentiator to secure commercial manufacturing contracts
The Group signed an exclusive partnership agreement with Amicus Therapeutics (“Amicus”) (Nasdaq: FOLD) for commercial manufacturing of Amicus’ biologic drug for the treatment of Pompe disease, ATB200. This marked another important milestone as well as the first success of the “Follow-the-Molecule” strategy, a project progressing from cell line development to potential BLA filing. The Group expects that more commercial manufacturing partnerships will be reached in the coming years leading to further revenue growth.
This is the first success of our commercial manufacturing strategy: “Global Dual Sourcing within WuXi Bio”, our unique paradigm to address our partners’ needs in ensuring supply while minimizing technology transfer to two different suppliers. Due to the complexity of biomanufacturing, companies traditionally use two suppliers to ensure their commercial product supply. With this new “Global Dual Sourcing within WuXi Bio” strategy, our partner can select two facilities from our global supply network in China, EU and the U.S. to ensure their global supply and at the same time eliminate the risks of inter-company technology transfer. We successfully signed two exclusive commercial manufacturing contracts using this approach and announced an exclusive commercial manufacturing partnership for both drug substance and drug product with Amicus.
Global Strategic Facility Investment Further Expanding Capacity and Capabilities
The rapid growth of the global biologics market is driving strong demand for biologics solutions. As a new chapter of the Group’s global footprint expansion, we commenced the construction of a biologics manufacturing facility in Ireland in 2018. Designed to be one of the world’s largest facilities utilizing single-use bioreactors, our facility in Ireland will support the rapidly growing demand in the European market as well as the global biologics market.
Dr. Chris Chen, CEO of WuXi Biologics, said, “WuXi Biologics delivered extraordinary results during 2018. Due to our premier technology platforms, excellent execution track record and premier global quality system, we continue to gain market share at record pace and added 57 new integrated projects into our pipeline of ‘Follow-the-Molecule’ strategy. We also achieved a number of ‘firsts’ in the industry. We have not only launched the industry-leading WuXiBody™ platform with great success, but also enabled our partner Tychan to expedite product development at record speed.”
Dr. Chris Chen, further commented, “Our three-region growth engines namely North American, EU and China continued to excel, especially the growth in China accelerated significantly with 105.7% year-on-year growth in second half of 2018. This was due to regulatory reforms and recent policy changes. Chinese companies are accelerating investment in biologics and leveraging WuXi Biologics to gain access to innovation in response to recent GPO policies which will potentially affect their revenues and profits. We have built several new state-of-the-art biologics sites to meet global cGMP standards in China. Additionally, Europe and North America delivered exceptional growth. North America delivered 41.5% year-on-year growth. Excluding a one-time payment from Arcus in 2017, North America grew more than 60%, which continues to be our biggest market despite geopolitical uncertainties. This year we have laid the groundwork for our continued growth in Europe by commencing construction of manufacturing facilities in Ireland. Thanks to the efforts, ingenuity and dedication of our over 4,000 employees, WuXi Biologics has achieved much success in 2018. We continue to strive for excellence, as we believe technology innovations and premier quality are the cornerstones for customer recognition and retention.”
Dr. Ge Li, Chairman of WuXi Biologics, concluded: “The global biologics industry has entered into a golden age. We are excited for the booming market across all regions, in particular China and EU. To tap these trends effectively, we will continue to enhance our capacity and capabilities to improve our competitiveness, and strengthen our integrated enabling platforms. Looking forward, our strength in innovation will allow the platform to gain scale and depth and continue to gain market share. More partners will be enabled which eventually brings vital biologics to patients far faster.”
2018 Annual Results
The Group’s revenue increased by 56.6% year-on-year to RMB2,534.5 million in 2018. The major revenue growth drivers were: (i) leading technology platform, competitive timeline and strong execution track record contributing to more market share; (ii) strong growth in revenue, as a result of more projects entering into late-phase by the success of the Group’s “Follow-the-Molecule” strategy; (iii) production expansion of new fed-batch facilities of MFG2 and MFG3, enabling higher revenue from more projects in late-phase.
Gross profit increased by 54.1% to RMB1,017.8 million, primarily attributable to the Group’s strong growth, along with the rapid increase in its number of integrated projects. The Group’s gross profit margin showed a slight decrease from 40.8% for the year 2017 to 40.2% for the year 2018, mainly due to slightly higher share-based compensation cost, currency impact, and ramp-up of operations of the 2nd and 3rd GMP manufacturing facility (MFG 2 & MFG3), partially offset by efficiency enhancement gained from our current manufacturing facilities (MFG1) and overall operations.
During the Reporting Period, Net profit surged by 149.6% year-on-year to RMB630.5 million in 2018, higher than 145.0% announced in Profit Alert Announcement, with net profit margin up 930 basis points to 24.9% in 2018. The higher net profit margin was primarily attributable to (i) the robust revenue growth; (ii) increase in government grants and subsidies; (iii) a considerable increase in interest income from bank deposits as a result of its improved cash flow; (iv) foreign exchange gains recorded in 2018 as compared to significant foreign exchange losses in 2017; partially offset by (v) expansion of administrative expenses and research and development expenses in line with the Group’s business growth.
Adjusted net profit, by excluding the impact of: (i) foreign exchange gains or losses; (ii) share-based compensations, our adjusted net profit increased by 73.6% year-on-year to RMB 751.5 million in 2018, and adjusted net profit margin went up 300 basis points to 29.7% in 2018.
Basic and diluted EPS were RMB 0.52 and RMB 0.48. Diluted EPS increased by 118.2% year-on-year.
Adjusted diluted EPS increased by 54.1% year-on-year to RMB 0.57.
Key Financial Ratios
(For the year ended December 31)
|Key Financial Ratio||2018||2017||Change|
|Revenue (In RMB million)||2,534.5||1,618.8||56.6%|
|Gross profit (In RMB million)||1,017.8||660.6||54.1%|
|Gross profit margin (%)||40.2%||40.8%||(60 bps)|
|Net profit (In RMB million)||630.5||252.6||149.6%|
|Net profit margin (%)||24.9%||15.6%||930 bps|
|Diluted EPS (In RMB)||0.48||0.22||118.2%|
|Adjusted net profit (In RMB million)||751.5||432.9||73.6%|
|Adjusted net profit margin (%)||29.7%||26.7%||300 bps|
|Adjusted EBITDA (In RMB million)||1,083.1||633.6||70.9%|
|Adjusted EBITDA margin (%)||42.7%||39.1%||360 bps|
|Adjusted diluted EPS (In RMB)||0.57||0.37||54.1%|
About WuXi Biologics
WuXi Biologics (stock code: 2269.HK), a Hong Kong-listed company, is the leading global open-access biologics technology platform offering end-to-end solutions to empower organizations to discover, develop and manufacture biologics from concept to commercial manufacturing. Our company history and achievements demonstrate our commitment to providing a truly ONE-stop service offering and strong value proposition to our global clients. As of December 31, 2018, there were a total of 205 integrated projects, including 97 projects in pre-clinical development stage, 94 projects in early-phase (phase I and II) clinical development, 13 projects in late-phase (phase III) development and 1 project in commercial manufacturing. With total estimated capacity of biopharmaceutical production planned in China, Ireland, Singapore and US reaching 220,000 liters by 2021, we will provide our biomanufacturing partners with a robust and premier-quality global supply chain network. For more information on WuXi Biologics, please visit www.wuxibiologics.com.