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WuXi AppTec Reports Strong 2021 Interim Results

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  • Revenue Up 45.7% Year-Over-Year to RMB10,537 Million

  • Net Profit Attributable to Owners of the Company Up 55.8% Year-Over-Year to RMB2,675 Million

  • Diluted EPS Up 46.8% Year-Over-Year to RMB0.91

  • Adjusted Non-IFRS[1] Net Profit Attributable to Owners of the Company Up 67.8% Year-Over-Year to RMB2,448 Million

  • Adjusted Non-IFRS Diluted EPS Up 58.5% Year-Over-Year to RMB0.84[2]

SHANGHAI, Aug. 12, 2021 /PRNewswire/ -- WuXi AppTec (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, is pleased to announce its financial results for the first half of 2021 (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 2021 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 (IFRS), in currency of RMB.

The 2021 Interim Report of the Company has not been audited.

1H 2021 Financial Highlights

Revenue grew 45.7% year-over-year to RMB10,537 million. The strong revenue growth was mainly attributable to the Company's continued focus on leveraging its unique integrated end-to-end platform to achieve synergy and strong growth across our business segments.

  • Our China-based laboratory services revenue grew 45.2% to RMB5,487 million.

  • Our CDMO services revenue grew 66.5% to RMB3,599 million.

  • Our U.S.-based laboratory services declined 15.7% to RMB659 million.

  • Our clinical research and other CRO services revenue grew 56.5% to RMB783 million.

  • IFRS gross profit increased 46.1% year-over-year to RMB3,884 million. Gross profit margin was 36.9%.[3]

  • Adjusted Non-IFRS gross profit increased 44.1% year-over-year to RMB4,102 million. Adjusted Non-IFRS gross margin was 38.9%.

  • EBITDA increased 51.6% year-over-year to RMB3,942 million.

  • Adjusted EBITDA increased 53.4% year-over-year to RMB3,649 million.

  • Net profit attributable to owners of the Company increased 55.8% year-over-year to RMB2,675 million. The strong net profit growth is mainly attributable to robust revenue growth, continuous improvements to the Company's operating efficiencies and gains from our venture capital investment portfolio, partially offset by the fair value losses of RMB1,493 from derivative component of convertible bonds as a result of significant H-share price increase during the Reporting Period. In the first half of 2021, the net gain from venture and fund investments contributed RMB2,148 million, due primarily to fair market value gains post certain portfolio companies' IPO and gains from the sale of shares of certain companies within our venture investment portfolio during the Reporting Period.

  • Adjusted non-IFRS net profit attributable to owners of the Company increased 67.8% year-over-year to RMB2,448 million.

  • Diluted EPS increased 46.8% year-over-year to RMB0.91, while adjusted diluted non-IFRS EPS increased by 58.5% year-over-year to RMB0.84.

[1] To better reflect the operation results and key performance, we adjusted the scope of Non-IFRS, and the comparative financial figures for the comparable periods have been adjusted to reflect this change.

[2] Half-year 2020 and 2021, we had a fully-diluted weighted average share count of 2,761,121,569 and 2,924,395,370 ordinary shares, respectively.

[3] If prepared under Accounting Standard for Business Enterprises of PRC, the gross profit grew 46.1% year-over-year to RMB3,897 million. Gross profit margin was 37.0%.

1H 2021 Business Highlights

  • In 1H 2021, we continued to grow our customer base by adding over 1,020 new customers, increasing our customer base to more than 5,220 active accounts. The demand for our services was very strong across our customer base. We continued to optimize cross-platform synergies and increased our presence globally, strengthening our unique competitive advantage as a fully integrated CRDMO (Contract Research Development and Manufacturing Organization) and a true one-stop service provider that is able to fulfill all our clients' discovery, development and manufacturing service needs.

China-based Laboratory Services: Growing demand from domestic and international markets

  • Our China-based laboratory segment has seen a significant uplift in market demand and overseas orders; revenue grew 45.2% year-over-year to RMB5,487 million. The segment remains a significant value-driver for our medium to long term business growth, enabling us to "follow-the-molecule" from the earliest stages of drug discovery to preclinical development.

  • We strengthened our research services and capabilities for new modalities, growing revenue in this area by 52% year-over-year in 1H 2021.

  • We continued to engage and increase new "long-tail" customers, adding 544 new clients in 1H 2021; "long-tail" customer revenue contributions reached a historical high of 65% in 2Q 2021.

  • Toxicology services achieved strong revenue growth of 85% year-over-year. We are the industry leader in China for drug safety assessment.

  • We leveraged our integrated WuXi AppTec Investigational New Drug (IND) program (WIND) to prepare and facilitate global regulatory submissions of IND packages, expediting the IND application process for many of our global and China customers. 81 WIND service packages were signed during 1H 2021 and the average revenue per WIND package ranges from USD1.1 million to 1.5 million.

  • Our success-based drug discovery service unit filed INDs for 7 new-chemical-entities and obtained 8 Clinical Trial Applications (CTA) for domestic customers. As of June 30, 2021, we have cumulatively submitted 126 new chemical entity IND filings with the NMPA and obtained 99 CTAs, with 2 projects in Phase III clinical trials, 12 projects in Phase II clinical trials, and 68 projects in Phase I clinical trials.

CDMO Services: Accelerated growth supported by increased capacity and capabilities

  • Revenue attributed to CDMO services grew 66.5% year-over-year to RMB 3,599 million. During the reporting period, our CDMO services provided process development, formulation development and manufacturing services for 1,413 small molecules, including 48 molecules in Phase III clinical trials and 32 molecules in commercial manufacturing. Our subsidiary WuXi STA supplies clients with quality drugs that meet global standards, empowering clients worldwide to enter global markets.

  • During 1H 2021, we added 341 new molecules into our CDMO pipeline. As of June 30, 2021, molecules in our CDMO pipeline account for 14.1% of the innovative chemical drugs in clinical stages globally, an increase from 11.5% at the end of 2019.

  • Among the 341 newly added molecules, we have provided our second full CMC integrated manufacturing services for HUTCHMED's Savolitinib (MET inhibitor). We provide end-to-end manufacturing services for Savolitinib from API manufacturing to spray drying, tablet manufacturing and packaging. We believe this is another important testament to our full capabilities, from drug substance to drug product manufacturing for commercial products.

  • We also continued to expand our capabilities in developing new modalities for global clients. The number of compounds for oligo and peptide drug candidates in our pipeline increased 129% and the number of ADC clients increased by 57%. In June 2021, WuXi STA and WuXi Biologics formed WuXi XDC, a joint venture to provide integrated end-to-end CDMO services for ADC and other drug conjugate products.

  • Our Wuxi site began operations in May 2021, marking the company's second site for integrated formulation development and drug product manufacturing.

  • WuXi STA also announced the construction of a new API and Drug Product manufacturing facility in Delaware, USA. The facility will be the second site for STA in the U.S. and its eighth manufacturing facility globally.

  • WuXi STA closed the acquisition of Bristol Myers Squibb's commercial drug product production facility in Couvet, Switzerland end of July 2021. The Couvet site is STA's first facility in Europe, expanding WuXi AppTec's global presence with large scale capsule and tablet production capabilities.

U.S.-based Laboratory Services: Continued impact from COVID-19 pandemic, but expect to see recovery in 2H 2021

  • Our cell and gene therapies CTDMO services enabled customers globally. During the Reporting Period:

  • Our Medical Device Testing segment was negatively affected by the COVID-19 pandemic in the U.S. and the shifting of business mix of large medical device manufacturers in the U.S., and the delay of MDR. However, the new EU MDR (EU 2017/745) has been officially enforced starting May 26, 2021. Consequently, we expect the medical device testing business will gradually recover second half of 2021 and into next year.

  • Overall, we expect our U.S.-based Laboratory Services to recover in 2H 2021 and to further improve in 2022.

Clinical Research CRO/SMO Services: Strong growth in SMO and clinical CRO as the pandemic situation improved 1H 2021

  • Revenue attributed to clinical research CRO/SMO services achieved robust growth of 56.5% year-over-year to RMB783 million. Our clinical research services continued to enable customers in China and the U.S. during the Reporting Period:

Continuous Improvements in ESG Performance

In the first half of 2021, while working to manage the long-term effects of the COVID-19 pandemic, we continued to improve our ESG performance to meet our sustainability goals and expectations. We aimed to reduce carbon emissions and enhance our business' resilience to climate change. The intensity of our greenhouse gas emissions and energy consumption decreased by 6.5% and 6.9%, respectively. At the same time, we have sought to improve diversity and inclusion within our workplace and to make investments in our people. As a result, we have been awarded the "Most Attractive Employers for Medical Graduates in China" by Universum for the past three consecutive years. By the end of June 30, 2021, the number of female employees remained at 53% of our workforce. These efforts and practices are recognized by our investors and clients, as well as various ESG rating agencies. We remain committed to "doing the right thing and doing it right," and will focus on delivering our commitments to our customers, employees, investors, communities and the environment to operate in a sustainable way both today and in the future.

Management Comment

Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, "During the Reporting Period, our revenue increased 45.7% over the prior year to RMB10,537 million and our adjusted non-IFRS net profit attributable to owners of the Company increased 67.8% year-over-year to RMB2,448 million. We are proud that over our more than twenty-year history, WuXi AppTec has earned a solid reputation due to our track record of continuously delivering stable and outstanding results for our stakeholders, and that trend has continued in 2021."

"Relentlessly focused on serving our customers better, we are making changes to the organization of our business segments starting from Q3 2021. We have integrated our capabilities to form three new business divisions– WuXi Chemistry, WuXi Biology, and WuXi Testing which now possess the end-to-end capabilities needed to provide integrated services to customers.

"Dr. Minzhang Chen was named as a Co-CEO and will lead the newly-formed WuXi Chemistry division, which now encompasses all chemistry services, including research, development and commercial manufacturing under one roof. This is our new business model that we have named CRDMO (Contract Research, Development and Manufacturing Organization). After this integration, WuXi Chemistry will have 10,190 research scientists, 3,741 API process development and formulation development scientists, and 4,036 manufacturing staff. It is the largest and most comprehensive chemistry services organization in the world with a workforce of 17,967 as of June 30, 2021."

"Dr. Steve Yang continues to serve as a Co-CEO and will lead our WuXi Testing and WuXi Biology divisions. WuXi Testing now integrates our preclinical testing services (DMPK, Toxicology, Bioanalytical) and clinical testing services (clinical CRO and SMO) to provide customers with seamless drug testing services from preclinical testing to clinical trials. WuXi Biology provides a full spectrum of biology-related discovery services from in-vitro and in-vivo biology, high throughput screening, DEL, and many other biology services."

Dr. Ge Li concluded, "We believe that these three new integrated business divisions plus the existing WuXi ATU and WuXi DDSU will allow WuXi AppTec to better serve our global customers. The fundamentals of our business and its future outlook both remain very strong. Looking ahead, we will further increase investment in our R&D services in both capacity and capabilities, particularly in new modalities. We are confident that this will better enable our customers to bring innovative medicines to patients in need – realizing our vision that 'every drug can be made and every disease can be treated."

Reconciliation of Non-IFRS and Adjusted Non-IFRS Net Profit Attributable to the
Owners of the Company
[4]


RMB Million

Six Months Ended
June 30, 2021

Six Months Ended
June 30, 2020

Profit Attributable to the owners of the
Company

2,675.1

1,717.2

Add:



Share-based compensation expenses

310.6

275.3

Issuance expenses of convertible bonds

1.8

2.5

Fair value losses from derivative
component of convertible bonds

1,493.3

486.8

Foreign exchange related
losses/(gains)

66.8

(39.8)

Amortization of intangible assets
acquired in business combinations

26.2

17.6

Non-IFRS Net Profit Attributable to the
owners of the Company

4,573.8

2,459.6

Add:



Realized and unrealized gains from
venture investments

(2,148.2)

(1,013.2)

Realized and unrealized share of
losses from joint ventures

22.3

12.4

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

2,447.9

1,458.8


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

EBITDA[5]


RMB Million

Six Months Ended
June 30, 2021

Six Months Ended
June 30, 2020




Profit before tax

3,179.9

1,922.0

Add:



Interest expense

68.9

110.8

Depreciation and amortization

693.6

567.6

EBITDA

3,942.4

2,600.3

% EBITDA margin

37.4%

36.0%

Add:



Share-based compensation expenses

375.0

334.7

Issuance expenses of convertible bonds

2.4

3.3

Fair value losses from derivative
component of convertible bonds

1,493.3

486.8

Foreign exchange related losses/(gains)

79.0

(45.6)

Realized and unrealized gains from
venture investments

(2,266.0)

(1,013.2)

Realized and unrealized share of losses
from joint ventures

22.3

12.4

Adjusted EBITDA

3,648.5

2,378.7

% Adjusted EBITDA margin

34.6%

32.9%


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

Consolidated Statement of Profit or Loss[6]


RMB Million

Six Months
Ended June
30, 2021

Six Months
Ended June
30, 2020

Year-over-
Year
Change

Revenue

10,536.6

7,231.4

45.7%

Cost of services

(6,652.8)

(4,572.8)

45.5%

Gross profit

3,883.7

2,658.6

46.1%

Other income

206.1

128.0

61.0%

Other gains and losses

740.6

721.8

2.6%

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

(21.6)

(8.1)

166.7%

Selling and marketing expenses

(355.3)

(274.5)

29.4%

Administrative expenses

(995.3)

(829.3)

20.0%

Research and development expenses

(404.4)

(333.4)

21.3%

Operating Profit

3,053.8

2,063.1

48.0%

Share of profits/ (losses) of associates

217.3

(17.9)

-1314.0%

Share of losses of joint ventures

(22.3)

(12.4)

79.8%

Finance costs

(68.9)

(110.8)

-37.8%

Profit before tax

3,179.9

1,922.0

65.4%

Income tax expense

(487.7)

(194.5)

150.7%

Profit for the period

2,692.2

1,727.5

55.8%





Profit for the period attributable to:




Owners of the Company

2,675.1

1,717.2

55.8%

Non-controlling interests

17.1

10.3

66.0%


2,692.2

1,727.5

55.8%


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


Consolidated Statement of Profit or Loss (continued)[7]



Six Months
Ended June 30,
2021

Six Months
Ended June 30,
2020

Year-over-
Year
Change





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




– Basic

2,903,298,268

2,740,032,558

6.0%

– Diluted

2,924,395,370

2,761,121,569

5.9%





Earnings per share attributable to
ordinary shareholders of the Company
(expressed in RMB per share)[8]




– Basic

0.92

0.63

46.0%

– Diluted

0.91

0.62

46.8%


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

[8] In 2021, pursuant to the 2020 Profit Distribution Plan considered and approved by the shareholders'
general meeting, the Company issued 2 shares for every 10 shares of the Company by way of
capitalization of reserve. In accordance with the regulations of the China Securities Regulatory
Commission, the Company has adjusted the basic earnings per share and diluted earnings per share
for the comparative period according to the 2020 Profit Distribution Plan.

Consolidated Statement of Financial Position[9]


RMB Million

June 30,

December 31,


2021

2020




Non-current Assets



Property, plant and equipment

12,235.1

10,137.1

Right of use assets

1,743.6

1,519.9

Biological assets

631.3

418.9

Goodwill

1,952.6

1,391.8

Other intangible assets

912.7

585.3

Interest in associates

930.8

712.3

Interest in joint ventures

52.4

52.5

Deferred tax assets

315.0

300.9

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

9,467.3

6,717.2

Other non-current assets

2,134.8

1,395.6

Amount Due from Related Parties

1.6

0.4


30,377.0

23,231.8




Current Assets



Inventories

2,777.8

1,933.8

Biological assets

523.9

501.7

Contract costs

336.4

250.3

Amounts due from related parties

25.2

56.9

Trade and other receivables

5,120.2

4,337.9

Contract assets

680.1

542.0

Income tax recoverable

0.2

19.1

Financial assets at FVTPL

2,180.5

4,617.7

Derivative financial instruments

341.7

562.8

Pledged bank deposits

8.7

9.1

Bank Balances and Cash

9,805.7

10,228.1


21,800.3

23,059.3




Total Assets

52,177.4

46,291.2


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

Consolidated Statement of Financial Position (continued)[10]


RMB Million

June 30,

2021

December 31,

2020




Current Liabilities



Trade and other payables

5,374.0

4,550.3

Amounts due to related parties

12.9

23.8

Derivative financial instruments

10.2

0.9

Contract liabilities

2,010.7

1,581.0

Borrowings

2,271.2

1,230.0

Income tax payables

368.0

340.4

Financial liabilities at FVTPL

-

16.5

Lease liabilities

166.1

177.4


10,213.2

7,920.3




Non-current Liabilities



Convertible bonds-debt component

946.9

1,819.0

Convertible bonds-embedded derivative
component

1,757.1

1,582.1

Deferred tax liabilities

357.3

283.0

Deferred income

679.5

682.0

Other long-term liabilities

180.2

219.1

Lease liabilities

1,059.6

1,067.1

Total Non-current liabilities

4,980.7

5,652.3




Total Liabilities

15,193.8

13,572.7




Net Assets

36,983.5

32,718.5




Capital and Reserves



Share capital

2,949.0

2,441.7

Reserves

33,782.6

30,052.1

Equity attributable to owners of the Company

36,731.6

32,493.7

Non-controlling interests

251.9

224.7

Total Equity

36,983.5

32,718.5


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

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 5,200 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, issuance expenses of convertible bonds, fair value gain or loss from derivative component of convertible bonds, foreign exchange-related gains or losses, amortization of intangible assets acquired in business combinations and goodwill impairment. 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.

To better reflect the operation results and key performance, the Company has adjusted the scope of the foreign exchange related gains or losses by adjusting only the gains or losses that the management believes irrelevant to the core business. The comparative financial figures for the comparable periods have been adjusted to reflect the change of the scope.

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.

Cision
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SOURCE WuXi AppTec