WuXi AppTec Continued Solid Growth in the First Three Quarters of 2023 on Top of an Exceptionally Strong Year in 2022, with Profit Growth Continuously Exceeding Revenue Growth

• Revenue of RMB10,670 Million in the Third Quarter, Single Quarter Revenue Back to over RMB10 Billion; Revenue of RMB29,541 Million in the First Three Quarters, Up 4.0% Year-over-Year; Excluding COVID-19 Commercial Projects, Up 23.4%
• Net Profit Attributable to Owners of the Company for the First Three Quarters Increased 9.5% to RMB8,076 Million; Diluted Earnings per Share (EPS) Increased 18.7% to RMB2.73
• Adjusted Non-IFRS Net Profit Attributable to Owners of the Company for the First Three Quarters Increased 20.6% to RMB8,167 Million; Adjusted Non-IFRS Diluted EPS Increased 21.0% to RMB2.77^[1]
• Free Cash Flow Continued to Increase; Operating Cash Flow Grew Strongly by 32.5% Year-Over-Year for the First Three Quarters 

SHANGHAI, Oct. 30, 2023 /PRNewswire/ — WuXi AppTec (stock code: 603259.SH / 2359.HK), a global company that provides a broad portfolio of R&D and manufacturing services that enable companies in the pharmaceutical, biotech and medical device industries to advance discoveries and deliver groundbreaking treatments to patients, is pleased to announce its financial results for the third quarter and nine months ended September 30, 2023 (“Reporting Period”): 

• Revenue grew 4.0% year-over-year to RMB29,541 million; excluding COVID-19 commercial projects, revenue grew by 23.4%.
• Adjusted non-IFRS gross profit increased 13.8% year-over-year to RMB12,511 million. Adjusted non-IFRS gross profit margin improved 3.6pts to 42.3%. The Company continued to improve operating efficiency; adjusted non-IFRS gross profit margin increased by ~1pt year-over-year at a constant exchange rate.
• Net profit attributable to owners of the Company increased 9.5% year-over-year to RMB8,076 million; diluted EPS increased 18.7% year-over-year to RMB2.73. Adjusted non-IFRS net profit attributable to owners of the Company increased 20.6% year-over-year to RMB8,167 million; adjusted diluted non-IFRS EPS increased by 21.0% year-over-year to RMB2.77.
• Free cash flow continued to grow. Resulting from the continued profit growth, better asset utilization and efficiency improvements, the Company’s operating cash flow grew strongly by 32.5% year-over-year.
• In the first three quarters of 2023, we added over 900 new customers, and in total we served more than 6,000 active customers over the past 12 months. Demand from customers across regions globally continued to grow.
• Excluding COVID-19 commercial projects, backlog maintained growth momentum of the first half of 2023, among which TIDES backlog accelerated growth by 245% year-over-year.
• Revenue from the top 20 global pharmaceutical companies maintained rapid growth and reached RMB11.82 billion in the first three quarters of 2023, which grew strongly by 43% year-over-year excluding COVID-19 commercial projects.
• The sustained and steady revenue growth is a result of our unique fully integrated Contract Research, Development and Manufacturing Organization (CRDMO) platform. WuXi Chemistry’s D&M pipeline has maintained rapid growth, with 343 new molecules added in the third quarter and a total of 926 new molecules added in the first three quarters of the year. To date, our D&M pipeline has exceeded 3,000 molecules for the first time, currently totaling 3,014, among which 12 commercial and phase III projects were added in the first three quarters of 2023. Revenue from D&M services maintained strong growth. Excluding COVID-19 commercial projects, D&M services revenue grew by 48.2%.
• As an enabler of innovation, a trusted partner and a contributor to the global healthcare industry, the Company is committed to environmental protection and sustainability. We received the “AA” rating from MSCI for the third consecutive year, and upgraded to “Silver” rating by EcoVadis. Our outstanding ESG performance continues to be highly recognized by global ESG rating agencies, including MSCI, EcoVadis, S&P Global, Sustainalytics and CDP.

Fourth Quarter and 2023 Full Year Outlook

In the fourth quarter of 2023, revenue will all come from non-COVID-19 commercial projects. Without COVID-19 commercial projects, we expect the Company’s revenue in the fourth quarter to exceed RMB10 billion for the first time, among which WuXi Chemistry D&M will continue strong growth momentum and accelerate growth on top of the first three quarters. Excluding COVID-19 commercial projects, the Company’s revenue in the fourth quarter is projected to grow 29-34%. Excluding COVID-19 commercial projects, revenue will grow 25-26% in 2023, with the Company’s total revenue exceeding 40 billion for the first time. Due to lower than expected demand of early-stage drug discovery services, revenues from some lab service-related business will be significantly below budget. Therefore, we adjust 2023 revenue growth from 5-7% to 2-3%; excluding COVID-19 commercial projects, revenue growth from 29-32% to 25-26%.

Due to FX impact and efficiency improvements, adjusted non-IFRS gross profit margin expects to be up ~0.5pts and reach 41.7-42.1%; with further improved operating efficiency, adjusted non-IFRS net profit will exceed RMB 10 billion for the first time. Resulting from our unique CRDMO & CTDMO business model, better asset utilization and efficiency improvements, free cash flow expects to be up and reach RMB 4.5-5.0 billion, which will be over 17 times as compared to last year.

Due to lower than expected growth, the management team proactively proposes to terminate the 2023 H share incentive plan, repurchase and cancel 15,467,500 H shares, representing ~0.52% of the Company’s total share capital (worth of HKD ~1.3 billion^[2]). This has been unanimously approved by the Company’s Board of Directors.

Management Comment

Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, “We achieved steady growth across revenue, net profit, and free cash flow in the first three quarters of 2023, and expect the fourth-quarter revenue (without COVID-19 commercial projects) to exceed RMB10 billion for the first time. The Company’s growing pipeline and expanding customer base demonstrates heightened demand from our customers globally as they seek our services to bring new treatments to patients.”

“We have constant faith in the Company’s unique CRDMO and CTDMO business models, and believe that the Company will continue solid growth in the future. WuXi AppTec is committed to meeting the growing demands from customers worldwide, enhancing our capacity and capabilities, and relentlessly pursuing operational excellence, productivity and efficiency, as we support our customers’ efforts to bring groundbreaking therapies to patients around the world. Together, we can realize our vision that ‘every drug can be made and every disease can be treated’.”

Business Performance by Segments

• WuXi Chemistry: Integrated CRDMO Business Model Drives Steady Growth, with Continued Expansion in New Modalities (WuXi TIDES)
  • Q1-Q3 revenue from WuXi Chemistry grew 2.0% year-over-year to RMB 21.24 billion, excluding COVID-19 commercial projects, revenue grew strongly by 31.0%. Q1-Q3 adjusted non-IFRS gross profit margin was 45.7%, with 4.5pts year-over-year improvement, mainly due to FX impact, while efficiency continued to improve.
  • Drug discovery services (“R”) continued to generate downstream opportunities. In the past 12 months, we successfully synthesized and delivered more than 420,000 new compounds to customers, which grew 11% year-over-year. Through our “follow-the-customer” and “follow-the-molecule” strategies, we established trusted partnerships with our global customers, supporting the sustainable growth of our CRDMO business.
  • Development and manufacturing (D&M) services delivered strong growth.
    • In the first three quarters, D&M services revenue grew 1.4% year-over-year to RMB15.63 billion. Excluding COVID-19 commercial projects, D&M services revenue grew strongly by 48.2%.
    • In the first three quarters, we added 926 molecules to our D&M pipeline. To date, our D&M pipeline has exceeded 3,000 molecules for the first time and reached 3,014, including 58 commercial projects, 61 in phase III, 316 in phase II and 2,579 in phase I and pre-clinical stages, among which 12 commercial and phase III projects were added in the first three quarters of 2023.
  • Specifically, TIDES business (mainly oligo and peptides) continued to expand.
    • In the first three quarters, TIDES revenue grew strongly by 38.1% year-over-year to RMB2.07 billion. Q4 revenue is expected to increase significantly, with TIDES full year 2023 revenue growth expected to exceed 60%. As of September 30, 2023, backlog of TIDES accelerated growth by 245% year-over-year.
    • In the first three quarters, the number of TIDES D&M customers increased 31% year-over-year to 127, and the number of TIDES molecules increased 48% year-over-year to 230.
    • We initiated capacity expansion in Changzhou and Taixing. The expanded workshops are expected to commence operation in December 2023, with the total reactor volume of peptide solid phase synthesizers increased from 20,000L to 32,000L.
• WuXi Testing: Drug Safety Evaluation Service & SMO Maintain Leadership Position and Drive Steady Growth
  • Q1-Q3 revenue from WuXi Testing grew 16.2% year-over-year to RMB4.85 billion. Q1-Q3 adjusted non-IFRS gross profit margin was 38.6%, with 1.8pts year-over-year improvement, mainly due to FX impact, while efficiency continued to improve.
  • Q1-Q3 2023 revenue from lab testing services grew 16.3% year-over-year to RMB3.54 billion. Among which, revenue from drug safety evaluation services grew 26.9% year-over-year. We maintained our industry leadership position in Asia Pacific for drug safety evaluation services that meet global regulatory requirements. Meanwhile, new facilities in Qidong and Suzhou have begun delivering new projects.
  • Q1-Q3 2023 revenue from clinical CRO & SMO (Site Management Organization) grew 15.9% year-over-year to RMB1.32 billion.
    • SMO revenue grew strongly by 31.0% in Q1-Q3 2023, maintaining a leadership position in China. In the first three quarters of 2023, SMO supported 35 new drug approvals for customers.
    • In the first three quarters of 2023, clinical CRO enabled our customers to obtain 13 IND approvals and submit 5 NDA filings.
• WuXi Biology: New Modalities Business Drives Growth; WuXi Biology Platform Continues to Generate Downstream Opportunities
  • Q1-Q3 revenue from WuXi Biology grew 6.5% year-over-year to RMB1.89 billion. Q1-Q3 adjusted non-IFRS gross profit margin was 42.8%, with 1.6pts year-over-year improvement due to FX impact.
  • The Company focused on improving capabilities related to new modalities. In the first three quarters of 2023, WuXi Biology revenue from new modalities grew strongly by 35% year-over-year, contributing to 25.9% of WuXi Biology revenue.
  • The comprehensive early discovery screening platform integrates multi-technologies (HTS, DEL, ASMS, FBDD, CADD etc.) and analysis capabilities of multi-dimensional databases, which can provide extensive and in-depth services to clients. In the first three quarters of 2023, it continued to generate downstream opportunities and contributed more than 20% of the Company’s new customers.
• WuXi ATU: CTDMO Business Model Drives Growth
  • Q1-Q3 revenue from WuXi ATU grew 11.6% year-over-year to RMB1.03 billion. Q1-Q3 adjusted non-IFRS gross profit margin was (6.1)%, with 0.4pts year-over-year improvement due to FX impact.
  • The Company focused on improving our CTDMO integrated enabling platform and strengthening capabilities and capacities. We provided development, testing and manufacturing services to 68 projects, including 7 Phase III projects (2 projects in BLA review stage, and 2 projects in BLA preparation stage), 9 Phase II projects and 52 pre-clinical and Phase I projects.
  • In the first three quarters of 2023, we supported a customer to complete the BLA filing for a Tumor Infiltrating Lymphocyte (TIL) product with the FDA, which is expected to be the world’s first innovative TIL-based therapy, and our facilities in Philadelphia (U.S.) successfully passed the FDA pre-license inspection (PLI). In addition, we supported a customer to file BLA for Lenti-viral Vector (LVV) used in a CAR-T product, and became the first CGT CDMO in China to pass Center for Food and Drug Inspection of NMPA (CFDI) LVV on-site inspection. We expect that our customers will obtain approval for their products in the fourth quarter of 2023. Moreover, we completed the technology transfer for the manufacturing of a blockbuster commercial CAR-T product, whose process performance qualification is now in progress, and is expected to file pre-approval submission (PAS) to FDA in the first half of 2024. In June 2023, we signed an LVV manufacturing contract with a large pharmaceutical customer used in a commercial CAR-T product, which is expected to start manufacturing in the first half of 2024.
• WuXi DDSU: the First Year to Receive New Drug Application (NDA) Approval of New Drugs Developed for Customers; Breakthrough to Receive the First Royalty Income
  • Q1-Q3 revenue from WuXi DDSU declined 26.9% year-over-year to RMB0.49 billion. Q1-Q3 adjusted non-IFRS gross profit margin was 31.6%, with 3.5pts year-over-year improvement mainly thanks to favorable project mix.
  • In the first three quarters of 2023, 2 new drugs developed for our customers have obtained National Medical Products Administration (NMPA) approvals, including one for COVID-19 infection treatment and the other for tumor treatment. Moreover, 2 new drug candidates are in the NDA review stage. We continued to receive the royalty income of the 2 approved new drugs from customers. Royalty income is estimated to grow with more than 50% CAGR over the next 10 years as more and more products are commercialized by customers.
  • In the first three quarters of 2023, we supported customers to file INDs for 15 drug candidates and obtain 19 Clinical Trial Approvals (CTAs). Cumulatively, we have submitted 187 new chemical entity IND filings and obtained 163 CTAs for customers, among which 2 projects have obtained NDA approvals, 2 projects are in the NDA review stage, 5 projects are in Phase III, 29 projects are in Phase II, and 70 projects are in Phase I, covering multiple therapeutic areas.

This release provides a summary of the results and is not intended to be a comprehensive report. For additional information, please refer to the WuXi AppTec 2023 Third Quarterly Results Presentation and 2023 Third Quarterly Report disclosed on the Company’s official website, as well as the 2023 Third Quarterly Report and other 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 trading Company shares.

All financial information disclosed in this press release is prepared based on International Financial Reporting Standards (IFRS), in currency of RMB.

The 2023 Third Quarterly Report of the Company has not been audited.

Third Quarter 2023 Results by Segments

Unit: RMB million

Year-to-Date 2023 Results by Segments

Unit: RMB million

About WuXi AppTec

As a global company with operations across Asia, Europe, and North America, WuXi AppTec provides a broad portfolio of R&D and manufacturing services that enable the global pharmaceutical and healthcare industry to advance discoveries and deliver groundbreaking treatments to patients. Through its unique business models, WuXi AppTec’s integrated, end-to-end services include chemistry drug CRDMO (Contract Research, Development and Manufacturing Organization), biology discovery, preclinical testing and clinical research services, cell and gene therapies CTDMO (Contract Testing, Development and Manufacturing Organization), helping customers improve the productivity of advancing healthcare products through cost-effective and efficient solutions. WuXi AppTec received an AA ESG rating from MSCI in 2022 and its open-access platform is enabling more than 6,000 customers from over 30 countries to improve the health of those in need – and to realize the 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 customers’ 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 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, non-financial assets impairment, etc. 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 capital 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.

Source : WuXi AppTec Continued Solid Growth in the First Three Quarters of 2023 on Top of an Exceptionally Strong Year in 2022, with Profit Growth Continuously Exceeding Revenue Growth

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