Genscript Biotech Corporation

Please be advised that today's conference is being recorded. It is now my pleasure to introduce IR Director Peng Fei.

Thank you, Andrew. Hi, everyone. Welcome to GeneScript 2023 Insurance Result Conference Call. I'm Peng Fei Duan, Investor Relations Director at GeneScript. Joining me on the call today are Mr. Robin Munn, Chair of the Board, Mr. Sherry Shao, rotating CEO, Dr. Patrick Liu, off-duty rotating CEO, and Mr. Sunil Wei, CFO of Genscript. We also have key leaders from subsidiaries and business units join us. Before we begin, I would like to remind everyone that on today's call, we will be making statements about future expectations, plans, and perspectives, as well as any other statements regarding matters that are not historical facts. which may constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements. Because of various important risk factors and changing market conditions, we do not undertake any obligation to publicly update any forward-looking statements. In today's conference call, Sherry, our rotating CEO, will share with you the business highlights of the company in the first half, as well as the group's strategic planning and our staff will walk you through our financial performance and outlook. We also have a Q&A section for you at the end of the call. Now, I will hand over the floor to our rotating CEO, Ms. Sherry Sha. Sherry, please.

Good morning. I'm Sherry Sha, the rotating CEO of Genscript. It's my pleasure to share our latest development with you. Despite uncertainties of the global economy, the group's business has maintained robust growth. over the past four years, our revenue peak is at about 30%. In the first half of this year, our revenue reached approximately 390 million US dollars, representing an increase of 26.4% over the last year. Our cell therapy business segment, Lesion Biotech, made significant progress this year. We saw strong cell growth in cavity in Q2 of this year. We also raised capital for three subsidiaries. By the end of first half, the group's overall cash position is at $2.167 billion. Our investment plan for CapEx and R&D for the next few years is secured by a solid balance sheet. At present, we have approximately 6,500 team members globally. Globally, more than 10% of our employees are R&D staff. Thanks to their ingenuity and innovation, we have accumulated over 240 patents and have nearly 1,000 patent applications. We have a diversified global customer base. The customers we serve span more than 100 countries and regions. including top-tier pharma and biotech companies, research institutions, as well as agricultural and personal care companies. Janssen and Allegiant Cavite is also helping patients with multiple myeloma. A solid customer foundation gives us a unique competitive advantage and ensures our sustainable growth in the future. Let's move to our segment highlights. Life Science Group, as the cornerstone of the group, the life science business has maintained standing growth since inception. Life Science also serves as the foundation for us to incubate, base them, legend, and provide. In the first half of 2023, despite a challenging marketing environment, Our lab science achieved robust external rapidness growth of 15.6%, with an increase of approximately 12% in active customer numbers. Our core business, molecular biology, maintained its strong momentum with over 18% YOY growth, demonstrating our technical capability and service strength. Regarding our capacity expansion, Our focus remains on grading quality and delivery standards. Our life science building in Zhenjiang will provide new GMP grade capacity. In the biologic CDMO field, slowdown in biotech funding has a direct impact on our business. Provides external revenue growth about 7%. we added 12 CMC projects in protein and antibody CDMO and 21 GCT CDMO projects in first half. Since inception, we have cumulatively helped our customers get 61 NG approvals globally. ProBio is accelerating the construction of GMP Plasmid facility in the US and protein and antibody CDMO facility in China. The PLASMID GMP facility in the US will help us penetrate the world's largest GMP-CDMO market. Our H2000L floating antibody GMP-CDMO facility in Zhengjiang also represents a significant milestone for ProBio. This will fulfill our customers' late-stage clinical and commercial production needs. In early 2023, we completed Series C funding of approximately $224 million U.S. dollars for ProBio. Our industrial synthetic biology product segment, Betzen, also delivered a number of achievements. Betzen's external revenue grew about 8.9% YOY. Revenue in constant currency grew approximately 16.8%. Our innovative product, proteins for liquid detergent, has achieved early commercial success. A number of detergent manufacturers have incorporated our products into their supply chains. The capacity utilization of Bethlehem has also increased, allowing us to improve cost structure. In June, Bethlehem successfully completed Series A financing. The rest funds will be mainly used to further support S-SAM's capacity expansion and strengthen our competitiveness in synthetic biology. Turning to cell therapy, Kavikki generated total sales of 189 million US dollars in the first half of 2023. This year, At the ESCO meeting, we presented new data from our Phase III, Part IV study investigating Cavic-T in relapsed and thalidomide-reflectory patients with one to three fly lines of treatment. In the study, Cavic-T reduced the risk of disease progressing or death by 74% compared to standard of care arrangements. The data were also published in the New England Journal of Medicine and presented at the EHA 2023 Congress in June. Based on CART4 data, our partner Jensen submitted a type 2 variation application to the European Medical Agency and a SBLA to the US FDA to expand the indication for Cavit-T for use in earlier lines of multiple myeloma treatment. as early as after first relapse. Beyond the success of CARVIC-T, we are also advancing our pipeline for solid tumors. This quarter, the US FDA wanted open job designation for our occupational therapy LB2102 for small cell lung cancers. We have opened two trial centers in the US and are preparing for patient enrollment. Thanks to market recognition of Type 2.4 data, we raised a total of $785 million in the first half of the year. We also received a $15 million milestone payment this quarter at the acceptance of the Type 2 application for Kaviti and achieved another milestone of $20 million at the U.S. FDA acceptance of the SBLA of Criteria to Score. Now, I will back into the details of segment performance. In the life science business, we have enhanced cost and value proposition from three key aspects. From innovation perspective, thanks to our continuously enhanced gene synthesis capabilities and upgraded TurboTru platform, we can shorten gene-to-antibody expression timeline to five business days, setting the file for the industry. In the TCT field, our new offering, gene-circle DSDNA, circular double-strand DNA vector for gene editing, extended our competitive advantage in the non-viral payload sector. We secured China's first GMP-level gene circle order and earned three GMP-grade SFDNA orders in first half. In terms of our peptide business, we upgraded cyclic peptide processes leading to higher success rate, cost optimization, and significant sales growth in cyclic peptides in first half. from a capacity and capability perspective. In first half, we upgraded nucleic acid and peptide services. Now, we can provide our customers with GMP-grade FGMA and nucleic acid. Our GMP-grade peptide facility was also put into use, which can support customers with undefiling and clinical manufacturing. In terms of GCT consumables, we completed the construction of GMP manufacturing facility in Zhenjiang with GMP-grade magnetic beads for T-cell isolation and activation. Our automated plasmid preparation instrument, MF-Quartro, can significantly reduce cost and improve plasmid preparation efficiency. The instrument has generated revenue and received positive feedback from customers. To better serve our global customers, we are optimizing our capacity in Singapore and the US and improving overall profitability. We are a customer-centric company. Our efforts in capacity and capabilities upgrading are always driven by customer needs. Throughout our journey, We have enhanced our position as the global number one gene synthesis provider and continue to provide our customers with innovative services and products. In first half, we continue to see robust growth in customer numbers. Our active customer count increased by 12%. In terms of sales by region, Asia Pacific region, which includes China, dropped by 11% due to biotech funding slowdown and microeconomy. In other overseas regions, sales maintained strong growth. Gensco Life Science Group is a reliable partner for customers in their R&D journey. We continue to receive positive feedback from customers. Due to our insight into the diverse needs of academic and industrial customers. In the biologic CDMO business, we have further enhanced our capabilities in protein and antibody drug and the GCT platform. In the antibody and protein drug discovery and development business, we have shortened the development time of antibodies using hebdoma platforms and further shortening our fully human antibody generation time to one month. Provider also introduced a one-stop ADC development platform. In terms of development and the manufacturing of antibody and protein CDMO, we upgraded our recombinant protein and biospecific antibody titers. Our fast CMC solutions enable us to deliver GMP materials from DNA sequencing to antibody and coating in three and a half months. We also launched ProBox, which can help us better utilize our experience accumulated over the years. In terms of GCT CDMO portfolio, we launched proprietary PowerF ITL-RF strand, the turnaround time for linearized plasmid production has been shortened to five weeks. In the viral vector sector, we deliver of GMP-grade viral vectors from Plasmid in six months. Provile is capable of supplying 50-liter-scale antiviral production, and our AAV suspension production can be scaled up to 200 liters as well. provides proprietary power F293 and 293T brands have completed DMF registration. In terms of new DMC projects, there have been noticeable changes in the project structure. More customers are working with ProBio to explore challenging molecules and emerging GCT projects. In the protein and antibody CDMO area, we added 12 CMC projects, including collaborations with customers on clinical sample production, process capitalization, process validation research, and commercial production of recombinant coagulation factor H. This project will help provide accumulated commercial manufacturing experience and base-stage project experience. In the GCT CDMO business, PMC projects have steadily increased. Customers are more focused on non-COVID-related project development. In the industrial synthetic biology product business, BESM maintains stable and positive momentum. Our product offerings include industrial enzymes and feed enzymes. We also have them R&D team dedicated to synthetic biology. In feed enzymes, we mainly served the agricultural and animal feed industry. In terms of industrial enzymes, our downstream product applications cover ethanol, starch, sugar, baking, textile, and daily chemicals. This year, Bethlehem's innovative industrial enzyme business has achieved encouraging market breakthroughs Among the others, our detergent protein product, which was launched at the end of last year, has successfully entered the supply chains of healthcare companies and started to generate revenue. We expect to achieve further breakthroughs in the second half of the year. In terms of customer service, we are further upgrading our product solutions to ensure our customers can effectively leverage our products during their production process. In terms of production capacity, the utilization rate of our facility continues to increase. In the second half of the year, we will further increase investment to optimize our production efficiency and quality. We are actively pursuing new opportunities in things Simbiofield. Our first commercial product, gas acid, has entered the commercial stage, and we are working closely with our partner to optimize cost structure and improve production efficiency. Our Simbio solution for food and nutrition additives are also making satisfactory progress. Due to modern society's pursuit of a healthy lab style, Sweeteners have significant advantage over traditional super substance. Our sweet protein has undergone preliminary sensory testing and has demonstrated satisfactory results. We are further exploring its commercialization model. We are also developing other single pipelines according to our roadmap. Thanks to the completion of Series A financing in the first half, we have now been able to further strengthen our competitive edge on Sebald by attracting more talent and upgrade our R&D facility. Turning to cell therapy, we recently announced the submission of the supplemental biologic license application to the US FDA to expand the label for Cavix-T. The application for expansion includes the treatment of adult patients with relapsed and selenidromide-reflective multiple myeloma who have received at least one pipeline of therapy, including a proteasome inhibitor and an immunomodulatory agent. With this finding, we hope to move cavity into a two to four fly lines of therapy setting in multiple myeloma, subject to FDA approval. FDA has accepted the SBLA filing and assigned a per-duba date of April 5, 2024. On the clinical side, we are on track to complete enrollment of the on-going phase three, category five study which evaluates cell cell in newly diagnosed patients for whom transplant is not intended by the end of this year. Also, we are planning to initiate enrollment of our first-line CART6 study in Q4 of 2023. Our MD team continues to advance our preparatory pipeline. In the last quarter, we opened our first clinical site for our DLL3 program in the U.S., our second ongoing clinical trial in the U.S. In addition, another one of our solid tumor programs, LB19-0H, targeting protein 18.2 in gastric cancer, is also progressing on track. We recently opened two trial sites in the U.S., for this program as well in the second quarter. And we anticipate those in our first patient zone. A number of patients are being enrolled and dosed in Phase I IIT programs in China. That concludes the update on business highlights. Next, I would like to invite Xinyu to share the financial performance.