Genscript Biotech Corporation

Please be advised that today's conference call is being recorded. I would like to hand the conference over to your speaker today, CFO, Mr. Shiniu Wei. Please go ahead.

Thank you, Maggie. Greetings, everyone. Welcome to our 2023 Annual Results Conference Call for Genscript Group. I'm Shiniu Wei, CFO at Genscript Group. Joining me today to present the prepared remarks is Ms. Sherry Schaub, our group's rotating CEO. And also we invited key leaders from the subsidiaries and business units to join us for Q&A later. And let's pause for one second for the forward-looking statement. In today's conference call, Sherry, our rotating CEO, will share our business highlights and I will walk you through our financials and future outlook. We also have a Q&A session at the end of the call. Now, I'll hand it over to Sherry.

Good morning, I'm Sherry Shao. It's a great honor to share our annual results with you today. First, let me give you a high-level overview. Despite the challenges in the market in 2023, our group's business has shown resilience and generated robust growth. This past year, we've seen remarkable revenue growth of 34.2%. Our five-year case stands at an impressive 30%. This success is a testament to the hard work and dedication of our more than 6,900 global employees. Their commitment is the driving force behind our achievement. Innovation lies at the heart of GenScript, and it's our co-community. Reflecting this, over 10% of our workforce is dedicated to R&D. Their unwavering dedication has led to the accumulation of over 300 patents and 900 patent applications across the globe. This year, we also successfully raised capital for three of our subsidiaries. As we reached the year's end, our group's cash reserves were approximately $2 billion. This strong financial position empowers us to further invest in R&D and expand our capacity. Our investment in innovation and the pursuit of excellence has created tremendous customer value over time. We have been serving clients in over 100 countries and regions, ranging from pharmaceutical and biotech companies to research institutions, as well as agricultural and consumer food enterprises. We are also making a significant difference in the lives of multiple myeloma patients with our best-in-class cell therapy product, Cavity. Together, we are not just choosing growth, we are building a healthier and more sustainable future. Now, let's look at our segment highlights, starting with the life science group. We have always emphasized understanding industrial trends and innovation in our business. In response to the increasing demand for Christmas related services and products, we have launched a comprehensive suite for in vivo gene editing. Our offerings include gene editing tools, related enzyme lock-in templates, library services, and cell line development. This platform enables our clients to accelerate research in this field. In GCT-related instruments, and consumables. We are also advancing our cell isolation platform, CellSynch, and we have also launched magnetic beads for NK, SA, CD4, CD8 cell separation, beads for T-cell activation, and columns for cell separation. Turn-around time is crucial to our customers. We not only accelerate customer projects by innovative solutions, but also by launching new platforms to shorten our turnaround time. We launched our GeneStart 2.0 online ordering platform to improve customer experience and simplify the ordering process. We also combined TurboTool 2.0 platform with our high throughput DNA synthesis platform. taking an industry-leading turnaround time of five business days from gene to protein services. At Gentwood, we believe science is a universal language that knows no borders. It's a collaborative pursuit that unites humanity in the quest for knowledge. Therefore, we launched our Life Science Research Grounds program globally. We believe This program will foster collaboration and promote excellence between the academic community and the industry, showing our dedication to shaping a better world through biotechnology. And we are honored to have two new members join our scientific advisory board last week. Dr. Ka Jun, an immunotherapy pioneer Director of the Parker Institute for Cancer Immunotherapy at the University of Pennsylvania, and Dr. David Liu, a leader in genome editing, professor at Harvard University, Broad Institute, and HHMI. We believe their insights will empower gentlemen to develop innovative services and products for the industry. Next page. We are committed to creating strong value propositions for our customers and helping them foster innovation and achieve grassroots by continuously enhance our services. In 2023, we further strengthen our leading position in nuclear acid synthesis by introducing Gene Fragment Synthesis Service. Additionally, we introduced synthesis services for circular RNA and SA RNA. We also leveraged AI technology in our service offerings. Our AI-based codon optimization and enzyme design could help our customers accelerate research in their field. we continue to receive recognition from our global customers. Globally, our last time active customer base is now over 57,000. New customers grow faster compared to last year. We also support the translational research of academic customers and industrial customers in order to transform scientific ideas into clinical assets. As a result, we have a healthy mix with regard to customer completion. Roughly 80% of our business is from industrial customers representing biotech and pharmaceutical companies. In terms of regional performance, the Asia-Pacific region declined by 7% due to the bonding environment. Our revenue growth remained strong in other regions. Next page. We provide top-tier capacity to our global clients. Last year, we achieved a significant reduction in turnaround time for our lifetime services, with gene-to-protein processes now taking only five business days in China and gene-to-protein processes eight business days in Singapore. Efficiency enhancements have also been implemented in our U.S. and Singapore facilities. To meet the growing demand for GMP-grade manufacturing in life science business, we are strategically increasing our capacity worldwide. Next page, turning to profile, our biologic CDMO. we have further enhanced our capabilities in protein and antibody draft and CT platform. Starting with discovery, our newly launched hypoderma platform allows rapid identification of functional antibody binders in as fast as three months, shorting the turnaround time by over 30%. We also launched high throughput semi-quantitative function assays which enables functional screening using hypodermatic agent at early phase of seed discovery. In terms of development and manufacturing platform, we enhanced the titer of protein to 14.5 gram per liter and biostatic antibodies to 10 gram per liter. Additionally, our new light CNC solution for novel modalities has reduced the segments to top batch delivery time to 3.5 to 4 months, facilitating quicker development in our customers' projects. We also continue to enhance our integrated capabilities for plasmid production. Our plasmid and mRNA one-stop solution offers six-month gene to GMP production, and we constructed proprietary power SITL strand, which significantly improved the ITL plasmid quality, resulting in high plasmid sequence integrity and high production yield. Finally, let's look at viral vectors. We significantly improved the crew titer of antivirus vectors with 2 to 10 fold increase. and optimized PRC Plasmid, which enhances the yield of AAVs. Our LED platform processes improved with high recovery up to 50%, including both inherent system and suspension system. Next page. For the biotech and the CDMO industry, 2023 was a challenging year. We are committed to supporting our clients and accelerating their projects. In terms of our track record, we delivered 17 CMC projects including an antibody drug and 32 CMC projects in CTT. We also helped our clients earn 13 new R&D approvals including an antibody drug and 18 new R&D approvals in CTT. Notably, we recently received our first 2,000-meter CMO order, which marked a significant milestone for our CDMO business. The experience we gained from this project will enhance our commercial manufacturing capabilities and strengthen our commercial quality systems, paving the way for us to become a global CDMO. Next page. Although the industry is facing headwinds temporarily, we believe the long-term potential of biologic CDMO business has more advanced therapeutics under development and the need for manufacturing capability to support such industry trends will be on the rise. We are committed to expanding our manufacturing sprint to better serve our customers globally. In 2024, we expect to launch our phase one of 16,000 liter commercial manufacturing facilities. And we are on track to launch our U.S. GMP Plasmid facilities in Q3, 2024, aiming to bring our competitive plasmid services to U.S. market. In order to support our global expansion, we have invested resources in our quality management system to ensure compliance with GMP regulations of the US FDA, EMA, and NMPA. These systems are crucial for our future CDMO business and will also help us earn customer recognition globally. Next page. Moving to our industrial synthetic biology product segment, BASDEM. BASDEM delivered remarkable growth compared to PEERS in a single-digit growth enzyme market. BASDEM achieved 22.6% enzyme portfolio constant currency growth. Our key account sales revenue contribution was improved by 4%. Our newly launched innovative detergent enzyme showed steady growth in the last few quarters and successfully earned industry-leading household product manufacturers as customers. We also expanded our product portfolio by launching products with new features and upgraded microorganism strengths to increase production efficiency. thanks to our Series A financing for BASEM. We are able to further invest in our capacity in order to address manufacturing bottlenecks. Once finished the expansion project, we increased our manufacturing capacity by 30 to 40%. In terms of workforce, we recruited experienced industrial salespeople who successfully boosted our revenue growth and helped us with key account penetration. In order to better address R&D needs for enzymes and synthetic biology, we expanded our R&D team by about 20%. To support our new market penetration plan, we are also actively expanding our local distributors Southeast Asia, and America. Next page. As for our synthetic biology pipeline updates, our first two synthetic biology candidates, Neutral Sweeteners and Lactoferrin, are making promising results throughout the year. For Natural Sweeteners, we completed industrial-scale trial production. Now, we are targeting to finish product safety verification, preparing for the graph submission and expecting to launch in 2024. For left fairing, our product candidate finished pilot trial production in 2023. We are working with universities and clients on functional study. In 2024, we are aiming to set graph certification and initiate industrial grade trial production. We plan to commercially launch this candidate product in 2025. We believe these synthetic biology product candidates have tremendous opportunities in the future. Next page. Turning to our cell therapy segment, Legend Biotech. In the first seven quarters of its launch, Our lead product, CARVIC-T, outperformed historical CAR-T launches, setting a new standard for CAR-T launches. Cell-to-cell has cumulatively treated over 2,500 patients. In 2023, Leighton continued its efforts to support market penetration of CARVIC-T. We presented positive PRO data from phase three, category four study at 2023 ASH annual meeting. We are also strengthening our manufacturing capabilities. We have started clinical production at the new site in Ghent, and our self-processing capacity has doubled since the beginning of 2023. Other than our lead product, we are also unlocking values across broad pipelines.