Genscript Biotech Corporation

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Financial Officer, Chief Financial Officer, Shin Yuwei. Please go ahead.

Thank you, Operator. Good morning, everyone, and good evening for colleagues joining us from the U.S. This is Shin Yuwei. Welcome to GenScript's 2024 Interim Results Conference Call. Joining me on the call today are Mr. Robin Meng, our chairman of the board, Mrs. Sherry Hsiao, our rotating CEO, and Dr. Patrick Liu, off-duty rotating CEO and chairman of Genscript ProBio. We also have other senior executives from the business participating. Before we begin, I'd like to remind everyone about the forward-looking statements we will be making on the call. 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 call, Sherry will share our first half business highlights, while I will present our first half financial results and share financial commentary. Then we will open up for Q&A. As a reminder, you can find today's presentation on our investor relations section of the company's website. Now, I'll hand it over to Sherry.

Thank you, Chenille. Let's go to slide four. James Cook delivered another strong top line growth in the first half. The group's revenue increased by 43.5% to about 561.4 million US dollars. adjusted network of the group was significantly narrowed to about 79 million US dollars. In particular, our groundbreaking product for treating multiple myeloma, CARVIC-T, is making a significant difference in the lives of multiple myeloma patients. By the end of first half, more than 3,000 patients have been treated by CARVIC-T. This remarkable progress was made possible by our strategy and our dedicated employees. By the end of the first half, our global employee base exceeds 7,000. Among them, about 12% of our employees are R&D folks, showing our commitment to leading industry innovation. We also further strengthened our IP position. just have accumulated more than 350 patents, and we also have over 1,000 patents in the application process. In the first half, we secured Equivati's bronze rating, demonstrating our commitment to sustainability and our unwavering dedication of becoming a reliable partner for global clients. into slide five. Before we dive into the business part, I'd like to share our recent progress on sustainability. Guided by our corporate mission, make people and the natural healthier through biotech knowledge. We integrate sustainability into our long-term growth strategy. This commitment has led to significant achievement. As a member of the United Nations Global Compact, we align our environmental, social, and governance initiatives with global standards. Our dedication to sustainability has been recognized with the Bronze Medal from Equivadis, the world's largest business sustainability rating platform. This rating positions us among top 35% of all companies evaluated by EcoVadis, affirming GenSquad as a trusted partner for our global clients. This year, we took a major step to address climate change and support our customers' environmental goals by committing to the science-based target initiative. After completing a comprehensive greenhouse gas inventory and verification. We are on track to submit our near-term and long-term targets for validation by the end of August. In our operations, we focus on reducing energy consumption through various energy efficiency programs, technological upgrades, innovations, and increased use of renewable energy. Additionally, we work to lower carbon emissions across our value chain by engaging suppliers on environmental issues. Together with our global business partners, we are dedicated to shaping a sustainable future for all. Next page. Turning to our first half business highlights. Let's start with the life science group. In first half, despite the geopolitical circumstances, we maintained a robust growth momentum. Our customer base remains healthy. In the first half of the year, our customer base consisted of 20% nonprofit organizations and 80% industrial customers. Our customer base continues to grow. During first half, we have over 39,000 active customers, representing a 5.4% year-over-year growth. We are committed to setting industry-leading timelines and delivering unmatched results. In the first half, we further accelerated our turnaround time in business lines to strengthen our core competencies in the gene synthesis market, we launched the Four Business Days Flash Gene Synthesis Service. This service features both the fastest turnaround time and the most affordable price in the industry. Thanks to our efforts to integrate our gene synthesis and protein services, we now provide the fastest antibody expression in the market. delivering results as fast as five business days. We've also introduced our 10 business days rush MRN activities versus setting the industry standards for MRN agencies. We are also pushing the boundaries of innovation by continually introducing new platforms to meet our customers' emerging needs. in our protein line. We have launched a comprehensive protein production platform for novel modalities, such as a variety of different biospecific antibody designs. We are continuously enabling novel CRISPR technologies by launching prime editing by RNA and gene circle double-strand DNA . Additionally, we introduced self-amplifying RNA to meet emerging demand from customers, staying ahead of the curve in biotechnology advancement. Our lifetime business offers a wide range of services and products, with genesis being a key starting point for most of them. Since the second half of last year, we have been directing resources towards gene-to-protein business integration. Through automation, lean production, and internal collaboration between protein and the gene synthesis, our protein business line has achieved a 30% of year-over-year revenue growth. The percentage of monthly gene items dedicated for protein segment has also increased by approximately 9% since the beginning of this year. We believe this growth momentum is approaching business to continue. And we will continue to leverage cross-portfolio capabilities to unlock higher customer value in the future. Next page. Turning to lifetime capacity expansion, we provide top tier capacity for our global client In the first half, our focus is on improving our US and Singapore sites. At our New Jersey site, we have shortened automated gene synthesis delivery time by over 25%. Revenue from the New Jersey sites has seen a 30% year-over-year growth, and our site utilization rate continues to improve. In Seattle, Both mRNA and gene placement services have grown over 100% in terms of revenue. At our Singapore site, we successfully launched our automated gene service, and we are able to provide age-business-safe gene to protein services at this site. All those results in a revenue increase over 100%. As shown on our slide, we are now in phase three of our modular capacity expansion approach from 2024 to 2026. Our focus will be on strengthening our global production capabilities to address customer needs in different markets. Slide nine, turning to profile. our biologic CDMO segment. We have further enhanced our capabilities in both the protean antibody drug and cell and gene therapy platform. Starting with discovery, we have upgraded the single B-cell antibody discovery platform, leveraging our proprietary cross-feed expression platform to deliver functional antibody leads in just one month. we have also upgraded our developability assessment offerings to deliver high quality candidates to the CDMO business. In terms of the development and manufacturing platform, we launched the Aperture Media System. This system is proprietary medium system designed for biocell line 2Q1-GS and has been proven to significantly optimize productivity and product quality in fed batch, intensified fed batch, and perfusion processes. We have also further enhanced our antibodies every titer, which now stands at six grams per liter, with a maximum titer of 15 grams per liter. This will further help our customers to reduce future drug manufacturing costs Additionally, we have shortened cell line development turnaround time to an industry-leading 10 weeks, facilitating customer project development time. Turning to Plasmid, we have continued to enhance our turnaround time and improve our title for Plasmid manufacturing. We launched the closing cell-free linearized DNA technology. and with the help of this platform provide and accelerate various customer projects. We are now also able to offer a formal FDA-grade R&D CMC service. And our title for Plasmid is now around two grand per liter. For our viral vector line, we are now able to deliver AAV CMC project 200 liter GMP manufacturing capacity. Additionally, we have opened a commercial GMP viral vector facility in China and launched PCPV, TPQ, and GMP manufacturing services. Turning to slide 10, for the biotech and the CDMO industry, we believe there are emerging signs of a positive turnaround. We have observed that our self-orders are gaining renewed momentum and our short-cycle discovery business has outperformed the rest of the portfolio, indicating a healthy recovery trend for the business. In terms of our track record, we secured 13 CMC projects including an antibody draft and about 40% is ex-China projects. We gained 24 CMC projects in CGT. In terms of R&D approvals, Probio helped our customers earn three new R&D approvals including an antibody drug and 16 new R&D approvals in CGT. We received our first 2,000 liter CMO order in first half 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 system, paving the way for us to become a more competitive global CDMO. Next page. In terms of provide capacity, we launched a commercial biologic manufacturing facility in April. So while also extended its and viral vector production capabilities in New Jersey, we acquired the Hopewell site, which now features a complete process development and manufacturing team focused on CGT-CDMO. This cutting-edge facility will serve as the hub for our North American operations. We are seeing an increase in inbound customer interest for the services we plan to deliver from this site. Next page. Moving to our industrial synthetic biology product segment, BEST-EDGE. with over 40% top-line increase. Baizhen's growth significantly outpasses that of other companies in the market. By collaborating with local distributors and international partners, we have been able to accelerate our international expansion. Compared to last year, our ex-China revenue increased by about 60% and the ex-China revenue now accounts for about 21% of our total revenue. We are also strengthening our IP position by securing more patents. Two of our co-products, Thermostable Biotech and Laundry Protease, have been recently granted patents. Additionally, we are enhancing our internal capabilities in IP protection and regulatory compliance. We are committed to providing our customers with high-quality products with integrity and our long track record of R&D investment support that commitment. We also expanded our product portfolio by launching products with new features and upgraded microorganism strengths to increase production efficiency. The next stage for BASAM, we will focus on R&D. We are also expanding our R&D staff for BASAM, and the R&D focus will be on symbol and enzyme business. Turning to slide 13, as for our synthetic biology pipeline updates, we are focusing on regulatory approval and pilot production for natural sweet protein and lactoferrin. For natural sweet protein, we have completed industrial-scale trial production. We have attained self-affirmed growth data and submitted a growth notice to the US FDA. We launched our natural sweet protein in the US market last month. Regarding lactoferrin, we are collaborating with universities and clients on functional studies. In 2024, we aim to set broad certification and initiate industrial-grade trial production. We plan to commercially launch this product candidate in the US in 2025. Besson has established a solid position in the enzyme market and our future growth will be driven by both organic growth in enzymes and breakthrough in synthetic biology products. Slide 14, turning to our cell therapy segment. Our leading product, CarbicTea, outperformed historical CAR-T launch, saving a new standard for CAR-T launch. In the first half, legend achieved net trade sales of 343 million US dollars on Carvity. In terms of ongoing clinical trials, we completed CARTU5 enrollment in July and announced positive overall survival results in the second interim analysis of the CARTU4 trial. We also launched Carvity in earlier lines of therapy study from the second quarter of 2024. Turning to manufacturing, Beijing initiated clinical production at the Novartis facility in July 2024 and made meaningful progress on the Raritan site expansion with expected approval of the new Raritan section in second half 2025. We continue to advance early-stage pipeline candidates across hematological and solid tumor indications. We broke ground on a new set of ARCH research centers in Philadelphia and began preclinical development in the autoimmune field. Legend has a solid financial position to fund sustainable growth. By the end of first half Legend has a cash position of 1.3 billion US dollars and its revenue continues to grow at a fast pace. With this cash position and revenue growth, Legend could fund operating and capital expenditures into 2026 when Legend anticipates achieving an operating profit. Importantly, We continue to see growth in patient demand and we are reiterating our expectations for pronounced growth for COVID-19 in the second half of the year as we continue to add more jobs and expand our capacity By 2015, the US and EU markets contributed the majority of the native tree cells of Calvictis. Therefore, addressing market demand in this region plays a critical role in Calvictis' future sales growth. In Europe, we have started the clinical production of Dove cell in Gange. In the US, we initiated clinical production at the Novartis facility in July 2024. and we signed a commercial CMO agreement with Novartis during the first quarter of 2024. We also received FDA and EMA approval to extend the antivirus capacity from 20 liters to 50 liters batch size, more than doubling our capacity. Next page. Turning to our pipeline, I'm pleased to share that we recently completed Part. 5 enrollment. As you might recall, this randomized phase 3 study evaluates patients with newly diagnosed multiple myeloma for whom stem cell transplant is not planned as initial therapy. If we were to receive approvals based on Part. 5 and Part. 6, it would translate into an additional 52,000 patients annually. That concludes the update on business highlights. Next, I would like to invite Juniu to share the company's financials.