GENSCRIPT BIO(HK:01548)2024-08-29 08:15Company Overview and Operations - The company's professional team consists of 7,284 members as of June 30, 2024[3] - The company operates in over 100 countries and regions globally[3] - The company has established four major platforms: Life Science Services and Products, Biologics CDMO, Industrial Synthetic Products, and Global Cell Therapy[3] - The company's CDMO platform provides end-to-end services for biologics discovery, development, and commercial production[3] - Legend Biotech, a subsidiary, focuses on developing novel cell therapies for oncology and other indications, with its lead candidate cilta-cel co-developed with Janssen for multiple myeloma[3] - Bestzyme, another subsidiary, leverages enzyme engineering for products in feed, alcohol, food, and home care industries[4] - The company's Life Science Services and Products division offers gene synthesis, oligonucleotide synthesis, peptide synthesis, protein production, antibody development, and life science equipment[3] - The company's mission is to use biotechnology to improve human and environmental health, with a focus on customer needs and long-term development[3] - The company aims to optimize operational processes for high-quality end-to-end delivery and enhance strategic collaboration with business partners[3] - The company's global presence includes legal entities in China, the US, Hong Kong, Japan, Singapore, the Netherlands, Ireland, the UK, South Korea, Belgium, Spain, and Australia[3] - The company has 7,284 employees as of June 30, 2024, with 53.0% in production, 8.7% in sales and marketing, 14.9% in administration, 11.8% in R&D, and 11.6% in management[56] - The company is focusing on accelerating the clinical and commercial development of CARVYKTI and enhancing production capacity for frontline patient treatment[53] - The company is exploring new opportunities in synthetic biology, aiming to serve a wide range of industrial applications with potential health and environmental benefits[53] - The company plans to continue leveraging investigator-initiated trials (IIT) in China for cost-effective clinical data generation and may use IIT data for U.S. clinical trials when beneficial[53] - The company has over 100,000 internationally peer-reviewed academic journal articles citing its services and products as of June 30, 2024[52] - The company acquired a plasmid and viral vector production facility in the United States to address customer concerns about supply chain risks and data storage/protection[52] - The company secured its first 2000L-scale GMP order for antibody production and a viral vector production order to support a CAR-T product's Biologics License Application submission[52] - The company is focusing on differentiated services and solutions to gain market share and accelerate growth in the CDMO industry[52] - The company is mitigating geopolitical risks by diversifying its global production footprint and supply chain partnerships[47] Financial Performance - Revenue increased by 43.5% to $561.4 million, with non-cell therapy revenue slightly decreasing by 0.2% to $281.1 million and cell therapy revenue significantly increasing by 156.0% to $280.3 million[9] - Gross profit surged by 75.4% to $307.0 million, with non-cell therapy gross profit slightly decreasing by 0.9% to $133.5 million and cell therapy gross profit significantly increasing by 323.4% to $175.3 million[9] - Net loss narrowed to $215.6 million from $245.8 million in the previous period, with adjusted net loss improving to $69.0 million from $162.0 million[9] - Life science services and products revenue increased by 9.6% to $222.4 million, with adjusted gross profit rising by 8.5% to $119.9 million and adjusted operating profit increasing by 23.8% to $47.8 million[13] - Cell therapy segment accounted for 49.9% of total revenue, with external revenue reaching $280.3 million, a significant increase from $109.5 million in the previous period[11] - Adjusted gross margin for life science services and products remained stable, driven by platform innovation, automation upgrades, and improved production efficiency in Singapore, China, and the US[13] - Adjusted operating loss for the cell therapy segment improved to $119.4 million from $205.9 million, reflecting better cost management and operational efficiency[12] - Non-cell therapy segment's adjusted net profit decreased by 13.1% to $29.2 million, while the cell therapy segment's adjusted net loss improved to $98.3 million from $195.7 million[9] - The company's overall adjusted net loss improved significantly, driven by better performance in the cell therapy segment and cost control measures[9] - Revenue from biopharmaceutical development services decreased to $40.4 million from $65.1 million, reflecting a shift in focus towards higher-margin cell therapy operations[12] - Biologics development services revenue decreased by 37.9% to $40.4 million, with adjusted gross profit down 69.7% to $5.9 million, and adjusted gross margin dropping from 30.0% to 14.7%[14] - Industrial synthetic biology products revenue increased by 43.4% to $26.1 million, with adjusted gross profit up 52.8% to $11.0 million, and adjusted gross margin rising from 39.4% to 42.2%[15] - Cell therapy revenue surged by 155.7% to $280.5 million, driven by CARVYKTI sales and milestone payments from Janssen and Novartis agreements[16] - Total group revenue increased by 43.5% to $561.4 million, primarily due to growth in life sciences and industrial synthetic biology products, as well as CARVYKTI sales and milestone payments[18] - Group gross profit rose by 75.4% to $307.0 million, with adjusted gross profit increasing by 73.3%[19] - Sales and distribution expenses increased by 19.5% to $97.3 million, mainly due to cilta-cel sales costs and preparation for second-line indications[20] - Administrative expenses grew by 12.9% to $120.2 million, driven by capacity expansion and enhanced administrative functions[21] - R&D expenses increased by 14.0% to $236.4 million, primarily due to ongoing investments in cilta-cel and solid tumor projects[22] - Adjusted operating loss for cell therapy decreased to $119.4 million from $205.9 million, with adjusted R&D costs at $196.3 million[16] - Fair value loss of $113.5 million recorded due to changes in the fair value of Probio A and C class preferred shares and warrants[23] - The company's net loss for the reporting period was approximately $215.6 million, compared to $245.8 million in the previous period[27] - Cash and cash equivalents as of June 30, 2024, were approximately $399.3 million, down from $1.4 billion as of December 31, 2023[27] - Capital expenditures during the reporting period included $33.7 million for prepaid cooperative assets and $100.3 million for construction and purchase of property, plant, and equipment[28] - The company held significant investments in financial products with floating expected annual yields ranging from 2.5% to 5.9%[29] - As of June 30, 2024, the company's financial assets at fair value through profit or loss totaled $195.29 million, up from $137.51 million as of December 31, 2023[30] - Income tax expenses increased from approximately $1.1 million in the previous period to $10.0 million in the current reporting period, primarily due to valuation allowances on deferred tax assets from CDMO business[26] - The company had $231.0 million in available but unused bank credit facilities as of June 30, 2024[27] - The equity portion of Probio Class B preferred shares was valued at approximately $1.6 million, while the liability portion was valued at approximately $40.1 million as of June 30, 2024[25] - The company's investment in credit-linked notes with J.P. Morgan Structured Products B.V. yielded a fair value increase from $17,000,000 to $17,852,000, reflecting a 5.01% gain[32] - The company's investment in non-principal guaranteed floating income products with China Merchants Bank showed a fair value increase from RMB 90,000,000 to RMB 13,016,000, reflecting a 3.07% gain[32] - The company's investment in Yuanming Prudence SPC — Healthcare Fund I resulted in a fair value increase from $261,000 to $294,000, reflecting a 12.64% gain[33] - The company's investment in Ruifu Medical Health Fund resulted in a fair value decrease from $9,370,000 to $8,152,000, reflecting a 12.99% loss[33] - The company recorded investment income of approximately $1.3 million from financial assets measured at fair value through profit or loss during the reporting period[34] - The company recorded a fair value gain of approximately $1.7 million from financial assets measured at fair value through profit or loss during the reporting period[34] - The company's investment in 7G BIOVENTURES I, L.P. resulted in a fair value decrease from $3,000,000 to $2,474,000, reflecting a 17.53% loss[33] - The company's investment in Fund B resulted in a fair value increase from $3,785,000 to $3,967,000, reflecting a 4.81% gain[33] - The company's investment in AffyXell Therapeutics Co., Ltd. resulted in a fair value decrease from $810,000 to $710,000, reflecting a 12.35% loss[33] - The company's investment in Shenzhen Aimabio Technology Co., Ltd. resulted in a fair value increase from $1,123,000 to $1,614,000, reflecting a 43.72% gain[33] - GS China borrowed a short-term interest-bearing loan of RMB 47.0 million (approximately USD 6.6 million) from Citibank with a fixed annual interest rate of 2.4%[36] - GS China, Nanjing Probio, and Jiangsu Probio borrowed short-term interest-bearing loans totaling RMB 174.1 million (approximately USD 24.4 million) from China Merchants Bank with fixed annual interest rates ranging from 2.38% to 2.6%[36] - Jiangsu Probio borrowed long-term interest-bearing loans totaling RMB 96.1 million (approximately USD 13.5 million) from China Construction Bank and Jiangsu Bank, with floating annual interest rates based on LPR, secured by leased land[36] - Legend received a prepayment of USD 250.0 million from a partner, with interest totaling USD 41.6 million, based on 12-month SOFR plus a spread adjustment[36] - The group's current ratio was approximately 4.2, and the debt-to-asset ratio was approximately 45.2% as of June 30, 2024[39] - The group plans to expand production capacity globally, including in the US, Singapore, and mainland China, to meet strong customer demand[41] - The group plans to expand CARVYKTI production capacity in North America and Europe following anticipated FDA and EC approvals for second-line treatment of MM[42] - The company has no outstanding foreign currency forward or option contracts as of June 30, 2024[43] - The company has approximately $170.8 million in financial products exposed to fair value interest rate risk, excluding floating-rate bank balances and fixed-rate time deposits[44] - A 50 basis point increase or decrease in interest rates would result in a $0.4 million decrease or increase in pre-tax loss, respectively, based on fair value interest rate risk sensitivity analysis[45] - A 50 basis point increase or decrease in interest rates would result in a $0.7 million increase or decrease in pre-tax loss, respectively, based on cash flow interest rate risk sensitivity analysis[45] - The company's trade and other receivables are subject to independent credit assessments, with quarterly reviews of prepayment requirements and credit limits[46] - The company's CARVYKTI product generated approximately $343 million in net trade sales during the reporting period[51] - Revenue increased to $561.371 million in 2024, up 43.5% from $391.311 million in 2023[109] - Gross profit rose to $306.986 million in 2024, a 75.4% increase from $175.048 million in 2023[109] - Net loss for the period improved to $215.631 million in 2024, compared to $245.757 million in 2023[109] - Research and development expenses increased to $236.384 million in 2024, up 14% from $207.331 million in 2023[109] - Total non-current assets grew to $1,117.544 million in 2024, up from $1,034.191 million in 2023[113] - Cash and cash equivalents decreased to $399.297 million in 2024, down from $1,446.403 million in 2023[113] - Total current liabilities increased to $532.997 million in 2024, up from $494.811 million in 2023[113] - Total equity decreased to $1,824.207 million in 2024, down from $2,044.354 million in 2023[115] - Exchange differences on translation of foreign operations resulted in a loss of $63.054 million in 2024, compared to $15.777 million in 2023[111] - Total comprehensive loss for the period was $278.685 million in 2024, compared to $261.534 million in 2023[111] - The company reported a net loss of $175.115 million for the six months ended June 30, 2024, compared to a net loss of $93.581 million for the same period in 2023[117][119] - Total comprehensive income for the period was a loss of $207.5 million, primarily driven by the net loss and foreign exchange translation differences of $32.385 million[117] - The company's total equity decreased from $2.044 billion as of January 1, 2024, to $1.824 billion as of June 30, 2024, mainly due to the period's net loss and foreign exchange translation differences[117] - Cash flow from operating activities improved significantly, with a net inflow of $79.855 million for the six months ended June 30, 2024, compared to a net outflow of $187.168 million for the same period in 2023[120] - The company recognized a fair value loss of $113.509 million on preferred shares and warrants during the six months ended June 30, 2024[120] - Share-based compensation expenses increased to $53.349 million for the six months ended June 30, 2024, compared to $38.859 million for the same period in 2023[120] - The company's trade receivables and other receivables decreased by $61.38 million during the six months ended June 30, 2024, indicating improved collections[120] - Inventory levels increased by $26.739 million during the six months ended June 30, 2024, reflecting higher production or slower sales[120] - The company's contract liabilities increased by $23.708 million during the six months ended June 30, 2024, suggesting higher advance payments from customers[120] - Investment activities used a net cash flow of $1,133,054 thousand, compared to $454,543 thousand in the same period last year[121] - Financing activities generated a net cash flow of $5,565 thousand, significantly lower than $1,020,019 thousand in the previous year[121] - Cash and cash equivalents decreased by $1,047,634 thousand, ending at $399,297 thousand[121] - The company adopted revised Hong Kong Financial Reporting Standards, including HKFRS 16 and HKAS 1 amendments, with no material financial impact[124][126] - The company operates in five reportable segments: Life Science Services & Products, Biologics Development Services, Industrial Synthetic Biology Products, Cell Therapy, and Management Services[127] - Total revenue for the six months ended June 30, 2024, reached $561.371 million, compared to $391.311 million in the same period in 2023, representing a significant increase[132] - Revenue from external customers in the Life Sciences Services and Products segment was $217.722 million, while the Biologics Development Services segment contributed $37.132 million[129] - The Cell Therapy segment generated the highest revenue from external customers at $280.320 million, followed by the Life Sciences Services and Products segment at $217.722 million[129] - Gross profit for the Life Sciences Services and Products segment was $118.945 million, while the Cell Therapy segment recorded a gross profit of $175.324 million[129] - R&D expenses for the Cell Therapy segment were the highest at $213.590 million, reflecting significant investment in new technologies and product development[129] - The company reported a pre-tax loss of $205.588 million, primarily driven by losses in the Cell Therapy and Experience Management segments[129] - Revenue from customer contracts increased to $389.455 million in 2024 from $296.583 million in 2023, while revenue from partner contracts rose to $171.735 million from $94.432 million[132] - The Biologics Development Services segment saw a decrease in revenue from external customers, dropping to $37.132 million in 2024 from $64.652 million in 2023[129][131] - The Industrial Synthetic Biology Products segment recorded a modest increase in revenue from external customers, rising to $26.109 million in 2024 from $18.113 million in 2023[129][131] - The company's total gross profit for the six months ended June 30, 2024, was $306.986 million, compared to $175.048 million in the same period in 2023[129][131] - Other income and gains totaled $112.565 million for the six months ended June 30, 2024, a significant increase from $31.301 million in the same period in 2023, driven by foreign exchange gains and fair value gains on financial assets[136] - Pretax loss for the period was impacted by a $37.480 million impairment provision for long-term assets, which was not present in the prior year[137] - Employee benefit expenses, including salaries and wages, increased to $255.673 million from $210.101 million year-over-year, reflecting higher compensation costs[137] - The company recorded a fair value gain of $113.509