WuXi AppTec Achieved First Quarter 2024 Target Despite External Challenges, Maintaining Stable Operations

Rhea-AI Summary

WuXi AppTec announced its financial results for Q1 2024, achieving revenue of RMB7,982 million, with net profit of RMB1,942 million. The company added over 300 new customers and served 6,000 active customers. WuXi Chemistry's D&M pipeline saw growth, adding 337 new molecules. The company is committed to sustainability and quality standards, with recognition from global ESG agencies. Revenue from top 20 pharmaceutical companies grew by 4.2%. WuXi AppTec aims for revenue of RMB 38.3-40.5 billion for the full year.

Despite external challenges, the company maintained stable operations with positive free cash flow of RMB1,326 million. WuXi Chemistry revenue reached RMB5.56 billion, with adjusted non-IFRS gross profit margin of 43.3%. WuXi Testing and WuXi Biology also showed steady growth. WuXi ATU faced challenges due to completion of high-margin projects in 2023 and under-utilization of capacity.

Overall, WuXi AppTec's innovative services and commitment to quality continue to drive business growth, enabling the company to support the pharmaceutical and life sciences industry globally.

Positive

• Positive: WuXi AppTec achieved Q1 2024 revenue of RMB7,982 million and net profit of RMB1,942 million, adding over 300 new customers and serving 6,000 active customers.
• Positive: The company's commitment to sustainability and quality standards led to recognition from global ESG agencies, reaffirming its position as a trusted partner in the industry.
• Positive: WuXi Chemistry's D&M pipeline saw rapid growth, with 337 new molecules added in Q1 2024, contributing to sustained and steady business growth.
• Positive: Revenue from the top 20 global pharmaceutical companies grew by 4.2%, reflecting the company's strong performance and reputation in the industry.
• Positive: WuXi AppTec's financial targets for the full year, with revenue expected to reach RMB 38.3-40.5 billion and free cash flow of RMB 4-5 billion, demonstrate a positive outlook for the company's future.
• Positive: WuXi Testing and WuXi Biology segments showed steady growth, maintaining leadership positions and driving innovation in drug safety evaluation services and new modalities business.

Negative

• Negative: WuXi ATU faced challenges with a gross profit margin of (32.8)% due to completion of high-margin projects in 2023 and under-utilization of capacity for other projects.
• Negative: WuXi DDSU's revenue declined significantly, impacting the overall financial performance of the company in Q1 2024.
• Negative: Adjusted non-IFRS net profit attributable to the owners of the company decreased by 18.3% compared to Q1 2023, signaling a decline in profitability despite stable operations.
• Negative: WuXi AppTec's revenue declined by 11.0% in Q1 2024, reflecting challenges in the external environment and the pharmaceutical industry.

• Revenue Reached RMB7,982 Million; Excluding COVID-19 Commercial Projects, Down 1.8%
• Net Profit Attributable to the Owners of the Company Reached RMB1,942 Million; Diluted Earnings per Share (EPS) Reached RMB0.66
• Adjusted Non-IFRS Net Profit Attributable to the Owners of the Company Reached RMB1,913 Million; Adjusted Non-IFRS Diluted EPS Reached RMB0.65^[1]
• Free Cash Flow Remained Positive and Reached RMB1,326 Million

SHANGHAI, April 29, 2024 /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 and life sciences industry, today announced its financial results for the first quarter ending March 31, 2024 ("Reporting Period"): 

• Revenue reached RMB7,982 million; excluding COVID-19 commercial projects, revenue down 1.8%.
• Adjusted non-IFRS gross profit reached RMB3,090 million. Adjusted non-IFRS gross profit margin was 38.7%.
• Net profit attributable to the owners of the Company reached RMB1,942 million; diluted EPS reached RMB0.66. Adjusted non-IFRS net profit attributable to the owners of the Company reached RMB1,913 million; adjusted diluted non-IFRS EPS reached RMB0.65.
• Free cash flow remained positive and reached RMB1,326 million.
• In the first quarter of 2024, we added over 300 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.
• During the Reporting Period, revenue from the top 20 global pharmaceutical companies reached RMB2.70 billion, which grew 4.2% year-over-year excluding COVID-19 commercial projects.
• The sustained and steady business growth is attributed to our unique fully integrated Contract Research, Development and Manufacturing Organization (CRDMO) platform. WuXi Chemistry's D&M pipeline has maintained rapid growth, with a total of 337 new molecules added in the Reporting Period. As of March 31, 2024, our D&M pipeline reached 3,286 molecules, among which 11 commercial and phase III projects were added during the Reporting Period.
• As an enabler of innovation and a trusted partner and contributor to the global pharmaceutical and life sciences industry, the Company is committed to environmental sustainability efforts. The Company was named to the S&P Global Sustainability Yearbook and recognized as an Industry and Regional "Top-Rated" company by Sustainalytics consecutively in 2023 and 2024. Our outstanding ESG performance has also been widely acknowledged by major global ESG rating agencies, including MSCI, CDP, EcoVadis and FTSE Russell.
• The Company adheres to the unwavering commitment to customers' IP protection and the highest quality & compliance standards. In 2023, the Company has received a total of 748 quality audits and inspections conducted by global customers, regulatory authorities and independent third parties, and achieved 100% pass rate with no critical findings. The Company also received 83 information security audits conducted by global customers, with no critical findings. In addition, 24 of our main operating sites are ISO/IEC 27001 certified, including all the main operating sites in China.

[1] In 2023 Q1 and 2024 Q1, WuXi AppTec had a fully-diluted weighted average share count of 2,948,890,231 and 2,925,052,346 ordinary shares, respectively.

Management Comment

Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, "We achieved our targets for the first quarter of 2024. For the full year, the Company expects to deliver revenue of RMB 38.3-40.5 billion and free cash flow of RMB 4-5 billion, while adjusted non-IFRS NPM is expected to remain at a similar level as last year."

"Since its founding in 2000, WuXi AppTec has dedicated itself to serving as a highly efficient enabler to the industry, creating value for our customers and benefiting patients globally. Over the past two decades, the Company has remained fully committed to the highest quality and compliance standards, prioritizing our customers' needs, protecting their intellectual property (IP), and abiding by the laws and regulations in the countries in which we operate. Thanks to the trust and support from our customers globally, the Company continues to support the industry and enable our customers with continuously enhanced capabilities and capacity. With constantly emerging scientific innovations, including the rapid development of artificial intelligence (AI), the industry's demand for CRO, CDMO, CRDMO and CTDMO services will continue to grow – and this is the inevitable trend of the industry. Although the recently proposed U.S. legislation may create short-term uncertainty for the Company, our customers and the global pharmaceutical and life sciences industry, WuXi AppTec remains steadfast in 'doing the right thing and doing it right' and in supporting our customers' efforts to bring groundbreaking therapies to patients around the world."

Business Performance by Segments

• WuXi Chemistry: Integrated CRDMO Business Model Drives Steady Growth, with Continued Expansion in New Modalities (WuXi TIDES)

• • Revenue from WuXi Chemistry reached RMB5.56 billion; excluding COVID-19 commercial projects, revenue down 0.6%. Adjusted non-IFRS gross profit margin was 43.3%.
  • Drug discovery services ("R") continued to generate downstream opportunities. In the past 12 months, we successfully synthesized and delivered more than 430,000 new compounds to customers, which grew 3% year-over-year. Through our "follow-the-customer" and "follow-the-molecule" strategies, we established trusted partnerships with our customers globally, supporting the sustainable growth of our CRDMO business.
  • Development and manufacturing (D&M) services delivered sustained growth.
            i.        D&M services revenue^[2] reached RMB4.00 billion; excluding COVID-19 commercial projects, D&M services revenue grew 1.2% year-over-year.
            ii.        In the Reporting Period, we added 337 new molecules to our D&M pipeline. As of March 31, 2024, our D&M pipeline reached 3,286 molecules, including 64 commercial projects, 74 in phase III, 345 in phase II and 2,803 in phase I and pre-clinical stages, among which 11 commercial and phase III projects were added during the Reporting Period.
  • Specifically, TIDES business (mainly oligo and peptides) continued to expand.
             i.        In the Reporting Period, TIDES revenue grew strongly by 43.1% year-over-year to RMB0.78 billion. As of March, 31, 2024, backlog of TIDES grew significantly by 110% year-over-year.
             ii.        In the Reporting Period, the number of TIDES D&M customers increased 30% year-over-year to 146, and the number of TIDES molecules increased 43% year-over-year to 276.
             iii.        In January 2024, the total reactor volume of solid phase peptide synthesizers increased to 32,000L.

[2] To further strengthen the CRDMO business integration, business units have been adjusted accordingly, and so have the R and D&M revenue splits (similar to 2023 baseline).

• WuXi Testing: Drug Safety Evaluation Service & Site Management Organization (SMO) Maintain Leadership Position and Drive Steady Growth

• • Revenue from WuXi Testing reached RMB1.49 billion. Adjusted non-IFRS gross profit margin was 35.6%.
  • Revenue from lab testing services down 0.6% year-over-year to RMB1.05 billion. Among which, revenue from drug safety evaluation services grew 3.7% year-over-year. We maintained our industry-leading position in the Asia-Pacific region.
  • In the first quarter, the Chengdu facility received National Medical Products Administration (NMPA) GLP qualification; the Qidong facility received Organization for Economic Co-operation and Development (OECD) and NMPA GLP qualifications in March and April. An additional 22,000m² of facilities were GLP-qualified in the first quarter.
  • Revenue from clinical CRO & SMO grew 11.0% year-over-year to RMB0.44 billion. SMO revenue grew 26.4% year-over-year, maintaining an industry leading position in China. In the Reporting Period, SMO supported 10 new drug approvals for customers. Clinical CRO enabled our customers to obtain 7 IND approvals.

• WuXi Biology: New Modalities Business Drives Growth; WuXi Biology Platform Continues to Generate Downstream Opportunities

• • Revenue from WuXi Biology reached RMB0.56 billion. Adjusted non-IFRS gross profit margin was 38.5%.
  • The Company focused on improving capabilities related to new modalities. In the Reporting Period, WuXi Biology revenue from new modalities grew 12.2% year-over-year, contributing 29.2% of WuXi Biology revenue.
  • The Company further integrated resources of its in vivo pharmacology platform and continued to improve platform capabilities and efficiency.
  • The Company commenced operations at the Suzhou Guoxiang research platform by the end of March 2024, strengthening new capabilities of in vitro biology and in vivo pharmacology.
  • In the Reporting Period, WuXi Biology continued to generate downstream opportunities and contributed more than 20% of the Company's new customers.

• WuXi ATU: Commercial Projects Gradually Approved, Driving Future Growth

• • Revenue from WuXi ATU reached RMB0.28 billion. Adjusted non-IFRS gross profit margin was (32.8)%. Mainly due to: the completion of high-margin projects in 2023; the approval of the new TIL product in late February 2024, with an increase in costs associated with talents reserved for commercial manufacturing in advance; and the under-utilization of capacity for other projects.
  • The Company focused on improving our CTDMO integrated enabling platform and strengthening capabilities and capacity. As of March 31, 2024, we provided development, testing and manufacturing services for 65 projects, including 2 commercial projects, 5 Phase III projects (2 projects in BLA preparation stage), 9 Phase II projects and 49 pre-clinical and Phase I projects, among which, the world's first innovative TIL-based therapy was approved by FDA in the first quarter.
  • We are preparing for BLA filing to manufacture the LVV used in a commercial CAR-T product. We completed process performance qualification (PPQ) and started post-PPQ manufacturing, expect to file pre-approval submission (PAS) to FDA in the second half of 2024. Moreover, we expect to complete PPQ and file PAS to FDA in the second half of 2024 for a blockbuster commercial CAR-T product.

• WuXi DDSU^[3]: Supporting Customers to Continue Advancing Pipeline Projects

• • Revenue from WuXi DDSU reached RMB0.08 billion. Adjusted non-IFRS gross profit margin was 26.9%.
  • As of March 31, 2024, 3 new drugs developed for our customers obtained NMPA approvals, including 2 for COVID-19 infection treatments and 1 for tumor treatment. We continued to receive royalty income of the approved new drugs from customers. Moreover, 2 new drug candidates are in the NDA review stage.
  • In the Reporting Period, we supported customers to file INDs for 6 drug candidates and obtain 6 Clinical Trial Approvals (CTAs). Cumulatively, we have submitted 196 new chemical entity IND filings and obtained 175 CTAs for customers, among which 3 projects have obtained NDA approvals, 2 projects are in the NDA review stage, 4 projects are in Phase III, 35 projects are in Phase II, and 71 projects are in Phase I, covering multiple therapeutic areas.
  • Demand declined significantly, and thus fewer new projects were signed as expected.

[3] WuXi DDSU will not be shown separately in the subsequent earnings presentation, as its revenue currently accounts for only ~1% of the Company.

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 2024 First Quarterly Results Presentation and 2024 First Quarterly Report disclosed on the Company's official website, as well as the 2024 First 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 2024 First Quarterly Report of the Company has not been audited.

First Quarter 2024 Results by Segments

Unit: RMB million

Segment	Revenue	Change	Adjusted non- IFRS Gross Profit	Change	Adjusted non- IFRS Gross Profit Margin
WuXi Chemistry	5,562.63	(13.5) %	2,409.05	(16.6) %	43.3 %
WuXi Testing	1,490.61	2.6 %	531.11	0.6 %	35.6 %
WuXi Biology	560.81	(2.8) %	215.84	(9.9) %	38.5 %
WuXi ATU	280.27	(13.6) %	(91.96)	Note1	(32.8) %
WuXi DDSU	80.08	(51.8) %	21.57	(46.0) %	26.9 %
Others	7.54	(29.0) %	4.14	(37.0) %	54.9 %
Total	7,981.93	(11.0) %	3,089.74	(16.0) %	38.7 %

Notes: 1. Adjusted non-IFRS gross profit of WuXi ATU was RMB(91.96) million in Q1 2024, compared to RMB(24.01) million in Q1 2023, a decline of RMB67.95 million.

2. Any sum of the data above that is inconsistent with the total is due to rounding.

 

Consolidated Statement of Profit or Loss[4] – Prepared under IFRS
RMB Million	First quarter of 2024	First quarter of 2023	Year-over- Year Change
Revenue	7,981.9	8,963.7	(11.0) %
Cost of services	(4,976.2)	(5,438.1)	(8.5) %
Gross profit	3,005.7	3,525.6	(14.7) %
Other income	242.0	196.0	23.5 %
Other gains and losses	192.9	197.8	(2.5) %
Impairment losses under expected credit   losses ("ECL") model, net of reversal	(19.7)	(6.3)	213.2 %
Selling and marketing expenses	(179.1)	(175.9)	1.8 %
Administrative expenses	(610.5)	(669.4)	(8.8) %
Research and development expenses	(306.4)	(357.3)	(14.2) %
Operating Profit	2,324.9	2,710.5	(14.2) %
Share of results of associates	33.9	(45.8)	(174.1) %
Share of results of joint ventures	0.2	8.3	(97.5) %
Finance costs	(61.7)	(64.2)	(3.9) %
Profit before tax	2,297.4	2,608.9	(11.9) %
Income tax expense	(338.5)	(423.1)	(20.0) %
Profit for the period	1,958.9	2,185.8	(10.4) %
Profit for the period attributable to:
Owners of the Company	1,942.2	2,168.1	(10.4) %
Non-controlling interests	16.6	17.7	(5.8) %
	1,958.9	2,185.8	(10.4) %
Weighted average number of ordinary shares for calculating EPS(express in shares)
– Basic	2,919,696,373	2,933,625,180	(0.5) %
– Diluted	2,925,052,346	2,948,890,231	(0.8) %
Earnings per share attributable to ordinary shareholders of the Company (expressed in RMB per share)
– Basic	0.67	0.74	(9.5) %
– Diluted	0.66	0.72	(8.3) %
[4] If the sum of the data below is inconsistent with the total, it is caused by rounding

 

 

 

Consolidated Statement of Financial Position[5] – Prepared under IFRS
RMB Million	March 31,	December 31,
	2024	2023
Non-current Assets
Property, plant and equipment	26,045.5	25,844.4
Right-of-use assets	2,313.6	2,348.3
Goodwill	1,834.7	1,820.9
Other intangible assets	883.4	906.7
Interests in associates	2,260.3	2,180.4
Interests in joint ventures	36.0	35.2
Deferred tax assets	506.0	366.7
Financial assets at fair value through profit or   loss ("FVTPL")	8,742.1	8,626.0
Other non-current assets	114.2	105.8
Biological assets	1,050.6	1,012.5
	43,786.5	43,246.9
Current Assets
Inventories	3,148.5	2,886.1
Contract costs	784.3	695.6
Biological assets	1,115.2	1,154.6
Amounts due from related parties	95.3	86.7
Trade and other receivables	8,524.5	9,372.7
Contract assets	1,249.5	1,234.4
Income tax recoverable	7.4	17.5
Financial assets at FVTPL	503.1	11.0
Derivative financial instruments	0.0	414.0
Other current assets	-	785.8
Pledged bank deposits	1.6	1.6
Term deposits with initial term of over three   months	4,207.0	3,761.4
Bank balances and cash	11,517.0	10,001.0
	31,153.4	30,422.5
Total Assets	74,939.8	73,669.3
[5] If the sum of the data below is inconsistent with the total, it is caused by rounding.

 

 

 

Consolidated Statement of Financial Position (continued)[6] – Prepared under IFRS
RMB Million	March 31,	December 31,
	2024	2023
Current Liabilities
Trade and other payables	6,487.5	7,333.5
Amounts due to related parties	7.3	11.5
Derivative financial instruments	793.5	501.9
Contract liabilities	2,162.5	1,955.4
Bank borrowings	2,939.2	3,721.6
Lease liabilities	232.7	240.5
Income tax payables	764.8	991.9
	13,387.4	14,756.3
Non-current Liabilities
Bank borrowings	2,863.0	687.0
Deferred tax liabilities	516.7	530.1
Deferred income	1,064.9	1,079.9
Lease liabilities	1,059.4	1,098.6
	5,504.1	3,395.6
Total Liabilities	18,891.6	18,151.9
Net Assets	56,048.3	55,517.4
Capital and Reserves
Share capital	2,933.3	2,968.8
Reserves	52,706.2	52,153.6
Equity attributable to the owners of the  Company	55,639.5	55,122.5
Non-controlling interests	408.8	395.0
Total Equity	56,048.3	55,517.4
[6] If the sum of the data below is inconsistent with the total, it is caused by rounding.

 

 

 

Adjusted Non-IFRS Net Profit Attributable to the Owners of the Company[7]
RMB Million		First quarter of 2024	First quarter of 2023	Year-over-Year Change
Net Profit Attributable to the Owners of the   Company under IFRS		1,942.2	2,168.1	(10.4) %
Add:
Share-based compensation expenses		87.8	166.3	(47.2) %
Issuance expenses of convertible bonds		-	0.3	N/A
Fair value gains from derivative                     component of convertible bonds		-	(40.2)	N/A
Foreign exchange related losses		14.4	164.2	(91.2) %
Amortization of acquired intangible                     assets from merge and acquisition		13.6	14.1	(3.5) %
Non-IFRS Net Profit attributable to the   owners of the Company		2,058.0	2,472.8	(16.8) %
Add:
Realized and unrealized gains from    venture capital investments		(144.7)	(122.4)	18.2 %
Realized and unrealized share of gains    from joint ventures		(0.2)	(8.3)	(97.6) %
Adjusted non-IFRS net profit attributable to   the owners of the Company		1,913.1	2,342.1	(18.3) %
[7] If the sum of the data below is inconsistent with the total, it is caused by rounding.

 

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 life sciences 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, advanced 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 for the third consecutive year in 2023 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 the 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, talent incentive and retention expenses funded by cash donation from shareholders, etc. We also provide adjusted non-IFRS net profit attributable to the 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 the 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.

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SOURCE WuXi AppTec

FAQ

What was WuXi AppTec's revenue for Q1 2024?

WuXi AppTec's revenue for Q1 2024 was RMB7,982 million.

How many new customers did WuXi AppTec add in Q1 2024?

WuXi AppTec added over 300 new customers in Q1 2024.

What were the key financial targets set by WuXi AppTec for the full year?

WuXi AppTec aims to deliver revenue of RMB 38.3-40.5 billion and free cash flow of RMB 4-5 billion for the full year.

How did WuXi Chemistry's D&M pipeline perform in Q1 2024?

WuXi Chemistry's D&M pipeline saw rapid growth, with 337 new molecules added in Q1 2024, contributing to sustained and steady business growth.

What challenges did WuXi ATU face in Q1 2024?

WuXi ATU faced challenges with a gross profit margin of (32.8)% due to completion of high-margin projects in 2023 and under-utilization of capacity for other projects.