Revenue Increased by 419.5% YoY, CRO Business Income Increased by 62.5% YoY, Order Backlog Recorded a Significant Increase of 72%
Financial Highlights for the 6 months ended June 30, 2021:
- Revenue amounted to RMB1,026.5 million, representing a year-on-year (YoY) increase of approximately 419.5%
- Gross profit amounted to RMB316.3 million, representing a YoY increase of approximately 216.0%
- Adjusted net profit amounted to RMB204.9 million, representing a YoY increase of 65.6%
- Adjusted earnings per share amounted to RMB0.11
HONG KONG, Aug. 31, 2021 /PRNewswire/ — On August 30, 2021, Viva Biotech Holdings (1873.HK) announced that during the period ended June 30, 2021 (the "Reporting Period"), revenue of the Group increased significantly to RMB1,026.5 million from RMB197.6 million for the corresponding period last year, representing a YoY increase of approximately 419.5%, gross profit increased substantially from RMB100.1 million for the corresponding period last year to RMB316.3 million, representing a YoY increase of 216.0%. The adjusted net profit of the Group increased from RMB123.7 million for the corresponding period last year to RMB204.9 million, representing a YoY increase of 65.6%.
The increase was mainly attributable to the rapid growth of the Company’s drug discovery services, and the growth of small-molecule preclinical and commercial CDMO services arising from the acquisition of SYNthesis med chem (Hong Kong) Limited ("SYNthesis") and Zhejiang Langhua Pharmaceutical Co., Ltd. ("Langhua Pharmaceutical").
Drug Discovery Services Maintained Rapid Growth
During the Reporting Period, the Company’s revenue from drug discovery services increased significantly by approximately 62.5% from approximately RMB197.6 million to the corresponding period last year to RMB321.1 million. The order backlog amounted to approximately RMB848 million, representing a significant increase of approximately 72.0% from RMB493 million in the corresponding period last year.
The Company had delivered more than 26,000 protein structures to clients and conducted R&D into over 1,700 independent drug targets, and the cumulative number of clients served had increased to 936. The client base is geographically diverse, with overseas clients accounting for 83.9% of our client base. The revenue from drug discovery services contributed by clients in mainland China increased year on year by 91.4% and accounted for 16.1% of the total revenue.
Increased Investment in R&D and Productivity Expansion, to Proactively Gain Client Traffic Diversion from CRO Clients and Portfolio Companies
During the Reporting Period, Langhua Pharmaceutical had served a total of 759 clients with a total revenue of approximately RMB705.4 million, representing a slight decrease from approximately RMB809.2 million for the corresponding period last year, which was primarily attributable to callback of the surge in results due to the COVID-19 pandemic, the impact from foreign exchange rates and the adjustment in production capacity structure. In the first half of the year, Langhua Pharmaceutical completed 26 CDMO projects with a revenue of RMB415 million, accounting for 58.8% of total sales revenue.
The Group kept increasing R&D investment to scale up CMC and formulation capacities. The investment in Shanghai CMC R&D Center and Ningbo Taizhou R&D Center had exceeded RMB56.0 million, which was mainly used for the purchase of equipment and the construction of laboratories and a formulation plant meeting good manufacturing practice ("GMP") standards.
Leveraging the client traffic and project pipeline of Viva Biotech’s CRO business and portfolio companies, the Company achieved initial results in diverting clients from front-end projects to CMC and Langhua Plant. It is expected that with the completion of the CMC R&D Center in the second half of 2021, the continuous referral of clients will begin to create a funnel effect from front-end projects.
Extensively Explored Business Opportunities Around the Globe
We extensively explored business opportunities around the globe. During the Reporting Period, the Company reviewed more than 433 projects globally, added 8 startups to its portfolio companies, made additional investments in 2 existing portfolio companies, and was in negotiation for incubation of and investment in 3 new companies. The Group had invested in a total of 75 portfolio companies with an average agreed shareholding ratio of 18.41%.
8 of the portfolio companies finished a new round of financing, raising over US $200 million in total. The R&D efforts of the portfolio companies were progressing smoothly, with the total number of pipeline projects increasing to 140, of which 18 had entered the clinical stage. On June 2021, AbSci Corporation, a synthetic biology company, announced that it had reached an acquisition agreement with Totient Inc., a Viva portfolio company.
As of June 30, 2021, the number of the Company’s business partners had increased to 40. In an active effort to conduct post-investment management, the Company held the 2nd Viva Biotech Partnership Summit and helped portfolio companies accelerate the R&D progress, introduce talents, optimize product pipeline development strategies, and access financing resources.
Continued to Build Technology Barriers and Further Expanded the Scale of Staff and Facilities
The Company continued to build technology barriers with R&D investment amounting to RMB37.5 million during the Reporting Period. For the drug discovery service business segment, the Company proactively introduced Micro ED, AI Computational Chemistry, antibody and macromolecule drug discovery, and photochemical reaction platform; while for the CDMO business, the Company continued to refine the continuous reaction technology, catalyst screening platform, oral formulation production line platform, injection R&D platform, and non-fixed dispersion technology platform, and further improved the level of production automation.
As of June 30, 2021, the Group had a total of 1,873 employees. The Company has been accelerating the construction of office and laboratory facilities in line with workforce expansion plans and expanding production capacity to meet the fast-growing business needs.
- The Incubation Center located in Faladi Road, Shanghai with approximately 8,000 square meters has been put into full operation in the first quarter of 2021.
- The incubation center covering approximately 77,500 square meters in Qiantang New District of Hangzhou has commenced construction in July 2021.
- The laboratory covering 12,000 square meters in Chengdu will be put into use by the end of October.
- The Group’s new headquarters in Zhoupu, Shanghai will be put into operation by the end of 2021 with a laboratory area of approximately 36,328 square meters.
- The Langhua Pharmaceutical’s CMC R&D Center with an area of approximately 10,000 square meters and the 3,000-square-meter GMP standard formulation plant and R&D production center are expected to be completed and put into operation in November.
- The Langhua Plant in Taizhou plans to increase the production capacity to 900+m³ by the end of 2021.
Dr. Cheney Mao, Chairman and Chief Executive Officer of Viva Biotech Holdings, said, "We will continue to construct and raise technology barriers, expand service facilities and capacity, enhance talent recruitment with incentives, and step up efforts in commercial exploration into the global markets, particularly the domestic market. Levering the branded structure-based drug discovery services, the Company will expand along the industrial chain to establish a platform integrating R&D and production, boost the continuity of CRO-CMC/CDMO business, and support global biotech startups with our unique incubation platform to improve cross-selling among business segments. The Company is committed to providing more high-quality and diversified services for a growing number of drug discovery start-ups, and medium and large pharmaceutical companies worldwide, facilitate them to improve their R&D efficiency and benefit patients as soon as practicable, thereby establishing an open cooperation platform and win-win ecosystem for global biopharmaceutical innovators."
About Viva Biotech Holdings
Since its establishment in 2008, Viva Biotech (01873.HK) has always been adhering to the mission of "Becoming the cradle of global innovative biotech companies from around the world" and provided one-stop services for drug R&D and production to global biopharmaceutical innovators. Leveraging the technical advantages in the field of Structure-based Drug Discovery (SBDD), we provide leading CRO drug discovery services and CMC / CDMO services throughout the whole drug production process to global biopharmaceutical clients. At the same time, we focus on finding and investing in high potential biotech start-ups, solve unmet clinical medical needs in the form of EFS (service for equity), and continue to build an open cooperation platform and win-win ecosystem for biotech innovation.
As of June 30, 2021, Viva Biotech has provided drug R&D and production services to 1,695 biotech and pharmaceutical clients around the world. We have invested and incubated 75 biotech start-ups in total. In the future, the Company will continue to strengthen its technical barriers, improve R&D and production level, and the service capacity, so as to provide high-quality and diversified services for more drug discovery start-ups, as well as the medium and large pharmaceutical enterprises around the world. We hope to benefit more patients through Viva’s platform.