GenScript Biotech Reports 2019 Financial Results and Provides Business Update
Company highlights significant R&D investments, progress in cell therapy, especially in CAR-T Trials Targeting Gastric Cancer and Other Pipelines
NANJING, China, April 1, 2020 /PRNewswire/ -- GenScript Biotech Corp. (Stock Code: 1548.HK), a leading global biotechnology company, yesterday reported full year 2019 financial results and provided a corporate update. In 2019, overall revenue of the Group was approximately US$273.4 million, representing an increase of 18.4% as compared with that for the year ended December 31, 2018. Gross profit was approximately US$180.3 million, representing an increase of 13.8% YoY.
GenScript's four major business segments continued to grow steadily in 2019. Revenue growth was primarily attributable to the continued stable growth of life science products and services, an increase in contract revenue from Legend's collaboration with Janssen on CAR-T cell therapy (JNJ-4528), the rapid conversion of biologics CDMO service backlog, and an increase in customers and their purchase volumes of industrial synthetic biology products.
GenScript has made significant investments in R&D in each of its business segments. During the reporting period, the Company's R&D expense increased by 151.0% to US$186 million compared with 2018.
"GenScript's current investments and our bold initiatives across all four business units are significantly advancing our long-term goals and illustrate our ongoing commitment to building a strong foundation for high-quality growth," said Dr. Zhang Fangliang, Founder, Chairman & CEO of GenScript, "We intend to continue to invest heavily in R&D, talent and facilities to drive the growth of each business segment."
Business Highlights - Legend Biotech and Cell Therapy
GenScript's cell therapy program received multiple international designations for expediting clinical development, as the company prepared to spin off Legend Biotech as a publicly listed company.
The ongoing clinical trials for the B-cell maturation antigen (BCMA)-directed Chimeric Antigen Receptor T-cell (CAR-T) (BCMA CAR-T) program continued to proceed smoothly in the U.S. and China in 2019. The program has received Breakthrough Therapy Designation and Orphan Drug Designation from the US FDA, as well as PRIME Designation from EMA. Legend Biotech's BCMA CAR-T product has also recently obtained Orphan Drug approval from European Commission, which will be announced by EMA soon.
In December 2019, at the 61st American Society of Hematology (ASH) annual conference, Johnson & Johnson and Legend presented for the first time the latest Phase Ib/II pivotal trial data of CARTITUTE-1 on JNJ-4528's efficacy and safety. JNJ-4528 showed excellent efficacy in the treatment of 29 patients with relapsed/refractory multiple myeloma (R/R MM). With a median follow-up of 6 months, a 100% overall response rate (ORR) was achieved. Legend Biotech anticipates filing a Biologics License Application (BLA) with the FDA by the end of 2020. Legend Biotech has ongoing IIT trials treating DLBCL, AML, gastric cancer and pancreatic cancer, and is also conducting IIT on allogeneic anti-CD20 CAR-T therapy. Furthermore, Legend Biotech expects to file IND for CD4 CAR-T treating TCL in the second half of 2020 and another IND for Ovarian cancer in the first half of 2021.
To date, the cell therapy business has achieved four milestones related to the BCMA CAR-T LCAR-B38M program and received milestone payments of 110 million USD from Jassen. Going forward, Legend Biotech is eligible for up to 125 million USD payment if certain manufacturing milestone is reached and additional up to 1.115 billion USD payments if other milestones are reached.
Recently, GenScript has obtained conditional approval from the Hong Kong Stock Exchange to spin off its cell therapy business and seek a public listing in the US. This is intended to enable operational focus and strategy development at both GenScript and Legend Biotech, better align management responsibilities and increase the financial and operational transparency for both GenScript and Legend Biotech. It is anticipated that after a potential Legend IPO, Legend will continue to be consolidated under GenScript Group. Existing GenScript shareholders, through their interest in GenScript, will continue to own a majority interest in Legend Biotech.
In addition, GenScript announced this morning that Legend has just closed a round of private financing, a syndicate of highly reputable institutional investors have agreed to invest approximately 150.5 million USD into Legend, this deal values Legend at approximately 1.95 billion USD on a fully diluted basis. This round of financing is co-led by Hudson Bay Capital, JNJ Innovation, and Lily Asia Ventures, other participating investors included Capital Group, Vivo Capital, and RA Capital. These pre-IPO investors can also choose to invest more into Legend at the IPO stage. This is endorsement for Legend's technology and commercial potential in the future.
Business Highlights - Life Sciences, Biologics CDMO, Industrial Synthetic Biology
In addition to Legend Biotech's progress in the cell therapy segment, GenScript's other segments continued to grow steadily.
GenScript's life science services and products segment, as the traditional business of the Company, remains a strong and stable revenue source for the overall business. GenScript has maintained its position as one of the world's largest molecular biology CRO companies. In 2019, the Company continued to focus on successful commercial operations in synthetic biology. The Company has grown its commercial operations by establishing sites in Europe and Asia Pacific, organizing a new management team and a local team, building its brand and launching an online service platform. The Company expanded its gene synthesis throughput by 50% through investments in automation and maintained its number one market share position globally. Commissioning the production facility in Zhenjiang, along with the automated peptide production line, boosted production capacity.
By the end of 2019, revenue from life science services and products segment was approximately US$170.4 million, representing an increase of 20.9% as compared with approximately US$141.0 million for the year ended December 31, 2018. During the same period, the gross profit was approximately US$110.6 million, representing an increase of 15.7% as compared with approximately US$95.6 million for the year ended December 31, 2018.
In the biologics CDMO segment, the Company entered into significant collaborations at home and abroad and leveraged its R&D strength to efficiently expand capacity. Bringing in Berkeley Lights optofludic single cell platform, the company became the first CDMO in Asia Pacific to apply this global leading digital cell biology technology in the antibody development technology service. In late 2019, China's largest plasmid and virus facility for clinical sample production began operations. During the reporting period, revenue from the biologics CDMO business was approximately US$22.5 million, representing an increase of 8.7% as compared with approximately US$20.7 million for the year ended December 31, 2018. During the same period, the gross profit was approximately US$7.0 million, representing a decrease of 20.5% as compared with approximately US$8.8 million for the year ended December 31, 2018. Total backlog for biologics development services increased by 172.9% from US$18.1 million from the year ended December 31, 2018 to US$49.4 million for the year ended December 31, 2019.
The Industrial synthetic biology products business continued its rapid growth. In 2019, the Company launched several innovative products and entered the bio-synthesis market, shifted its marketing strategy from a product seller to a solution provider in order to expand market share, and optimized the production process for cost reduction and quality improvement. During the reporting period, revenue from industrial synthetic biology products was approximately US$23.1 million, representing an increase of 30.5% as compared with approximately US$17.7 million for the year ended December 31, 2018. Excluding impact from foreign currency conversion, constant currency revenue increased by 34.6%. During the same period, the gross profit was approximately US$5.3 million, representing an increase of 112.0% as compared with US$2.5 million for the year ended December 31, 2018.
In January 2020, GenScript hosted the GenScript Biotech Global Forum during the J.P. Morgan Healthcare Conference in San Francisco, drawing thousands of attendees. According to media coverage, "At the top global industry event, GenScript's role has changed from an attendee to a speaker to an independent sponsor… As an emerging innovative pharmaceutical company in China, GenScript is narrowing the gap in terms of global biological innovation… As China's innovation ecosystem continues to improve, 'China's rising power' will stand the test of time."
The life science services and products segment, GenScript's traditional business, has significant growth opportunities around the world. GenScript will focus on expanding its industrial customer base, relying on the Europe and Asia Pacific Divisions to support global expansion, investing in automation to improve CRO business efficiency, and leveraging its leading R&D strength to develop higher industry standards.
The company's cell therapy segment will focus on moving the BCMA program towards commercialization in last line R/R MM patients and clinical trials in earlier line MM treatment. The next-generation cell therapy pipeline will target malignant hematological tumors, solid tumors and infectious diseases, using autologous and allogeneic CAR-T technology. This will create new growth potential for Legend Biotech and help grow the business to become the world's leading biopharmaceutical company.
GenScript's Biologics CDMO segment has become a new growth driver of the Company. With well-defined strategic positioning, GenScript's CDMO segment focuses on biologics CDMO and gene and cell therapy CDMO. The Company's planned and implemented construction projects are intended to increase the GMP capacity to meet the manufacturing requirements of Phase I/II/III clinical trials and commercialization, to offer end-to-end biologics CDMO services to customers, and to make the Company a leading biologics and gene and cell therapy CDMO provider.
For the industrial synthetic biology products segment, the Company will continue to focus on industry key accounts, optimizing capacity, and combining R&D and applications to maintain rapid growth.
"GenScript aims to be one of the leaders in global gene and cell therapy in five years, while maintaining our leadership and commitment to our fundamental business of gene synthesis technology. In the next decade, our main course business will focus on biologics CDMO, cell and gene therapy, life science services and products, and bio-enzyme and synthetic biology products. To this end, we must invest resolutely. To make breakthroughs in the most prospective cell therapy for cancer treatment and even get far ahead, a Chinese biotech company must be committed to bold continued investment," said Dr. Zhang Fangliang.
About GenScript Biotech Corporation
GenScript Biotech Corporation (Stock Code: 1548.HK) is a global biotechnology group. Based on its leading gene synthesis technology, GenScript has developed four major platforms including the leading contract research organization (CRO) platform that offers one-stop solutions to global life science research, the integrated global cell therapy platform, the biologics contract development and manufacturing organization (CDMO) platform, and the industrial synthesis product platform.
GenScript was founded in New Jersey, US in 2002 and listed on the Hong Kong Stock Exchange in 2015. It is headquartered in Nanjing, China. GenScript's business operation spans over 100 countries and regions worldwide with legal entities located in the US, Mainland China, Hong Kong, Japan, Singapore, Netherlands and Ireland. GenScript has provided premium, convenient, and reliable products and services for over 100,000 customers.
GenScript has more than 3,700 employees globally as of the end of 2019, 37% of whom hold master's and/or Ph.D. degrees. In addition, GenScript has a number of intellectual property rights and technical secrets, including more than 100 patents and over 270 patent applications. As of December 31, 2019, GenScript's products and services have been cited by 42,200 peer-reviewed journal articles worldwide.
Driven by the corporate mission of making human and nature healthier through biotechnology, GenScript consistently strives to become the most trustworthy biotech company in the world.
For more information, visit GenScript's official website https://www.genscript.com.
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