Non-Cell Therapy Achieved 31.4% Adjusted Net Profit Growth
Cell Therapy Business Revenue Surged By 70%

• Revenue of the Group for the year ended December 31, 2022 was approximately US$625.7 million, representing an increase of 27.7% as compared with approximately US$490.1 million for the year ended December 31, 2021.
• The external revenue for non-cell therapy business was approximately US$509.0 million, representing an increase of 19.8% as compared with approximately US$424.7 million for the year ended December 31, 2021.The external revenue for cell therapy business was approximately US$116.7 million, representing an increase of 78.4% as compared with approximately US$65.4 million for the year ended December 31, 2021.
• The adjusted net profit of non-cell therapy business before eliminations was approximately US$62.4 million, representing an increase of 31.4% as compared with approximately US$47.5 million for the year ended December 31, 2021, and the adjusted net loss of cell therapy business before eliminations was approximately US$422.1 million, whilst the adjusted net loss of cell therapy business was approximately US$372.4 million for the year ended December 31, 2021.

NANJING, China, March 31, 2023 /PRNewswire/ -- GenScript Biotech, the world's leading biotech company, today announces its annual results as of December 31, 2022.

In times of macroeconomic challenges, GenScript Group continued to deliver strong growth in 2022. "The Group has maintained growth momentum across the business portfolio under long-term strategy. Benefiting from our insights into the industry and continuous investment in R&D and production processes, our life science business saw steady growth by offering diversified life science services and products. This has positioned us as a reliable life science partner for customers. In biologics CDMO business, our antibody and protein CDMO and GCT CDMO services continued rapid growth. Our proven one-stop solutions helped ProBio drive significant share gain. Our industrial enzyme business reported improved profitability, driven by enhanced R&D and sales capabilities. Also, we are exploring new opportunities in the synthetic biology field. In cell therapy business, Legend Biotech, along with its partner Janssen, has successfully commercialized CARVYKTI. We are also moving forward on other pipelines," said Ms. Sherry Shao, Rotating CEO of GenScript.

Ms. Shao added, "Our success is enabled by customer trust, our global high-caliber team, and support from our investors. I would like to express my heartfelt gratitude again. We are confident that we will deliver on our commitment to "make people and nature healthier through biotechnology."

Results Analysis of the Four Business Segments

As the Group has reallocated back office administrative expenses into each business segment following the establishment of Probio legal entities in the second half of 2021, segment operating profit is not directly comparable to the same period in 2021. The adjusted expenses exclude the impact from (i) share-based compensation expenses, (ii) consultation and other related costs for the Investigation, and (iii) service fees and other costs for equity financing activities.

Life-science services and products

During the Reporting Period, revenue from life-science services and products was approximately US$360.5 million, representing an increase of 14.2% as compared with approximately US$315.8 million for the year ended December 31, 2021. The adjusted gross profit was approximately US$201.1 million, representing an increase of 8.0% as compared with approximately US$186.2 million for the year ended December 31, 2021. The adjusted gross profit margin decreased slightly from 59.0% for the same period in 2021 to 55.8% this Reporting Period. The adjusted operating profit of life-science services and products was approximately US$66.1 million.

The increase in revenue was driven by a combination of (i) the increased demand in each of the segment's principal businesses with particular strength in molecular biology, protein and antibody business, and (ii) the successful commercialization of innovative platforms such as sgRNA, and was partially offset by the decreased demand for testing to diagnose COVID-19. The decrease in adjusted gross profit margin was primarily attributable to the (i) increment in labor, overhead and facility cost related to overseas site operation, (ii) increased freight and duty costs, and (iii) changes in product portfolio strategy. The adjusted operating profit was positively impacted from operational efficiency, while negatively impacted by increased research and development efforts focused on the enhancement to existing services and development of new products.

Biologics development services

During the Reporting Period, revenue from biologics development services was approximately US$125.0 million, representing an increase of 53.6% as compared with approximately US$81.4 million for the year ended December 31, 2021. The backlog increased to US$233.3 million as at December 31, 2022, with a growth at 18.2%. The adjusted gross profit was approximately US$42.8 million, representing an increase of 54.5% as compared with approximately US$27.7 million for the year ended December 31, 2021. Adjusted gross profit margin kept stable in the two years. The adjusted operating loss of biologics development services was approximately US$1.1 million.

The growth of revenue and adjusted gross profit was mainly attributable to the (i) increase in the number of projects from protein and antibody drug development, and plasmid, (ii) expanded capacity and increased capacity utilization rate in process development and manufacturing, and (iii) continuously shortened delivery timeline.

Industrial synthetic biology products

During the Reporting Period, revenue from industrial synthetic biology products was approximately US$38.7 million. The adjusted gross profit was approximately US$16.6 million, representing an increase of 46.9% as compared with approximately US$11.3 million for the year ended December 31, 2021. Adjusted gross profit margin increased from 29.3% for the same period in 2021 to 42.9% this Reporting Period. The adjusted operating profit of industrial synthetic biology products was approximately US$2.9 million whilst it just arrived operating break-even for the same period in 2021.

The increase in both adjusted gross profit and adjusted operating profit was primarily attributable to the (i) adjustment of product portfolio and enhancement of the promotion of high-margin products, together with active pruning of low or negative profit products, (ii) upgrade of the workflow and improvement of production process, and (iii) profit from the license of certain patents.

Cell therapy

During the Reporting Period, revenue from cell therapy segment was approximately US$117.0 million, representing an increase of 70.0% compared to approximately US$68.8 million for the year ended December 31, 2021. The increase in revenue was primarily attributed to the collaboration revenue involving the commercial launch of CARVYKTI in the U.S.. On February 28, 2022 the FDA approved CARVYKTI for adults with relapsed or refractory patients with MM who have received four or more prior lines of therapy. CARVYKTI has received conditional marketing authorizations from European Commission in May 2022 and approval from Japan's Ministry of Health, Labour and Welfare for the treatment of adults with relapsed or refractory multiple myeloma limited to cases meeting certain conditions on September 26, 2022.

During the Reporting Period, the operating loss of approximately US$458.1 million whilst the operating loss for the same period in 2021 was approximately US$394.0 million. The continued investment in research and development costs of approximately US$335.6 million during the Reporting Period compared to approximately US$313.3 million for the same period in 2021 is the primary driver of the operational expenditures as Legend focused on investment in early lines of therapy for cita-cel as well as progressing Legend's pipeline. Additionally, incurred approximately US$93.4 million in selling and distribution expenses and approximately US$80.6 million in administrative expenses during the Reporting Period compared to approximately US$102.5 million and approximately US$47.0 million, respectively, for the same period in 2021. Also, incurred approximately US$65.4 million during the Reporting Period towards cost of collaboration revenue to support the commercial supply of CARVYKTI.

FINANCIAL REVIEW

Revenue

In 2022, the Group recorded revenue of approximately US$625.7 million, representing an increase of 27.7% from approximately US$490.1 million in 2021. This was primarily attributable to (i) the stable market share growth and brand awareness of non-cell therapy business with new competitive services and products, especially in biologics development services, and (ii) the product sales of CARVYKTI after the commercialization approval from the FDA.

Gross Profit

In 2022, the Group's gross profit increased by 7.6% to approximately US$304.1 million from approximately US$282.5 million in 2021. The increase in gross profit was primarily attributable to the expansion of the revenue, and was partially offset by (i) the increased share-based compensation expenses in production teams, particularly in biologics development services, (ii) the adjustment of product and service portfolio, and (iii) the increased shipping cost. The adjusted gross profit increased by 10.1% over the same period in 2021.

Selling and distribution expenses

The selling and distribution expenses was approximately US$168.3 million in 2022, roughly unchanged over the same period in 2021.

Administrative expenses

The administrative expenses increased by 35.7% to approximately US$182.5 million in 2022 from approximately US$134.5 million in 2021. This was mainly caused by (i) the increased investment on talent with recruiting experienced personnel with competitive package and share-based compensation expenses for all business segments, (ii) the reinforcement of some key administrative functions and information technology infrastructure to support the Group's overall business, and (iii) the enhanced corporate governance and compliance measures. The adjusted administrative expenses increased by 34.1% over the same period in 2021.

Research and development expenses

The research and development expenses increased by 8.8% to approximately US$390.1 million in 2022 from approximately US$358.4 million in 2021. This was mainly due to the continued investment in talents with competitive package and share-based compensation expenses. The adjusted research and development expenses increased by 7.2% over the same period in 2021.