Net Profit Surged by 193.5% YOY to approx. RMB265.9 million;
Accelerating the Integration of Innovative Drugs Industrial Chain
Viva Biotech Holdings (the “Group” or “Viva Biotech”; stock code: 1873.HK), announced its annual results for the twelve months ended 31 December 2019 (the “Reporting Period”). During the Reporting Period, the Group’s innovative twin drivers of cash-for-service (CFS) business and equity-for service (EFS) business contributed to each other to secure remarkable progress, driving the Group’s revenue to increase significantly to RMB323.1 million from RMB210.0 million for the corresponding period last year, representing a year-on-year (“YOY”) increase of 53.9%. And its net profit increased by 193.5% to RMB265.9 million from RMB90.6 million for the corresponding period last year.
Financial Highlights
For the year ended December 31, 2019
– Revenue amounted to approximately RMB323.1 million, representing a significant YOY increase of 53.9% from approximately RMB210.0 million in the same period last year.
– Gross profit amounted to approximately RMB155.9 million, representing a significant YOY increase of 47.8% from approximately RMB105.5 million in the same period last year.
– Net profit increased to approximately RMB265.9 million, representing a significant YOY increase of 193.5% from RMB90.6 million in the same period last year.
– Adjusted non-IFRS net profit increased to approximately RMB318.0 million, representing a significant YOY increase of 134.7% from RMB135.5 million in the same period last year.
– Adjusted non-IFRS diluted earnings per share increased to HK$0.24 from HK$0.13 in the same period last year.
– The Board has recommended the payment of a final dividend of HK$0.015 per share.
Significant Growth in CFS Business with a Further Diversified Customers Structure
Leveraging on its leading structure-based early stage drug discovery technology platforms, the Group’s CFS business maintained vigorous growth in 2019, delivering more than 13,700 protein structures and more than 1,200 independent drug targets to customers. During the Reporting Period, revenue from the CFS business increased significantly to RMB245.6 million from RMB154.7 million for the corresponding period last year, representing a YOY increase of 58.8%. The Group had provided drug discovery services to more than 438 biotechnology and pharmaceutical customers worldwide including nine out of the ten largest global pharmaceutical companies (in terms of revenue in 2019) and 29 companies named in the Fierce Biotech Top 15 Promising Biotechs; the contract amount of customer orders reached approximately RMB349.0 million, up by 91.8% YOY. In particular, revenue generated from repeat customers accounted for 81.5% of the total revenue. Total revenue contributed by the top ten customers increased to RMB125.3 million in 2019 from RMB91.0 million for 2018, up by 37.7%, while total revenue from top ten customers as a percentage of the Group’s total revenue decreased from 43.3% to 38.8%, reflecting the Group’s ever-growing customer base and a diversified customer structure.
Rapid Expansion in EFS Business to Achieve Initial Success in Establishing Ecosystem
During the Reporting Period, revenue generated by EFS business amounted to RMB77.5 million, representing a YOY increase of approximately 40.0%. With received and reviewed 635 early-stage projects in 2019, the Group added 19 startups to the incubation portfolio companies, made additional investments in two of existing incubation portfolio companies and was in negotiation for investment in three new companies. At the same time, the Group also disposed partial equity interests in two incubation portfolio companies, namely Weimou Biotech (Shanghai) Co. Ltd. and Proviva Therapeutics, INC. During the Reporting Period, these new investment projects covered more frontier, diversified fields, and a greater geographical distribution. For example, the Group has expanded the portfolio coverage of biological macromolecules, genes and cell therapies. By establishing and improving the post-investment management system, as well as deepening cooperation with scientific research institutes, incubators in the global biopharmaceutical field and venture capitals, the Group’s EFS business foundation has been further strengthened.
Strengthening Technology and Incubation Platforms Capability While Expanding Human Resources and Facilities Scale
In aspects of technology platforms, in addition to continuously optimizing the existing eight technology platforms including structure-based drug discovery (SBDD) platform, fragment-based drug discovery (FBDD) platform, affinity selection mass spectrometry (ASMS) screening platform and membrane protein targeted drug discovery platform, the Group is actively building new technology platforms such as Cryo-EM and Computational Chemistry, being committed to further expanding in technology fields such as new drug discovery in terms of bio-macromolecules and biological detection. During the Reporting Period, the Group’s new laboratory and office premise in Zhangjiang High-Tech Park, Shanghai was expanded by approximately 8,000 square meters and primarily caters for the increasing demand of CFS customer orders. Another newly constructed modern scientific research and production center in Chengdu, covering an area of approximately 50 mu, will integrate new drug R&D, commercialization and production.
In 2019, the Group attracted 6 top-tier scientists and professionals from the People’s Republic of China (“PRC”) and overseas to join as business partners, bringing the total number of business partners to over 20 and constantly strengthening the Group’s core capacities to assess project value and the professional barriers in R&D activities. Additionally, employees of the Group increased from 486 as of the same period last year to 731, 614 of whom are R&D staffs.
Promoting the Integration of Innovative Drugs Industrial Chain and Improving the Group’s Service Offerings
Looking forward, the Group will accelerate its strategic cooperation with quality CMO/CDMO companies by vertically integrating new drug discovery, R&D and production platforms in the industry service chain, so as to rapidly improve the service offerings of the Group, enhance the incubation capability of the EFS business and attract more CFS customers. Meanwhile, through strategic investment in a number of funds and professional platforms along the entire industrial chain, the Group’s incubation portfolio and its diversity, adaptability, variety and risk resilience will be further strengthened.
Dr. Cheney Mao, Chairman, Chief Executive Officer and Executive Director of Viva Biotech Holdings said: “Since our listing on the Hong Kong Stock Exchange in May 2019, Via Biotech has been continuously focusing on consolidating its technological advantages and strengthening its competitiveness in the capital market. Nowadays the global innovative drug market has witnessed vibrant growth and China’s contract research organization (CRO) industry has entered a golden stage of high-speed and high-quality development, especially the surged demands for early preclinical drug R&D outsourcing services. The Group will capture such historical opportunities to proactively capture quality customers and biotech companies with high potentials at the early R&D stage of new drugs, build up and continuously raise technology barriers and expand and integrate industrial chain through improving operational efficiency, strengthening talent recruitment and enhancing platform capability, with an aim to establish an virtuous cycle of win-win cooperation, thereby achieving sustainable and high-quality growth, bringing long-term value to investors and striving for maximum returns.”
About Viva Biotech Holdings
Viva Biotech’s mission is to become a cradle for innovative biotechnology companies around the world. Viva Biotech has developed a scalable business model combing the conventional cash-for-service (CFS) model and its unique equity-for-service (EFS) model. Under the CFS model, the Group provides structure-based drug discovery services to its biotechnology and pharmaceutical customers worldwide for their pre-clinical stage innovative drug development, covering the full spectrum of the customers’ needs for early stage drug discovery, including target protein expression and structure research, hit screening, lead optimization and drug candidate determination. Viva Biotech also provides drug discovery and incubation services to biotechnology start-up companies with high potential under its EFS model. As of December 31, 2019, Viva Biotech had provided drug discovery services to 438 biotechnology and pharmaceutical customers worldwide, worked on over 1,200 independent drug targets, delivered over 13,700 independent protein structures, and incubated a total of 46 early stage R&D projects.