Revenue and Gross Profit with Steady Growth
Competitive Advantages of One-stop Platform Continuously Demonstrating

Financial highlights of the year ended December 31, 2022:

• Revenue amounted to RMB2,379.6 million, representing a year-on-year (YoY) increase of 13.1%
• Gross profit amounted to RMB815.7 million, representing a YoY increase of 25.3%

HONG KONG, March 31, 2023 /PRNewswire/ -- On March 30, 2023, Viva Biotech Holdings (1873.HK) announced that during the year ended December 31, 2022 (the "Reporting Period"), the revenue of the Group increased to RMB2,379.6 million from RMB2,104.1 million for the corresponding period last year, representing a YoY increase of approximately 13.1%. The gross profit increased from RMB651.0 million for the corresponding period last year to RMB815.7 million, representing a YoY increase of approximately 25.3%. The Group recorded an adjusted net loss of RMB133.9 million. This was mainly affected by various factors including the decline in personnel utilization rate due to the resurgence of COVID-19 in mainland China, fair value changes in our portfolio companies as a result of market fluctuations, and to some extent, the cultivation of our early-stage new businesses.

CRO Business to Ride on its Significant Competitive Edges for Steady Growth Outlook in the Long Run

In 2022, the Company's revenue from CRO business increased by approximately 20.9% from RMB740.5 million for the corresponding period of last year to RMB895.1 million. The growth rate of CRO business in 2022 slightly lagged compared with the corresponding period of last year due to the persistent rage of COVID-19 in mainland China in the first half of the year, a strategic adjustment in the EFS business and the impact from a global biopharmaceutical investment and financing slowdown. Despite the relatively challenging external situation, the company still maintained a relatively stable growth trend.

From the long-term perspective, the Company's order backlog amounted to approximately RMB1,050.0 million, representing an increase of approximately 8.8% from RMB965.0 million for the corresponding period of last year. Although the growth of our order backlog was affected to some extent by the global biopharmaceutical investment and financing slowdown and a strategic adjustment in the EFS business, the Company expects to grow the number of orders by strengthening its efforts in securing new clients globally in future. In the future, as the impact of the pandemic gradually subsides, the Company will also strengthen its business development team building, proactively implement the integration strategy for biological and chemical segments, and establish active presence in emerging technology platforms to fuel sustainable growth of its CRO business.

The Company had delivered more than 48,925 protein structures to clients, approximately 14,534 of which were newly delivered in 2022, and conducted R&D on over 1,878 independent drug targets, 68 of which were newly delivered in 2022. In addition, the Company will sharpen market competitiveness of its chemical business in future, seeking to maximize the value of existing clients through the synergistic development of biological and chemical segments while securing large orders from pharmaceutical giants to further increase market share of its chemical business. The cumulative number of clients served had increased to 1,224, including the global top 10 pharmaceutical companies (by reported total revenue for 2022), and revenue from the top ten clients accounted for 24.6% of our total revenue. Clients of our CRO business are geographically diverse, of whom those from overseas contributed approximately 85.4% of our total revenue, representing a year-on-year increase of approximately 23.2%, and those from mainland China contributed approximately 14.6% of our total revenue, representing a year-on-year increase of approximately 9.0%.

During the Reporting Period, our utilization of synchrotron radiation source reached 2,064 hours. The Company established long-term cooperation with 12 synchrotron radiation source centers around the world, which are distributed in nine countries/regions, i.e., Shanghai, China, the United States, Canada, Japan, Australia, the United Kingdom, France, Germany and Taiwan, China, thus guaranteeing uninterrupted data collection all year round.

Improving CDMO Capacity Building and Ramping up CMC Revenue

During the Reporting Period, the Group made great efforts to strengthen the strategic integration with Langhua Pharmaceutical. On the one hand, the Group intensified the construction of chemistry, manufacturing and control ("CMC") R&D centers and continued to facilitate the layout and materialization of new production capacity; on the other hand, the Group strengthened client outreach and business development activities for business growth.

Langhua Pharmaceutical's revenue amounted to RMB1,484.6 million, representing a year-on-year increase of approximately 8.9%; and its gross profit amounted to RMB418.3 million, representing a year-on-year increase of approximately 35.5%. This was mainly attributable to a significantly higher growth of gross profit than that of revenue, driven by volume expansion of core business pipelines, production capacity recovery of plants and normalized production and delivery of key CDMO clients, as well as the positive factors in product structure optimization during the Reporting Period. As of December 31, 2022, Langhua Pharmaceutical had served a total of 852 clients, with the top ten clients accounting for 56.0% of its total revenue, suggesting constant improvement in client revenue structure.

In respect of capacity building, T10 plant started normal operation and is able to support revenue growth of our API business. At present, our total available capacity reached 860 cubic meters. In addition, Langhua Pharmaceutical plans to build a new production capacity of 400 cubic meters in 2024, and has started the relevant ground construction work. These capacity additions will provide adequate support to our future revenue growth.

In respect of CMC, we ramped up the construction of R&D centers and continued to increase R&D personnel. A CMC R&D center of approximately 10,000 square meters has been fully put into use. The center is located in the Group's headquarters in Zhoupu, Shanghai, and contains a 3,000-square-meter GMP pilot plant for formulation development. Nearly 123 new drug projects have been completed or are in progress since the establishment of CMC. As at the end of the Reporting Period, the number of CMC R&D personnel had reached 155; and the CMC business had generated revenue of nearly RMB50.0 million although it is still in a loss-making early stage. In the future, with the gradual increase in revenue, we expect the CMC business will eventually achieve break-even.

EFS Investment & Incubation Business: Establishment of Investment Funds in Future

During the Reporting Period, the Company reviewed a total of over 455 projects globally, added 4 start-ups to our portfolio companies, made new investments in 2 funds and made additional investments in 9 existing portfolio companies. As of December 31, 2022, the Group had invested in a total of 91 portfolio companies. The portfolio companies are mainly from the United States, Canada, Europe and China. 68% of the portfolio companies are from North America and 25% are from China.

In 2022, 10 of our portfolio companies completed or was close to completing a new round of financing, raising approximately US$158.0 million in total. The R&D efforts of the portfolio companies were advancing smoothly, with the total number of pipeline projects reaching close to 215, of which 179 pipelines are in the preclinical stage and 36 pipelines in the clinical stage. At present, the Group has successfully realized 9 investment exits or partial exits, and may have an additional 11 potential exits for our portfolio companies in the next one to three years. In addition, the Company is proactively applying for a fund manager license in the PRC, and intends to conduct incubation business through the establishment of investment funds in future.

Technology Highlights and R&D Breakthroughs

During the Reporting Period, the Group's R&D spending was RMB135.8 million, representing a year-on-year increase of 47.0% from RMB92.4 million for the year ended December 31, 2021. For our CRO business, we have built several core technology platforms, including: the PROTAC technology platform, protein production, preparation and structure biology platform, Cryo-EM technology platform, membrane protein research technology, hit discovery platform, bioassay platform, computer-aided drug design (CADD) and artificial intelligence in drug discovery (AIDD), medicinal chemistry, etc.

The Company also provides services relevant to PROTAC drug R&D, and revenue generated in this regard accounted for almost 10.2% of total revenue from CRO business. Our services primarily include studies on protein preparation and structure, high-throughput screening of PROTAC molecules, kinetics, drug metabolism, pharmaceutical chemistry, bioassay, CADD, etc. As of December 31, 2022, the Company had conducted research into over 50 E3 ligase structures and delivered over 100 target protein – PROTAC-E3 ligase ternary compound structures. It is expected that PROTAC business will add fresh impetus to the sustainable growth of CRO business in the future.

From the perspective of current progress of computer-aided drug design (CADD) platforms, CADD is based on physical chemistry models and empowered by artificial intelligence algorithms with the aid of supercomputing clusters has been widely used in various drug R&D stages. Our Computational Chemistry Department has developed a series of advanced algorithms (such as FEP), which support more targeted optimization against actual problems compared to traditional computational chemistry tools and commercial software packages, thus facilitating the progress of drug R&D projects efficiently.

Staff and Facilities

As of December 31, 2022, the Group had a total of 2,601 employees, of whom the number of CRO R&D personnel reached 1,617. The Company has been accelerating the construction of office and laboratory facilities in line with its workforce expansion plans and expanding production capacity to meet the fast-growing business needs

• The Group's new headquarters in Zhoupu, Shanghai with a total area of approximately 40,000 square meters completed its completion ceremony on November 10, 2022, and had been put into full operation as at the end of the Reporting Period.
• The incubation center located in Faladi Road, Shanghai covering approximately 7,576 square meters has been put into full operation, including 5,552 square meters of laboratory area.
• The park with a total GFA of 64,564 square meters in Chengdu has been completed, of which 12,000 square meters of properties had been partially put into use as at the end of the Reporting Period, including 10,590 square meters of laboratory area.
• For the novel drug incubation center with a planned GFA of approximately 77,500 square meters in Qiantang New District, Hangzhou, we will consider several potential construction options in future.
• A park with a GFA of approximately 7,169 square meters in Suzhou, including nearly 3,250 square meters of laboratory area.
• Shanghai Supercomputing Center has passed acceptance in December 2022, and has been officially put into operation. At present, it can support computer aided drug design (CADD) calculation, artificial intelligence in drug discovery (AIDD) related calculation, and crystal structure and Cryo-EM (Micro-ED) calculation.

Dr. Cheney Mao, Chairman and Chief Executive Officer of Viva Biotech Holdings, said, "With unique advantages in structure-based drug discovery (SBDD), the Company continue to increase the cross-promotion between biology and chemistry businesses and strengthen the construction of a one-stop drug R&D and manufacturing service platform, deepen the synergy between CRO and CDMO business, improve the capacity building for front-end projects to increase the funnel effect, accelerate back-end direction of customer traffic, and actively build an open cooperation platform and win-win ecosystem for biomedical innovators around the world."

About Viva Biotech Holdings

Established in 2008, Viva Biotech (01873.HK) provides one-stop services ranging from early-stage structure-based drug R&D to commercial drug delivery to global biopharmaceutical innovators. We offer leading early-stage to late-phase drug discovery expertise by integrating our dedicated team of experts, cutting-edge technology platforms, and state-of-the-art equipment in X-ray crystallization, Cryo-EM, ASMS, SPR, HDX, CADD, and much more. Our business covers all aspects of therapeutic strategies and drug modalities, including small molecules and biologics across the pharma and biotech spectrum. The experienced chemistry team, led by senior medicinal chemists and drug discovery biologists, provides services for drug design, medicinal chemistry (hit to lead and lead optimization), custom synthesis, chemical analysis and purification, kilogram scale-up, peptide synthesis and corresponding bioassays. With our subsidiary, Langhua Pharma, we offer our worldwide pharmaceutical and biotech partners a one-stop integrated CMC (Chemical, Manufacturing, and Control) service from preclinical to commercial manufacturing. Additionally, Viva embedded an equity for service (EFS) model to high potential startups to address unmet medical needs.

As of December 31, 2022, Viva Biotech has provided drug R&D and production services to 2,076 biotech and pharmaceutical clients around the world. We have invested and incubated 91 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.

Source: Viva Biotech Holdings Related Stocks: HongKong:1873