Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Genscript Biotech Corp (GNNSF, Financial) reported a strong top-line growth with a 43.5% increase in gross revenue, reaching approximately USD 561.4 million.
- The company significantly narrowed its adjusted net loss to about USD 79 million, showcasing improved financial performance.
- Genscript Biotech Corp (GNNSF) has strengthened its intellectual property position with over 350 patents and more than 1,000 patents in the application process.
- The Life Science Group achieved a 9.5% growth in external revenue, driven by enhanced synergy between gene synthesis and protein services.
- Legend, a segment of Genscript Biotech Corp (GNNSF), achieved a 156% year-over-year revenue growth, driven by strong demand for CARVYKTI and capacity expansion.
Negative Points
- ProBio, the biologic CDMO segment, experienced a decline in external revenue to USD 37.1 million due to headwinds in the biotech funding environment.
- The adjusted gross profit margin for ProBio dropped significantly due to price erosion and low capacity utilization.
- The geopolitical tensions have impacted the company's business, particularly in the US market, causing a temporary drop in orders.
- Genscript Biotech Corp (GNNSF) took a USD 37 million impairment on long-term assets and a USD 113 million fair value loss from ProBio preferred shares.
- The company faces challenges in maintaining profitability in the ProBio segment due to increased depreciation and operating costs from new capacity expansions.
Q & A Highlights
Q: Can you provide updates on the briefing request by the FLAG House committee and any potential changes in Legend's shareholding due to geopolitical tensions?
A: Sherry Shao, Rotating CEO, stated that the company has engaged external resources for legal, government affairs, and public relations to review operations and supply chain protections. They have not received further requests from administrative agencies and do not believe they pose a national security concern. Robin Meng, Chairman of the Board, emphasized Legend's value and the board's commitment to shareholder interests.
Q: What are the plans to turn around the non-cell therapy business, particularly ProBio, given the growth in cell therapy?
A: Shiniu Wei, CFO, explained that while ProBio offset growth from other segments, they have observed a turnaround in new orders and expect sequential improvement in ProBio revenue in the second half. They anticipate continued growth in non-cell therapy businesses in 2025.
Q: Can you elaborate on the revenue and cost synergy between cell therapy and non-cell therapy businesses?
A: Shiniu Wei, CFO, noted that there is minimal cross-selling between GenScript's non-cell therapy business and Legend. They are making Legend operations more independent to safeguard shareholder value. The company leverages its experience to serve other cell and gene therapy customers.
Q: Is the 40% revenue growth trend in the industrial synthetic segment sustainable?
A: Shiniu Wei, CFO, indicated that the growth is driven by a key account strategy and international market expansion. They expect a 25% to 35% growth rate to continue.
Q: What is the demand and order situation for Life Science and ProBio from overseas customers, and how are geopolitical concerns being addressed?
A: Sherry Shao, Rotating CEO, mentioned a drop in June, particularly in the US market, due to geopolitical concerns. However, after clarifying issues with customers, they observed stronger growth momentum in July.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
