Prologue: As mentioned earlier, the analysis of WuXi AppTec's performance is mainly analyzed from three major businesses, namely CRO business, CDMO business, and cell and gene therapy, because these three major businesses account for the highest proportion, of which CDMO business accounts for the highest proportion of about 40%, with reference to the 2021 semi-annual report, as shown below
Originally, in my research methodology, I only valued the above three major businesses (CRO business, CDMO business, and cell and gene therapy) and predicted CRO growth/CDMO growth/cell and gene therapy growth/, but due to changes in WuXi AppTec's accounting policy, the data changes were huge and difficult to study, so I had to re-analyze and study the company's fundamentals.
The first point: the number of employees changes
Employees continue to increase steadily, the side proves that the company's expansion further increased, in the half year of 2021, that is, three months ago, the total number of employees was 28542, master's degree above 9179, doctoral degree above 1149, in the third quarter, the total number of employees 33305, master's degree above 10643, doctoral 1184, you know, another pharmaceutical company in China, Hengrui Pharmaceutical, has recently been laying off employees, so the judgment is high.
The second point: performance data analysis
In the second quarter of 2021 and before that, the Group will mainly identify each operating segment in the form of segment information disclosure based on laboratory services in China, laboratory services in the United States, clinical research and other contract research and development services, small molecule new drug process research and production business and other businesses. From the third quarter of 2021, in order to improve the quality of information disclosure and provide more relevant segment financial information to users of the statements, the Company decided to use the chemical business (WuXi Chemistry), biology (WuXi Biology), testing business (WuXiTesting) in accordance with the "Accounting Standard for Business Enterprises No. 35 - Division Report", "Accounting Standard for Business Enterprises Interpretation No. 3" and the requirements of the Company's internal management. The Cell and Gene Therapy CTDMO business (WuXi ATU), the Domestic New Drug Research and Development Service (WuXi DDSU) and other businesses disclose information as operating segments.
The operating segments after the change in accounting policy are mainly divided into: (1) Chemical Business (WuXi Chemistry): Integrating resources and capabilities related to chemical businesses such as Hequan Pharmaceuticals, Chemical Services, International Service department of Drug Discovery and Core Analysis to provide customers with new drug research, development and production services (CRDMO); (2) Biology business (WuXi Biology): Integrating the Group's cutting-edge DNA coding compound library (DEL) technology, biology, Oncology and immunology capabilities to provide integrated drug discovery and research services to customers worldwide ;(3) Testing business (WuXi Testing): Integrating the Group's preclinical and clinical resources and capabilities such as Testing Division, Kant Hongyi (CDS business), WuXi Jinshi (SMO business) to better serve customers worldwide in pharmaceuticals, biopharmaceuticals, medical devices, and in vitro diagnostic reagents; (4) Cell and Gene Therapy CTDMO business (WuXi). ATU): Using the resources and capabilities of China, the United States and the United Kingdom to provide customers with integrated services for the development, production and testing of cell and gene therapy products (CTDMO); (5) Domestic New Drug Research and Development Service Department (WuXi DDSU): Based on customer needs, provide customers with integrated new drug research and development services with patent creation as the core, develop small molecule new drugs with international high level, and empower domestic pharmaceutical companies to research; (6) Other businesses: mainly including administrative service revenue, Income from the sale of raw materials and the sale of scrap.
(1) WuXi Chemistry achieved revenue of RMB3,651,400,300,300, compared with rmb2,740,022,900 in the same period in 2020, an increase of 33.3% year-on-year, of which revenue from small molecule drug discovery services was RMB1,616,063,400, an increase of 37.1% year-on-year, and CDMO service revenue was RMB2,035,336,900, an increase of 31.5% year-on-year. The company gives full play to the advantages of process development technology and firmly promotes the strategy of "following molecules". In terms of small molecule drug discovery services, the company completed the synthesis of about 200,000 compounds from January to September 2021, empowering early small molecule new drug development customers and becoming an important "traffic entrance" for the company's downstream business units. By building close partnerships with customers in the drug discovery and early clinical phases, the company continues to bring new late-stage and commercialization projects to the company, contributing to the company's continued rapid growth in CRDMO services revenue. During the reporting period, the Company's CDMO service program involved 1,548 new drug molecules, including 47 in Clinical Phase III, 235 in Clinical Phase II, 1,229 in Clinical Phase I and Preclinical Phase, and 37 approved for marketing. During the reporting period, the Company also completed the acquisition of the Kuwe plant in Switzerland, which began consolidating in July this year. (2) WuXi Testing achieved revenue of RMB1,227,270,600, compared to RMB893,274,800 in the same period in 2020, an increase of 37.4% year-on-year, of which revenue from laboratory analysis and testing services was RMB808,668,800, an increase of 39.8% year-on-year, and clinical CRO and SMO revenue was RMB418,601,800, an increase of 33.0% year-on-year. Drug analysis and testing services excluding device testing grew strongly by 46.7% year-over-year. Among them, in terms of drug analysis and testing services, the company provides customers with a series of related businesses such as pharmacokinetics and toxicology, bioanalytical services. The company continues to give full play to the advantages of the integrated platform, through the WIND service platform, the preclinical efficacy, drug generation, safety evaluation, as well as the writing and submission of declaration materials, to provide customers with new drug research and development and global declaration integration services, accelerate the process of customer new drug research and development. From January to September 2021, the WIND platform signed up 123 service offerings, with an average individual project amount of $1.1 to $1.5 million. The Company's toxicology business, compared with the same period last year, maintained a strong growth momentum in sales revenue, achieving a year-on-year increase of up to 72% during the reporting period, maintaining and expanding the leading position in China's toxicology business. In terms of clinical CRO services, the company provided clinical trial development services for a total of more than 200 projects from January to September 2021, helping customers complete 14 clinical study application approvals and 5 marketing application declarations. The company continues to strengthen business capacity building, and the data statistics and analysis business continues to develop rapidly. In SMO services, the company continued to expand rapidly, with a staffing team of nearly 4,500 people by the end of the third quarter of 2021, an increase of 42% year-on-year, distributed in approximately 1,000 hospitals in 153 cities across the country. (3) WuXi Biology achieved revenue of RMB504.1027 million, compared with RMB411.7287 million in the same period in 2020, an increase of 22.4% year-on-year. The company has a leading DNA-coding compound library (DEL) with more than 90 billion DEL compound molecules, 6,000 molecular scaffolds and 35,000 molecular blocks as of the end of the third quarter of 2021. During the reporting period, the company further optimized the allocation of resources, integrated dna-coding compound libraries, protein production and drug discovery platforms based on protein structures, and created a competitive integrated target-to-emerge compound discovery platform to fully empower early small molecule new drug research and development customers. In addition, the biology business focuses on building new biological capabilities related to new molecular species, including oligonucleotides, cancer vaccines, PROTAC, carrier platforms, and innovative drug delivery systems. From January to September 2021, the revenue of new molecular species and biopharmaceuticals in the biology business increased by 56% year-on-year, and the proportion of the biology business revenue increased from 10.4% at the end of 2020 to 13.3% at the end of the third quarter of 2021. (4) Cell and Gene Therapy CTDMO Business (WuXi ATU) achieved revenue of RMB282.5219 million, compared to RMB246.2231 million in the same period in 2020, an increase of 14.7% year-on-year. The Cell and Gene Therapy CTDMO business in China grew rapidly, delivering a 223% year-over-year increase in revenue, partially mitigating the impact of the decline in the U.S. business. In terms of service platforms, the company further strengthened its capabilities in the process development and production of cell and gene therapy products, providing testing services for 326 projects and development and manufacturing services for 61 projects in the third quarter of 2021 report 7/20, including 45 preclinical and Phase I clinical trials, 6 Phase II clinical trials, and 10 Phase III clinical trials. (5) Domestic New Drug Research and Development Service Department (WuXi DDSU) achieved revenue of RMB311.0532 million, compared with the same period in 2020, which was RMB281.5123 million, an increase of 10.5% year-on-year. During the reporting period, the company completed IND filings for 16 projects for its clients and obtained approvals for 12 clinical trials. As of the end of the third quarter of 2021, the company has completed in total IND filings for 136 projects and obtained clinical trial approvals for 103 projects. At the same time, 1 project is in the marketing application stage, 1 project is in phase III clinical trials, 14 projects are in phase II clinical trials, and 73 projects are in phase I clinical trials. Of the 136 projects that have submitted marketing applications or are in the clinical stage, more than 70% of the projects have ranked among the top three similar drug candidates in China. After the customer's product is listed, the company will receive a commission from the customer's drug sales revenue in accordance with the agreed proportion according to the agreement with the customer.
The third point: investment strategy and research
In general, the performance growth is within my heart expectations, there is not much surprise, there is only one word in the heart, that is, "stable", of course, the growth of performance is gratifying, because from the company's development prospects, the number of employees, are positive development.
From the perspective of data analysis, the chemical business and the testing business account for the majority of the revenue, which has long been expected, but unfortunately, the proportion of cell and gene therapy revenue is basically negligible, that is, this piece of business has not seen surprises for the time being, which is something I regret.
What is exciting is that you may not have noticed that behind the large proportion of growth in the chemical business and the testing business, there are actually some hidden things, but from the company's report, we did not find that this is also a deeply hidden place for the company, that is, it is possible to cooperate with Merck, in the company's semi-annual report in 2021, the company said: "At the same time, during the epidemic, in order to meet the urgent drug development needs of customers, The company quickly developed small molecule antiviral drugs for two large multinational pharmaceutical customers, and for one of the drugs, the company helped the customer screen the best candidate molecule and obtain clinical approval in just 6 months, and the molecule entered the clinical phase III stage after only 9 months. "If this event is a real hammer, then WuXi's performance will further grow, and this cooperation is entirely possible."
Reuters news on October 28, Merck said on Thursday that if its anti-covid-19 oral drug, monopivir, was authorized by U.S. regulators in December, it could bring the company sales of $5 billion to $7 billion by the end of next year. On October 1, Merck announced interim results from a Phase III clinical trial showing that oral medications can halve hospitalization and mortality. On October 11, Merck applied to the U.S. Food and Drug Administration (FDA) for urgent approval of the COVID-19 oral drug."
"At the end of September, Merck/Ridgeback's oral COVID-19 small molecule drug Molnupiravir was published in phase III clinical data on MILD," which achieved positive results in reducing hospitalization/mortality. While there are still questions about its genotoxicity, it confirms the effectiveness of oral small molecule drugs (at least RNA polymerase inhibitors) in the treatment of MILD COVID-19, not to mention that other companies are also working intensively. The biggest advantage of oral small molecule drugs is that it is convenient to take drugs, occupies small medical resources, and is cost-effective, and it is easier to achieve low-cost large-scale production. The advent of small molecule drugs does not mean that the epidemic is coming to an end soon, nor does it mean that vaccines can no longer be vaccinated; but the combination of vaccines + small molecule oral drugs will further enhance the possibility of influenza new crown, and how quickly this possibility is realized is closely related to the actual efficacy of small molecule drugs. In the future, we will pay close attention to the further clinical data of the new crown small molecule drug" - Ge Chen
summary:
At present, from the perspective of the growth scale of employees, the performance of various businesses, and the position attitude of the institution, WuXi App is a stock worth investing in, and we have every reason to continue to hold it #WuXi AppTec ##医药 #