Genscript Biotech Corp Stock

Good day, and thank you for standing by. Welcome to GenScript Biotech 2026 interim results conference call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, CFO of GenScript Group -- Biotech Group, Mr. Phil Zhao. Please go ahead.

CFO at GenScript. Welcome to our 2026 interim results conference call. Joining me on the call today are Mr. Robin Meng, Chairman of the Board; Ms. Sherry Shao, Rotating CEO of GenScript; Dr. Ray Chen, President of GenScript Life Science Group; Dr. Aixi Bai, General Manager of Bestzyme; and Mr. Allen Guo, CEO of ProBio.

During today's call, we will be making statements about future expectations, plans and prospects as well as any other statements regarding matters that are not historical facts, which may constitute the forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements because of various important risk factors and changing market conditions. We do not undertake any obligation to publicly update any forward-looking statements.

Before we begin, please note that the prior period figures presented in this conference call are on a comparable basis, excluding the financial impact of the license transaction with LaNova pursuant to the License Agreement that was recognized in a prior period. We believe this provides a more objective view of the group's underlying business performance.

Today, Sherry will provide an overview of our company's performance and growth drivers. I will then guide you through the financial performance. Following that, Sherry will update on our full year guidance. We will also have a Q&A session at the end of the call. As a reminder, today's presentation and recordings will be available in the Investor Relations section of the company's website.

Now I will hand it over to Sherry.

Thank you, Phil. Before turning to company performance, I'd like to provide an overview of our company and the core drivers behind our long-term growth. GenScript is a leading global platform for life science services and products. We serve more than 260,000 customers across over 100 countries and regions, supported by an integrated R&D, manufacturing, and commercial network across North America, Europe and Asia Pacific.

In the first half of 2026, GenScript delivered a strong set of results that demonstrate both growth momentum and improving business quality. Revenue exceeded USD 400 million, with 27.3% year-over-year growth, while adjusted net profit reached USD 62.5 million, growing more than 200% year-over-year. More importantly, these results reflect the early benefits of a more scalable growth model, AI-driven demand is expanding our addressable opportunities. Our gene-to-protein platform is deepening customer value and competitive moats, and operating leverage is translating growth into stronger profitability.

Now let me walk you through key operational highlights across our business for the first half. First, our Life Science Group scaled up high-quality growth. Powered by growing AIDD demand, we achieved both growth at scale and margins improvement. We have further enhanced global delivery, with about 60% of our labs equipped with AI-driven automated workstations, lifting operational efficiency and productivity at scale. Importantly, our gene-to-protein platform continues to change the game by compressing turnaround from digital sequence to model-ready data to as fast as four days, the fastest turnaround in the industry. This is precisely the kind of speed the AI era demands.

ProBio maintains steady growth with accelerating order momentum. Increasing top lines moving to downstream driven by AI and in vivo CAR-T is becoming a new growth engine, while improving scale continues to lift profitability. For Bestzyme, rising customer adoption continues to validate the commercial value of our products. We are also applying AI to protein design and engineering to accelerate innovation and the launches in the market with impact. Our growing IP portfolio underpins our long-term successes.

As we look ahead, AI is revolutionizing drug discovery. I will highlight how these disruptive trends in AI drug discovery are unfolding and why GenScript is perfectly positioned to leverage this shift and drive this revolution forward.

AIDD is approaching a critical tipping point. As summarized by Anthropic's briefing, over the past few years, AI has fundamentally reshaped the software development industry, and life sciences is emerging as the next high-value applications beyond software. We see increasing AI applications in target delivery (sic) [ discovery ], molecule design, and candidate selection. According to another survey by Deloitte, nearly 60% of surveyed biopharma leaders rank AI in research and discovery as a top priority. Indeed, the potential of AI in drug discovery is undeniable.

First, AI has the potential to dramatically accelerate early-stage discovery, compressing a traditional 4- to 6-year time line into just 12 to 18 months. Second, AI can enable researchers to explore a much broader range of therapeutic targets, modalities and molecular designs at computational scale. Third, by identifying high-quality, winning candidates early before more costly downstream development begins, ultimately, AIDD models promise higher success rates and a maximized ROI.

Here is the structural shift we are tracking: applying AI to the life sciences and drug discovery is fundamentally more complex than pure tech. Biological data is inherently more complicated, and our feedback loops demand rigorous, physical wet-lab experiments. But make no mistake, the AI-driven transformation of our industry is inevitable. Those who can bridge the gap between digital design and wet-lab reality will dominate the market.

The key challenge facing AI-driven drug discovery today is no longer generating ideas and designs. It is validating them. AI models can now generate thousands of candidate molecules in hours. However, traditional experimental workflows were not designed for that scale or speed. Validation often takes weeks, involves multiple disconnected steps, and produces data that is not always ready to feed directly back into AI models.

As AI accelerates design, the bottleneck is shifting decisively towards experimental validation. We are experiencing a significant opportunity emerging around a new category of infrastructure, validation platform that is fast enough for AI iteration, scalable enough for AI volumes and structured for continuous model learning. That is where GenScript is uniquely positioned. We are here to close the loop.

To address this industry challenge, we put forward our 4-day AI-to-biology validation engine. This is an integrated validation platform built specifically for the AI era. And it will continue to improve and evolve. Our platform combines 4 critical capabilities: first, scalable capacity. Our modular gene-to-protein and assay workstations allows us to rapidly add throughput as customer demand grows; second, speed. We can move from digital sequence to model-ready biological data in as short as 4 days, dramatically reducing validation time lines, this is industry leading, world leading; third, integrated execution. Automated and digitally orchestrated workflows reduce manual handoffs, improve consistency and scale efficiency; fourth, AI-ready data. Results are generated in format that can support model iteration and continuous learning.

Together, these capabilities allow GenScript to help close the gap between digital intelligence and biological execution, transforming validation from an industry bottleneck into a next-generation solution and our competitive advantage.

Here, why this matters commercially. This shift isn't just technological, it's redefining our customer base and our revenue model. AI is changing who buys from us and how they buy. Beyond our core pharma and biotech base, we are increasingly engaging AI-native biotechs, model developers and major technology companies entering life sciences for the first half, a genuinely new commercial category for life sciences industry and for GenScript.

AIDD is changing how our customers operate. Their AI models generate more designs, run more experiments and iterate faster, which turns validation from a one-off and a longer cycle project into recurring ongoing stream of demand. That shift the new segment of customers and evolving operating models from our customers is what makes this opportunity structurally larger than a typical cycle. And the result is threefold: a larger customer universe, higher order volumes, faster cycles and deeper, longer-term engagement. Together, they create a larger and more strategic growth opportunity for GenScript over time.

For investors who are newer to the AI-for-science ecosystem, this slide illustrates where GenScript sits in the value chain. AI models can generate designs, but those designs must ultimately be translated into biological constructs, validated experimentally, developed into candidates, and ultimately, manufactured at scale. GenScript participates across multiple points of that workflow.

Our Life Science Group leads validation through our gene-to-protein and assay platform at an unmatchable speed and scale. We are closely integrated into the AIDD loop. ProBio helps advance promising candidates into development and manufacturing once pipeline advances. Bestzyme leverages innovation and AI-enabled protein engineering to create new opportunities in synthetic biology.

Combined with our global operating footprint and strong balance sheet. These capabilities positions GenScript as a critical infrastructure provider, supporting the next generation of AI-enabled biotech innovation. We are not simply participating in the AI-for-science ecosystem, we are actively building the validation infrastructure that enables it. As AI-driven discovery scales, GenScript will continue to strengthen its position as one of the most strategic and valuable points in the biotechnology value chain.

Having discussed the strategic drivers shaping our long-term opportunity. I will now hand the call over to Phil to review our financial performance in greater detail.

Thank you, Sherry. Let me now take you through the group's financial performance for the first half. Revenue reached USD 404.2 million, up 27.3% year-over-year, reflecting strong momentum across the group.

Growth was broad-based: Life Science services and products grew 28.8% to USD 319 million; ProBio grew 34.2% to USD 61.1 million; and Bestzyme grew 7.4% to USD 30.4 million. Alongside the top line growth, we also delivered higher-quality earnings. Group gross profit reached USD 206.7 million, up 48% year-over-year, significantly outpacing revenue growth. This reflects our improved business mix, operational efficiency and scale benefits. Benefiting from revenue growth and improved operating leverage, adjusted net profit reached USD 62.5 million, up 203.3% year-over-year, a record for any half and the clear guidance, and clear evidence that profitability is scaling faster in the top line.

Overall, the group delivered growth across revenue, gross profit and net profit, which is a strong validation of our ability to create long-term value by leveraging our global footprint, innovative platforms and scale.

Now let's turn to the Life Science Group or LSG. In the first half, LSG delivered strong revenue growth alongside the meaningful profit expansion and operational efficiency gains. Revenue reached USD 319 million, up 28.8% year-over-year, around 10 percentage points above initial guidance. Growth was driven by sustained global customer demand increase the penetration of the gene-to-protein platform and rapid expansion in AIDD-related demand. We are seeing strong demand for high-quality gene synthesis, protein expression and related research services across pharma and biotech customers and AI-driven companies.

More importantly, profitability improved significantly. Adjusted gross profit reached USD 185 million, up 46.1% year-over-year. Adjusted operating profit reached USD 94 million, up 102.8%, surpassing USD 90 million for the first half and effectively doubling. This benefits from our improved operating leverage. Over the past couple of years, we have consistently invested in automation, digital operations, capacity expansion and other global footprints. Alongside the business growth, we see higher operational efficiency and stronger profitability, enabling profit growth to outpace revenue growth.

Expense trends were also encouraging. Growth in selling, administrative and R&D expenses remains below revenue growth, reflecting strengthening scale effects and disciplined resource allocation. We also see improved margins. In the first half, adjusted gross margin reached 57.8% or 55.4%, excluding the impact of U.S. tariff refunds, and adjusted operating margin reached 29.5% or 27.1% on a same basis, both improved significantly compared to first half 2025. The operating margin approaching 30% marks an important milestone for LSG, transitioning from investment to growth at scale and profitability. With growing demand from AI-driven drug discovery and expanding global customer base and increasing platform synergies, we believe LSG is well positioned to drive both revenue growth and profitability improvement.

This slide shows why LSG's growth is not dependent on single product, region or custom type. LSG's sustainable growth is attributable to its leading platforms, global reach and broad customer base. Looking first at our product mix, gene-to-protein products and services contributed around 2/3 of LSG revenue, making it our most important business area. This reflects both our leadership of gene-to-protein platform and a strong customer demand for integrated R&D solutions.

By region, our revenue base remains well balanced. North America contributed approximately 50% of revenue, while Asia Pacific and Europe accounted for 29% and 21%, respectively. This diversified global plans allow us to catch the opportunities across major markets while enhancing our business resilience. Our revenue stream is highly resilient built on a strategically diversified customer base. With over 80% of revenue generated by pharma and biotech, we are deeply embedded in leading R&D engines. Complementing this, our robust presence across global research institutions ensures long-term structural collaboration well beyond our industry segments.

Taken together, our gene-to-protein platform, global operating network, and the diversified customer base provides a strong foundation for LSG's continued growth, enabling us to capture opportunities arising from AI-driven life science innovation.

Moving on to the opportunities ahead and the key drivers that will support long-term growth, we see 3 engines powering LSG growth in the years ahead. First, our integrated gene-to-protein platform remains the primary engine of our growth. We are tracking the structural shift as customers from transactional, single-product purchases to our comprehensive end-to-end solutions. This transition embeds deeper into their R&D workflows, accelerating top line revenue while directly driving margin expansion and long-term profitability.

Second, AI-driven demand has rapidly emerged as massive new growth engine. Unlike traditional discovery, AIDD programs required exponentially higher throughput, continuous engagement and a long-term collaboration. For GenScript, it translates directly into significant larger contract values and exceptional long-term revenue visibility. We expect this momentum to compound aggressively with AIDD orders projected to double in the second half and maintain that hyper-growth trajectory over the next several years.

Third, we are seeing stronger returns from our platform investments. The foundational investments we made in automation and the digital capacity are now highly accretive. Driven by climbing utilization rates, our gene-to-protein platform ROI surged 1.5x year-over-year in the first half. Moving forward, as we scale our infrastructure to capture surging demand, this powerful capital efficiency will directly drive margin expansion and superior shareholder value.

Overall, the continued expansion of the gene-to-protein, rapid growth in AIDD-driven demand and improving returns on our platform investments underpin LSG's high-quality growth over the next several years.

Turning to ProBio. The business continued its strong momentum in the first half, delivering revenue growth, improved profitability, and greater operational efficiency under our end-to-end CRDMO strategy. Please note that all the year-over-year growth rates presented here are on a comparable basis, excluding the financial impact of the LaNova license transaction.

Revenue reached USD 61.1 million, up 34.2% year-over-year, continuing the healthy trend of recent quarters, driven by faster order execution, new customer wins and progress across the existing programs. More importantly, that growth is now translating into profitability. Adjusted gross profit reached USD 8.3 million, up substantially from around $2.7 million in first half 2025, as better project mix, higher utilization and manufacturing efficiency all came through.

Expense growth remained well below ground growth. We kept investing in R&D and our technology platforms, while tightening organizational efficiency and as revenue scales fixed cost absorbed more effectively. Operating leverage is now clearly reasonable. This show up most clearly in adjusted EBITDA, where the loss narrowed to USD 6.5 million from USD 16.8 million in first half 2025, an improvement of over USD 10 million, and the meaningful step toward profitability. These investments we've made in platforms, global expansion and capacity are now converting into profitability as revenue grows. Looking ahead, we'll stay disciplined on high-quality growth, driving revenue, improving operating leverage, and reinforce ProBio as a leading global CRDMO partner.

Beyond revenue and margin, we are focused on the quality and the sustainability of future growth. And on that front, our order intake stood out. On revenue, ProBio grew 34.2% organically. Biologics business grew 44.2% and advanced therapy business grew 16.3%, broad-based strength across both lines. The real headline is orders. New orders grew 54% year-over-year, significantly outpacing revenue growth. Biologics business up 62.1% and advanced therapy business up 34.9%. Our backlog continues to build, further enhancing the visibility of our future revenue.

By region, we achieved a steady growth across all major markets. On revenue, China grew 43.1% and international markets grew 30.3%. On orders, China grew 73.8% and international markets grew 55.3% (sic) [ 45.3% ], demonstrating robust demand across both markets and solid [ BD ] outcomes.

Overall, ProBio is delivering strong growth across revenue, new orders and market expansion. In particular, orders consistently outpacing revenue reflects customer recognition of our end-to-end CRDMO platform, and reinforces our confidence in growth outlook ahead.

Finally, turning to Bestzyme. Despite the market headwinds, Bestzyme maintained steady growth while continuing to invest in innovation and commercial execution. Revenue reached USD 30.4 million, up 7.4% year-over-year, driven by rising demand for core products and growing customer base. Our expertise in the industrial enzymes and biomanufacturing continues to reinforce our competitive position. Profitability also improved. Adjusted gross profit grew 14% year-over-year to USD 13 million, outpacing revenue growth on better product mix and improved manufacturing efficiency.

Innovation remains our core driver, with adjusted R&D investment reaching USD 5.6 million in the first half, spanning industrial enzymes, biomanufacturing and synthetic biology, while we apply AI and digital tools to improve R&D productivity and speed commercialization. Alongside that, we continue to strengthening our commercial capabilities and global reach, expanding customer reach as demand grows for high-performance enzyme products and sustainable solutions.

On the bottom line, adjusted operating loss was USD 1.3 million compared to 0.6 million loss in first half 2025, a deliberate investment in platform and innovation that positions us to unlock larger growth ahead. Looking forward, with new product commercialization, continued market expansion, and emerging scale benefits, we expect Bestzyme to lift both revenue and profitability.

To conclude, let me share our outlook for the full year. Looking ahead, we are actively capitalizing on the industry tailwinds, the acceleration of AI-driven drug discovery revolution, robust expansion in global biopharma R&D and the next-generation transformation of global biomanufacturing.

In Life Science Group, our mandate is clear, we will scale our leading gene-to-protein platform, pushing sequence-to-data delivery, with unmatchable speed and capacity. We will keep digitalizing and automating our global lab network to improve efficiency and reliability. More importantly, we will be directly integrating our wet-lab validating engine into our customers' R&D systems and digital infrastructure to power the future of AI drug discovery.

In ProBio, we will continue to benefit from growing biologics demand and emerging opportunities in in-vivo CAR-T and AIDD. We will expand our global footprint, strengthen our platforms, advance more progress from early discovery into clinical and commercial stages, and stay on track for positive EBITDA in 2027.

In Bestzyme, we will focus on commercializing sweet protein, accelerating AI-enabled R&D and product optimization, and continuing to expand globally while strengthening our IP position.

Supported by our strong first half performance and confidence in the opportunities ahead, we are raising our full year guidance for the Life Science Services segment. We now expect revenue growth of 25% to 30%, adjusted gross margin above 55%, and adjusted operating margin above 25%. For ProBio, we are increasing our revenue growth guidance to 25% to 30% and continue to expect the business to achieve positive EBITDA in 2027. For Bestzyme, we expect revenue growth of 8% to 10% while maintaining an adjusted gross margin of over 43%.

Taken together, our platform leadership and continued investments in global reach and innovation, position GenScript to deliver high-quality growth and long-term shareholder value. That concludes today's presentation. Operator, please open the floor for questions.

[Operator Instructions] First question comes from the line of Yang Huang from JPMorgan.

I have two questions. I will first ask first one, then a follow-up. So we noticed a significant upward revision to your 2026 guidance for the Life Science segment compared with the outlook provided earlier this year. So could management discuss the key drivers behind this kind of upgrades and the relative contributions from different areas like AIDD-related demand, customer expansion and project volume growth? And also, if we kind of look ahead, given AIDD demand, and AIDD demand remain very strong, how should we think about the likelihood of further upside to the current Life Science guidance? Are you seeing any signs that such demand from AIDD will continue to outpace your existing assumptions? That's the first one.

Thank you, Yang, for your questions. I'm happy to answer. This is Ray from GenScript Life Science Group. And according to your questions, let me answer in this way. There were 3 things that drove our growth, and they reinforce each other rather than standing alone.

First, the AIDD demand itself. As more AI-related biotech foundation model developers and the innovation-focused pharma groups scale their investments in AI-enabled discovery, we're seeing strong growth from gene synthesis to protein expression and candidate validations, especially the sequence-to-data generation solution that we tailored specifically for AIDD. Project sizes are increasing and engagements are becoming deeper and more strategic. Both are showing up directly in order value and revenues.

And second, our customer base is compounding and getting higher quality, we're winning new AI-focused accounts while maintaining the healthy demand from our traditional pharma and biotech base. More importantly, our growing share of customers converting from single-project work into multi-stage, multi-service partnership, which is what turns one-time projects into recurring revenue as partnerships.

And third, we are now reaping the fruits of our years of platform investments. Sustained spending on automation high throughput capacity building and digitalization is translating into to shorter turnaround, higher utilization and greater scalability. And that operational leverage has become foundational to how fast we can further grow.

And for the second part of your question, and we do believe the AIDD is still early. And customers are moving from proof of concept into large-scale validation and iterations and optimization. And that's exactly the phase where demand for high throughput in the protein production and the high-quality data accelerates. We are seeing that in 3 concrete signals. The sizes of the order is growing, the customers' relationships are deepening, and the share of high complexity and structured recurring orders an area that we are uniquely strong is rising.

And that last point matters most because it's what gives us confidence and visibility for long term rather than just the momentum. And so we wanted to be clear, this growth isn't the result of one larger customer or one project. It reflects a structural shift in demand and our unique ability to convert that demand into revenue and profitability at scale.

Looking ahead, we are continuing to manage guidance prudently. However, the underlying demand signals project volume, size of the order, customer depths, and the growing mix of complex recurring AIDD projects are all pointing the same direction. And big pharmas are evolving and also adopting as well. So it's a fascinating time in the industry. If these trends continue, and our unprecedented execution remains strong, and we're confident about that, too, and we will see a real potential for continued upside versus our current assumptions.

My second one is on competitive landscape. To our understanding, Twist Bioscience is one of our company's primary competitors in the gene synthesis market. So how does management view the competitive landscape between Twist and GenScript in the AIDD space-related business?

Thank you, Yang, for your question. Again, this is Ray. I would like to be a little bit more specific here, because we think the data speaks for itself. At GenScript, we don't compete on commodity volume, we compete on value per delivery results, the speed to data and the data quality that customers can actually rely on. Let me give you some numbers behind that.

First, on economics, GenScript capture more than twice the revenue per delivered item versus the company you mentioned. And that gap has continued to widen. On throughput, we're processing in real more than 4,000 designs per day, meaningfully ahead of the publicly reported numbers from the company that you just mentioned, which is in thousands per week. The third about speed. We delivered from digital sequence to binding data in 4 to 7 calendar days, depending on which expression route customer is taking, comparing to more than 2 weeks reported somewhere in the market from the company that as you mentioned. That's -- the number is important here because this is 3 to 5x faster iteration cycle, which matters enormously for customers who is doing AI model depends on the continuous experimental feedback in the loop.

And we think the most important edge actually is the data quality in one recent customer round of evaluation, our assay variability that came in under 10%, compared to close to 30% for the company that you mentioned in their workflow. So in the AIDD area, reliable, low variable data is not a nice to have, it's a must to have. And that's where we believe our uniquely strong and clear advantage is most durable.

And I can explain a little bit more about our fundamental business model differences as well by comparing the company you mentioned. Much of the competitive landscape, especially, they stop just at DNA or fragments. They couldn't go over, and we delivered the full path from sequence through expression to model-ready data reliably at scale with speed. And we have already built critical downstream capabilities that close the loop end-to-end.

Our infrastructure is built differently too. We built a modular intelligent workstations rather than large fixed format systems. And this allows us to add capacity faster with meaningfully lower capital intensity. And eventually, we're targeting doubling the throughput of our capacity every quarter. And we have the confidence to do that. And we have to sustain the industry-leading pace. That's what we have been committing to.

So looking ahead, our objective is crystal clear, serving the customers to be the definitive and always industry-leading biology validation engine. Especially for the AI drug discovery era, engineered for the speed, the scale and reliability the industry now demands and requires. And we need to build -- to stay there. Thank you, Yang, for your questions, and allowing me to have the opportunity there to explain.

Next, we have David Shang from Jefferies.

My first one is about the ProBio. We noticed that ProBio has began securing AI drug discovery projects in the first half of '26, could you please briefly discuss the current pipeline of drug discovery related orders and ProBio technology capability?

[Audio Gap] It's about we found both Life Science and CRDMO has delivered a meaningful acceleration in the growth. Could the management elaborate on this capital allocation and CapEx plans to support this opportunity and also the investors, we expect any incremental financing requirements or fundraising activities as company continues to expand its capacity and capability.

Thank you, David. So for the first question, Allen, will help address. And for the second one, I'm happy to address some questions. Allen?

Thank for the question, David. This is Allen of ProBio. So for the first half of 2026, ProBio totally signed USD 9.7 million AIDD-related orders, including both for discovery and also CMC project. And actually, we delivered around $2.5 million in revenue. So the AI-generated drug candidate presents a unique development requirement and increasingly demand integrated solutions across discovery and also development. Based on our experience with the AIDD program to date, we have several common characteristics.

First, so drug candidates generated or optimized by AI are typical complex molecule, including bispecific or trispecific antibody, which require further validation and optimization to address developability and drugability considerations. Second, the targeted selection and therapeutic applications are becoming increasingly diverse, spanning multiple disease areas and modalities. Third, customers typically require significantly accelerated development time line to maximize the efficiency advantages delivered by AI-driven discovery. And fourth, some customers will advance multiple candidate molecules simultaneously and this creates demand for high throughput and also parallelized development capability.

To address this need from AIDD, ProBio has quickly established a specialized solutions across both the discovery and also CDMO value chain based on our extensive experience, know-hows and platforms. First, leveraging our more than 20 years experience in the biologics discovery segment, ProBio discovery provides a comprehensive wet-lab validation platform designed specifically for AIDD program. The key capabilities include: customized data generation, and experimental support for AI model training and optimization; second, highly automated and high-throughput workflows capable of processing thousands of samples per day; and third, integrated in-vitro and in-vivo pharmacology platform across multiple assay formats; and fourth, tailored screening strategies that optimize both biological activity and developability. Through this end-to-end approach, ProBio can help customers advanced AI-generated candidate to PCC within as little as 4 months.

And secondly, for our biologic CMC platform, we have introduced a combined developability assessment and Express CMC offering tailored for AI-derived molecule. The key advantages include early-stage developability assessments, leveraging the same host cell system and expression vector employed in downstream CMC development, and rapid identification of sequence liabilities and potential CMC challenges before entering formal development, meaningful reductions of downstream technical and manufacturing risk. And we expanded our accelerated development framework beyond monoclonal antibody, symmetric bispecific antibody to include asymmetric bispecific, trispecific antibodies and also high concentration programs.

For even the most challenging molecule format, ProBio can progress from cell transfection to toxicology batch production in as little as 4.5 months, significantly shortening the development time line for AI-driven programs. AIDD is really moving incredibly fast, with ProBio's extensive experience, competitive host cell line system and integrated discovery and CMC platform, we believe ProBio is well positioned for AIDD program, and we will continuously capture this strategic opportunity.

Yes. Thank you, Allen. So David, for your question regarding our capital allocation and CapEx plans. So yes, we will keep investing into match this growth, not just chase it. So expanding capacity, automation and the technology platforms to support a robust growth of both of LSG and the CRDMO business. So our approach to capital allocation stays very disciplined throughout and with a very -- every investment calibrated tightly to customer demand and expected return. So let me give you some numbers. So during the first half of 2026, the group incurred capital expenditure of USD 48.4 million. And based on current business momentum and the project execution in progress, we expect full year 2026 CapEx to remain at a healthy and flexible level, with total CapEx approximately USD 130 million.

And importantly, the company continues to maintain a robust balance sheet and a healthy liquidity structure. We currently hold approximately USD 830 million in cash and cash equivalents. And in addition, our disciplined management of capital expenditure, operating costs and the return on invested capital, ROIC, has driven a significant year-over-year improvement in both working capital and free cash flow during the first half of 2026.

So given our substantial cash position, our continued ability to generate operating cash flow and a high-quality enterprise credit standing, we are confident that we have sufficient financial resources to support all ongoing expansion initiatives. And therefore, we do not view growth and investment as competing priorities. Our objective is to continue investing aggressively in the highest return opportunities while maintaining disciplined capital allocation and creating long-term shareholder value.

So going forward, we will keep advancing our growth strategy with the same financial discipline and [indiscernible] here. So importantly today, we are doing so from a position of increasing profitability, improving return on capital and growing financial strength. So to directly address your second question, we have a sufficient liquidity buffer, so we see no need for equity financing. Thank you, David.

Next, we have Laurence Tam from Morgan Stanley.

First of all, congrats to management on these fantastic results. I have two questions. The first one is that within the AIDD customer base, we have noticed that large AI model companies are gradually becoming a new source of revenue growth. Could you help us better understand the profile of these customers and how their needs differ from those of traditional pharma and biotech companies? That's my first question.

Thank you, Laurence. This is Ray from GenScript Life Science Group again. It's a really, really interesting question, and we're learning as well along the way. This is one of the most important shifts that we're seeing in our customer base, and it's worth being precise about what we have learned and how differently and these customers behave. But let me start about the scale a traditional pharma program typically advance a handful of candidates through a small number of projects, but the AI-related customers operate on an entirely different order of magnitude and their models can generate hundreds, thousands of candidate sequences in a single iteration. And each of those need rapid experimental validation that alone change the order size meaningfully.

And second about speed. It's truly different. A traditional design test to learn cycle runs in months, and AI-native customers need continuous fast feedback loop because the model requires a steady stream of experimental data to retrain and improve, which is why the turnaround measures in days now, not weeks. And high throughput expression automated platforms is must to have for those customers.

And third, it's about the molecular complexity, and it's different. The traditional pharma projects concentrate heavily on well-validated targets or formats, which -- AI-native customers, and they are pushing the boundaries. They have more complex designs and because the models are explicitly designed to explore molecular space, the traditional discovery won't even attempt. So this -- here's the insight that matters most, we think of how we will further grow for AI-native customers, we're not just delivering a DNA construct or protein itself, we are delivering the data. The data is the end goal.

And the expression functional activity, binding stability, developability data or feedback into the model development as input. This means we're not just selling one project or a deliverable. We're becoming part of the customers' AI development infrastructure, which is truly, truly fascinated. And that's what's driving the real upside. So that the customer's lifetime value. The traditional engagement is often a one-off project. And with AI-native relationship can expand the complete workflow in drug discovery, which can also further extend to the clinical and CMC, like Allen just mentioned that with ProBio. This is always one positive.

So simply put, AI-native customers and the demand more scale, more speed, more molecules, more designs, more data earlier in the process than traditional programs ever did and the companies built for the high throughput, automated, end-to-end sequence-to-data, quality data delivery are the ones positioned to capture the value. That's exactly the infrastructure we have been building for the past 2 decades and we've built around this for success. So more importantly, that which is more exciting as well, the traditional pharma is evolving as well. They are adopting together along the way. So this is why we see the customer segment is a structural, a long-term growth driver rather than a short-term momentum. And thank you for allowing me to share what we have learned.

Ray, my second question is on Bestzyme. Bestzyme has been extensively integrating AI technologies into its operations under the AI-for-science initiative. Could management provide more details on how AI is being applied at Bestzyme and impact it's having on the business?

Thank you, Laurence, for the question. This is Aixi from Bestzyme. So AI has become deeply integrated into every stage of R&D at Bestzyme. And the business impact comes down to two things: faster R&D at a lower cost. So first, our trained and fine-tuned models let us optimize enzyme performance across multiple dimensions. The enzyme molecules we are getting, say, at performance levels that our old method similarly could ever reach. Second, our AI-driven multi-property optimization has doubled our positive hit rate compared to 2025. In the best cases, we can hit our project goals in just 2 round of variant design with fewer than 150 mutants. This not only improves our project success rate but also significantly increases the number of projects we delivered. For 2026, we expect to deliver 6 to 7 projects which is twice as many as in 2025.

Third, we will shorten development cycles. We will launch both the design online platform and the product flow agent platform. They are already cutting R&D time by 20% and on top of that, the agent platform lets more of our scientists design and optimize enzyme simply by using natural language. So it's much more accessible to the team.

Fourth, our protein AI models help boost enzyme activity by our DNA-related models help improve our production yields. So put together, they drive significant cost reduction. Over the past year or 2, we have seen meaningful cost savings across more than 3 projects. Take our [indiscernible] and high-temperature amylase as examples, both achieved better performance at a lower cost, with gross margins up by 7% and 6%, respectively, for the single products. Thank you, Laurence.

Next, we have Linhai Zhao from Goldman Sachs.

Congrats on the great results for Life Science Group, in particular. I'm interested to get more color on the improved gross profit margin in the first half. It seems like the AIDD orders came with a higher margin compared to the traditional gene-to-protein orders? Can management share more colors on that? And given that, can we get a better sense on moving forward? How should we think about the long-term AIDD margins? And if the AIDD margins would likely to remain higher how should we think about the entry barriers into this field and the competitive mode of GenScript?

And also Dr. Chen also mentioned that increasing utilization to cope with the demand as we're expecting triple-digit growth in the second half and even beyond, what is the utilization rate that we are currently seeing? And how are we preparing for the increased capacity going forward, especially for protein side. Well, I understand that the automation level is lower compared to the gene part?

Thank you, Linhai. This is Phil. I will address your first question regarding the profitability of AIDD orders. And for the second part, utilization, I will defer to Ray to answer. Okay.

So AIDD-related orders carry structurally higher margin than traditional protein extraction work. It is worth explaining exactly why, because the drivers are durable, not one time. First, customers typically face/place a large-scale, high-volume orders, which significantly increase the protein expression throughput per project, and that's a portion of the fixed cost across our platform.

Second, they normally pay a premium for speed, okay? Rapid turnaround isn't optional for them because the AI models depend on faster experimental feedback to keep iterating, and speed at scale is exactly what our automated high throughput infrastructure is built to deliver.

Third, and most important, the deliverables item, it's a different. Customers aren't on just buying protein, they are buying high-quality structured experimental data that feeds directly back into their models, okay? So there's a higher value service than materials alone and they commands the pricing accordingly.

Put together, these 3 factors are why AIDD-related projects run roughly 20 percentage points higher in gross margin than traditional protein expression orders.

And regarding your question on sustainability, we believe these differential holds and could widen for two reasons: one, the value we are pricing points that is the speed at scale and model-ready data, as Ray just mentioned, becomes more variable and as AI adoption in drug discovery deepens, and because of the cost of validation bottlenecks only growth more painful for customers as their model scale.

And second, as our platform utilization increases and automation investments mature, our own cost structure improves in parallel, which means we can defend this margin premium even as the category grows and the competitive intensity increases. So that is a foundational and structural advantage tied to how our business is build and build to last.

Ray, for the second one?

Yes. Thank you for your question. I can talk with you for days about how we could scale. The throughput is not only the genes, but also all to the way to protein expression and the further downstream assays and for the validations. So our throughput -- our infrastructure is built, as I mentioned, the modular and intelligent workflows and workstations and which allows us to scale very rapidly with confidence. And the orders, the magnitude that we're getting no one else in the world could accept and deliver. That's what we're doing right now. And we have the confidence to further doubling our support capacities in the coming days and coming months in a very exciting way. Thank you.

Yes. Thank you, for your interest and the questions and ongoing support for GenScript, we apologize for not being able to address all the questions due to time limitations. So if you have additional questions, do not hesitate to reach out to our Investor Relations team, and we will see you on our next call. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to Genscript 2025 Annual Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Mr. Phil Zhou, CFO. Please go ahead.

Hello, everyone. This is Phil Zhou, CFO at Genscript. Welcome to 2025 Annual Results Conference Call. Joining me on the call today are Mr. Robin Meng, Chairman of the Board; Ms. Sherry Shao, Rotating CEO of Genscript; Dr. Ray Chen, President of Genscript Life Science Group; Dr. Aixi Bai, General Manager of Bestzyme; Mr. Allen Guo, CEO of ProBio.

During today's call, we will be making statements about future expectations, plans and prospects as well as any other statements regarding matters that are not historical facts, which may constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements because of various important risk factors and the changing market conditions. We do not undertake any obligation to publicly update any forward-looking statements.

Today, Sherry will start with the company highlights and our business heads will present highlights for each segment. I will then guide you through 2025 financial performance. Following that, Sherry will update our business focus and the 2026 full year guidance. We also have a Q&A session at the end of the call. As a reminder, today's presentation materials can be accessed in the Investor Relations section of the company's website.

Now I will hand it over to Sherry.

Thank you, Phil. In 2025, Genscript group delivered accelerated growth despite navigating a complex geopolitical and macroeconomic. Our success was powered by leveraging our global operations, robust management frameworks and technological expertise, allowing us to transform challenges into opportunities.

The biotech sector delivered three key catalysts in 2025, renewed funding flows, AI-driven innovation and record-breaking Chinese out-licensing, all of which directly enhanced our growth trajectory.

In terms of our financial performance, we achieved outstanding results. Group revenue surged by 61.4% year-over-year. Adjusted net profit reached nearly USD 230 million. Our growth stems from our four strategic drivers. First, our gene-to-protein synergy strategy successfully integrated capabilities across the Life Sciences value chain, creating powerful cross-business momentum. Second, our global expansion accelerated performance across all three business segments through targeted market investments. Third, our productization strategy drove tangible results. Both the Life Science Group products and industrial enzyme business delivered solid revenue contributions. Fourth, operational excellence through automated manufacturing and AI-powered R&D shortened development cycles and boosted manufacturing efficiency significantly.

Regarding our associate company, Legend Biotech, we are proud to share two milestones. Legend Biotech's CARVYKTI therapy achieved full year profitability in 2025. The adjusted net profit turned positive in Q4 2025, and the 2025 full year adjusted net loss significantly narrowed to USD 33.1 million. We are confident that Legend's strengthening financial position will create long-term positive impact for our group.

In 2025, we made significant progress in sustainability. In recent years, ESG has become a critical competitive differentiator for global companies. An increasing number of our customers worldwide now regard ESG ratings as a good standard when selecting partners. Through years of strategic investment and continuous management optimization, Genscript has achieved industry-leading ESG performance.

In 2025, MSCI upgraded our ESG rating to AA. We were also selected for inclusion in the FTSE4Good Index Series. Additionally, we received a Silver Medal in the EcoVadis Global Supply Chain Sustainability Assessment. Just last month, Genscript was further honored by being named to the 2026 S&P Global Sustainability Yearbook. These ESG achievements reflect our ongoing efforts across environmental stewardship, labor practices, corporate governance and beyond, all driving continuous improvement in our management systems.

Now I will hand over to Dr. Ray Chen, President of Genscript Life Science Group, to share Life Science Group's business highlights.

Thank you, Sherry. This is Ray. Good morning, everyone, and thank you for joining us. In the year of 2025, Genscript Life Science Group business surpassed the USD 500 million revenue milestone, representing an important scale inflection for the platform we have been building over the past decade. Even through a more cautious funding environment for biotech globally from the year 2021 to 2024, we delivered a CAGR of 12.9%.

In the year of 2025, our business growth accelerated from the 11% in the first half of the year to about 15% for the full year, reaching the upper end of our guidance. What gives us confidence is not only the growth itself, but how the growth is actively being engineered. Our long-term growth strategy has been simple and focused, continue advancing our platform, grow the ecosystem around it and scale the infrastructure that powers it.

Number one, platform leadership. We keep innovating and upgrading our platform capabilities. And importantly, we continue to unlock powerful synergies across the platform workflows. This is how our TurboCHO platform could lead the industry to deliver from gene to purified antibody in just about 5 business days with superior and reliable titer. In 2025, our gene-to-protein platform contributed about 65% of our total revenue growth.

Number two, ecosystem expansion. We are deepening relationships with global pharma, biotech and academic innovators, scripting possibilities, and partnering with them to turn scientific potentials into reality. In 2025, we are expanding our customer base. Orders from first-time clients grew over 34% year-over-year.

And last but not least, the #3, automation-driven scale. Our global business is expanding with the U.S. maintaining steady growth. The Europe has achieved 5 consecutive years of strong results, including over 30% growth in the year of 2025. APAC, especially Greater China, is showing increased activities as well. This requires us to continuously innovate and advance AI-enabled manufacturing and automation worldwide in order to enhance productivity, strengthening the global resilience and improve margins.

Together, these three pillars are transforming Genscript Life Science Group from a collection of services and product offerings into a scalable biotechnology infrastructure platform, enabling researchers worldwide to move faster from scientific insights to therapeutic discovery.

Let me walk you through each of these drivers. Our first growth pillar is platform leadership. And at the center of the advantage is our platform flywheel. Over the past several years, we have invested heavily in integrating capabilities across gene, protein, RNA, peptides and antibody. In 2025, this integration began to translate into clearer commercial momentum.

One of the strongest example is our integrated gene-to-protein services, which delivered over 50% revenue growth in the year of 2025. This growth reflects the powerful flywheel effect by design within our platform. Our gene synthesis capabilities continue to expand accordingly rapidly, delivering approximately 46% of more base pairs.

More importantly, we are seeing increasing platform synergy where genes we built seamlessly feed into downstream protein expression work. In fact, the gene flows into the protein workflow increased over 160% to fuel the 50% of the revenue growth of gene-to-protein. What this means strategically is simple. The combination of integration, speed and scientific excellence is increasingly valued by our customers, particularly in AI-enabled drug discovery, where rapid and accessible design-build-test cycle at high throughput is essential.

Today, nearly 70% of our protein orders support AI-driven antibody or more complicated antibody discovery programs, reflecting the growing alignment between our platform and the future of biotech innovations. And more importantly, this platform leadership is not static. We are integrated into new workflows, including gene-to-mRNA, gene-to-viral vectors, further delivering value and strengthening the long-term growth flywheel.

Also, excitingly, we are now extending more integration into in-house solutions for our customers as products, further expanding addressable markets that we're reaching with higher margin at larger scale. Our AmMag Quatro purification systems are now used by 17 of top 20 pharma worldwide. We are in the process of launching our TurboCHO expression kit to global market. This in-house solution will deliver superior antibody expression titer using nearly half time by current solutions in the market.

Our second growth pillar is ecosystem expansion. Within 2025, we continue to see strong growth across all major customer segments, reinforcing our role as a trusted partner to innovators across the global life science ecosystem. Let me start with the pharmaceutical and biotechnology companies, which remain our largest and fastest-growing customer group.

Sales from pharma and biotech grew 24% year-over-year. Even among the top 20 pharma, where our relationships are already well established, we still achieved over 16% of the growth, demonstrating the continued strategic importance of our platform infrastructure.

In academic, where research funding has been more constrained globally, we remain strong with close to 15% of the growth, reflecting our deep presence in global research institutions. Just as important to -- the expansion of our new customer pipeline. In 2025, sales from newly acquired customers increased over 30% year-over-year, demonstrating strong brand momentum following our global rebranding and continued market expansion.

In 2025, we served more than 66,000 active customers globally, supported by an extraordinary level of scientific engagement. This adoption is also reflected in scientific impact. Over 118,000 peer-reviewed publications citing us -- enabled by us, highlighting our deep integration into the global research ecosystem. All taken together, this ecosystem expansion provides both growth momentum for today and the future.

Our third growth pillar is automation-driven scale, which is becoming an increasingly important differentiator for us. As biotech research accelerates globally, customers demand not only scientific expertise, but also speed, reliability and cost efficiency at scale. To meet these expectations, we have been focusing heavily on automation, digitalization and AI-enabled production, building a truly global manufacturing network.

In 2025, we continued upgrading our manufacturing footprint to support both scale and reliability. Four of our five major production sites have been equipped and upgraded into fully automated AI-enabled lights-out factories, enabling continuous 24-hour production with exceptional consistency at scale. This automation is not only improving operational efficiency. It is also strengthening our ability to meet rapidly growing global demand. And importantly, our margins.

Looking ahead, by the end of 2026, about 60% of our global production capacity will be powered by AI-driven automation, significantly enhancing throughput, quality control and cost efficiency. Our New Jersey facility is a good example of how this strategy is playing out. In 2025, revenue generated from this site, New Jersey, increased around 70% year-over-year, highlighting its growing role in our global operations. Together, we are building the platform infrastructure that is not only industry-leading, but also globally scalable and operationally resilient.

This concludes Genscript Life Science Group updates. I will now hand it over to Allen, CEO of ProBio.

Thank you, Ray. Good morning. I'm Allen, CEO of ProBio. It's a pleasure to share our 2025 performance highlights with you today. Let's turn to Page 10. After navigating industry fluctuation over the past 2 years, we are pleased to report that ProBio has returned to 21% organic growth in 2025 with the business chain showing gradual quarter-over-quarter acceleration.

In our antibody and protein discovery business, we launched our novel TCR engineering and functional characterization platform, and we also further upgraded our hybridoma platform, which features automated imaging system and AI-powered data analysis, elevating monoclonal reach from 70% to 86%.

Our CMC capabilities have undergone significant upgrades as well. We introduced the ProMAX expression system, delivering industry-leading yield and stability. And based on this excellent vector system, we launched our Express CMC service, compressing time line from gene synthesis to tox batch delivery from 6 months to just 4 months, a 33% efficiency improvement and it's -- also the industry-leading speed.

We also commercialized our AOC, antibody-oligonucleotide conjugate, platform to better address the rising market demand for AOC discovery and development. We made several pivotal achievements in 2025. We completed our first PPQ project with BLA submitted in November 2025. This marks the first non-COVID-related BLA application for ProBio. We further enhanced the data integrity quality system to meet stringent U.S., Europe and China regulatory requirements, supporting our growing partnership with global multinational companies.

Our antibody and protein discovery and development services maintained stable growth and consistent with market projection. For 2026, we anticipate continued robust expansion aligned with the sustained industry demand.

In terms of our track record, there are several key takeaways. Now 40% of our antibody and protein CDMO products originate from international clients, validated our global market strategy. We delivered our first overseas process characterization project and also secured our first international 2,000-liter GMP manufacturing order. We also supplied multiple clinical batches to two top-tier multinational companies, which is a testament to our world-class quality system.

In 2025, in vivo CAR-T emerged as the most prominent highlight in the CGT field. Leveraging our market insight, we have proactively positioned ourselves in this area. We established a proprietary CD3/CD7 dual-targeting lentivirus and also tLNP-based in vivo CAR-T technology. Additionally, we established and launched the CMC and related quality study platform for both LVV and tLNP platforms.

On the LVV platform, we have four IIT CMC projects and three of which have been successfully delivered, while one project is still ongoing. And on the LNP platform, we possess a unique integrated one-stop solution covering plasmid, mRNA, antibody and tLNP. Currently, we have four R&D-enabling projects in progress.

And due to the book-to-bill cycle, revenue from in vivo CAR-T-related projects has not yet reached a significant revenue scale in 2025, but we secured around [ $9 million ] new orders for in vivo CAR-T-related CMC services already. Besides, we are continuously upgrading our plasmid and viral vector platforms.

On plasmid, we launched the PowerS-DNA strain, which is capable of increasing fermentation yield for DNA drug and vaccine projects to 3 gram per liter, significantly reduced production cost. Meanwhile, we further shortened the turnaround time for both GMP-principle plasmid and GMP-grade plasmid, achieving industry-leading performance. And for our U.S. site, we commenced the GMP plasmid manufacturing capabilities last year.

On the viral vector platform, we upgraded our AAV platform, we can achieve titer as high as 3E12 vg per ml and a recovery rate of approximately 50% now. Simultaneously, we initiated AAV manufacturing capability in the U.S. site and our first AAV CMC project is also being executed in our U.S. Hopewell site now. And besides, we completed the first LVV PAI inspection from MFDS, the Korean FDA, in 2025, which is expected to be approved very soon this year.

In terms of CGT track record, we newly secured 60 CGT-CDMO projects in 2025, including 6 in vivo CAR-T projects. In 2025, we also successfully supported one client in completing two out-licensing transactions. And we continue to invest in R&D, strengthening the development of proprietary platforms and high-potential assets and leveraging our enhanced innovation capabilities to empower client success and create long-term value.

Currently, we have over 30 pre-development projects, spanning multiple molecular formats and covering numerous high-value targets. Among them, our proprietary CD3 VHH and CD3 TCE pipeline stand out, featuring innovative molecular architectures, improved druggability, enhanced efficacy and superior safety profile. As I mentioned during the previous slide, we have successfully established a proprietary CD3/CD7 dual targeting LVV and tLNP-based in vivo CAR-T technology, and our antibody-retargeted LVV platform has been accepted by AACR 2026 for poster presentation.

Our TCE molecules are primarily focused on oncology indication with a potential exploratory application in autoimmune diseases. We are also developing a next-generation TCE platform technology that leverage antibody masking to reduce on-target-off-tumor tox and co-stimulation moiety to boost tumor cell killing in tumor microenvironment.

Now we have eight TCE molecules constructed in different discovery stages. And with three molecules entering the PCC stage by first half 2026. Two selected PCCs are planned to further advance to CMC development with the expectation to complete tox material production by 2026. And two TCE molecules featuring next-generation TCE molecules have been accepted by AACR 2026 for poster presentation, and with our DLL3 co-stimulated TCE invited for oral presentation. We believe our CD3 VHH platform and TCE molecules will definitely enable potential clients who are interested in this field to accelerate their R&D progress.

By the end of 2025, we have received upfront payment and milestone payments totaling about $280 million from LaNova project. To date, we have accumulated 16 out-licensed programs, and 5 of which have officially entered into clinical development.

Looking ahead, based on each partner's specific consideration regarding R&D capability, funding and time line, we will adopt more flexible collaboration models, including, but not limited to, fee-for-service, co-development, asset buyouts and out-licensing.

With that, concludes my part. Now let me turn the floor over to Dr. Bai.

Thank you, Allen. Good morning. Hello, everyone. I'm Bai Aixi, General Manager of Bestzyme. Despite macroeconomic headwinds impacting the enzyme industry, Bestzyme continues to lead the sector in business growth. On the operational front, our top five enzyme products, which accounts for about 50% of total revenue, have maintained a steady sales growth. Our newly launched products are showing strong momentum. Take PuriWise Series, an industry -- sorry for inconvenience. Please go to Slide 13. Okay.

Hello, everyone. I'm Bai Aixi, General Manager of Bestzyme. Despite macroeconomic headwinds impacting the enzyme industry, Bestzyme continues to lead the sector in business growth. On the operational front, our top five enzyme products, which account for about 50% of total revenue, have maintained a steady sales growth.

Our newly launched products are showing strong momentum. Take PuriWise Series, an industry-innovative alkaline protease first introduced in 2023. Sales have grown continuously since launch. By 2025, revenue from PuriWise Series had reached more than USD 1 million. Based on market analysis, we anticipate sales could double in 2026.

In addition, our novel phytase product, launched in the second half year of 2025, already accounts for 20% of total phytase sales, gaining rapid market acceptance in a very short time. Combined, our novel amylase and phytase products generated nearly USD 2 million in sales within their launch year, validating our ability to rapidly scale next-generation enzyme innovations with clear commercial traction.

Our sweet protein product have successfully obtained GRAS certification from the U.S. FDA. In second half of 2025, we submitted our market authorization application to China's National Health Commission. Our manufacturing facility for sweet protein is underway with production expected to commence by mid-2026, and we have already received some pilot orders.

In 2025, thanks to a significant increase in our R&D efficiency, the number of our patent applications reached a record high, growing by about 35% compared with the same period last year. Meanwhile, we further strengthened the construction of our intellectual properties protection protocols and internal control system.

In 2025, Bestzyme has significantly increased its R&D investments to foster long-term growth. Let me outline how we are strategically allocating these resources.

Our R&D efforts are focused on two main areas. First, AI-powered molecular discovery platform. We have developed multi-proprietary AI models for enzyme and synbio product screening, utilizing our extensive datasets accumulated from product development. These interconnected models are supported by Genscript's wet lab platform, enabling rapid, reliable and cost-effective gene synthesis and high-efficiency protein production.

Our integrated LDBT platform completed the information cycle by validating candidates using our robust data assets and continuously generating high-quality data to refine the models.

Second, AI-driven product optimization. By implementing AI, we achieved a 140% improvement in R&D efficiency and reduced the average project time line to just 6 months. This enabled us to build a pipeline of over 20 high-performance strains, supporting the development of more than 6 novel enzyme products and enhancements for existing ones.

Thank you for your attention. I would now like to invite our CFO, Phil, to provide an overview of the company's financials.

Thank you, Dr. Bai. I will be presenting the group's financial performance for 2025. In the year, our total revenue reached $959.5 million, a 61.4% year-over-year increase with gross profit more than doubling.

All business units delivered sustainable growth. The Life Science Group continued to be our growth engine and the profit center. Revenue grew 14.8% year-over-year to $522.1 million. ProBio achieved 309.1% year-over-year growth to $388.7 million revenue, including nearly $280 million LaNova license deal. Bestzyme's revenue grew by 7.9% year-over-year to $58 million, outperforming the industry average of 5%.

However, due to the share of loss and impairment from our investment in Legend Biotech, we recorded a loss for the year of $532.4 million. Now let me elaborate more on the share of loss and impairment from our investment in Legend Biotech.

In October 2024, the Genscript Group lost the control of Legend Biotech and subsequently account for investment in Legend as an associate [Audio Gap] Legend. Under Hong Kong AS 28 investment in associates and joint ventures, a significant or prolonged decline in the fair value of investment in an equity instrument below the cost is an objective evidence of impairment.

As of December 31, 2025, the significant and prolonged decline in Legend Biotech ADS price by year-end triggered an impairment test under Hong Kong AS 36. The group engaged an independent external valuer to conduct a valuation to determine the recoverable amount of the investment in Legend being higher of number one, value in use based on DCF model with a reasonable growth projection and WACC applied; and number two, fair value less cost of disposal calculated by reference to the closing price and provided an impairment loss of $398.1 million.

During the year ended 31st December 2025, the group recognized its share of Legend Biotech's profit and loss based on Legend's own financials appropriate adjustments and the changes in shareholding percentage in Legend. The group recognized a share of loss of $320.4 million in 2025.

It's important to note that both the impairment and the share of loss are noncash accounting items and do not materially impact the group's cash position or liquidity. By excluding the nonoperational and noncash items, our adjusted net profit was $230.3 million, which better reflects the true performance of our business, improved from FY 2024 $59.8 million, a 285% year-over-year growth.

So based on Legend's Q4 earnings report, Legend Biotech achieved a full year 2025 revenue of $1.03 billion and its adjusted net loss has been significantly narrowed to $33.1 million. Given that the CARVYKTI franchise has achieved a breakeven in 2025 and Legend Biotech is expecting to turn operating breakeven in 2026, we expect Legend's improving operating performance will positively impact Genscript's profit over time.

In 2025, Life Science Group revenue surpassed $500 million milestone, growing by 14.8% year-over-year. We observed its revenue momentum accelerate in the second half of 2025.

From a product mix perspective, attributed by synergies between gene and protein businesses, integrated one-stop gene-to-protein service now account for nearly 65% of total revenue, serving as a primary growth driver. Industrial customer revenue, particularly from pharmaceutical companies, continued to grow, reflecting enhanced key account development capabilities with global multinational companies.

Adjusted gross profit grew 12.5% year-over-year to $267.3 million with adjusted gross profit margin at 51.2%, broadly stable compared to the second half of 2024.

On the expense side, SG&A expenses increased primarily due to ongoing investment in Europe and the North American market business development and marketing and rebranding campaigns in the second half. The investment will further increase our customer base and generate new customer demand. R&D expenses remained at approximately 9% of the total revenue to maintain our cutting-edge technology leadership of our core business.

Adjusted operating profit stood at $95.4 million. Over the past 2 years, margin fluctuations have been impacted by product mix, global capacity ramp-up and pricing strategy adjustments. Currently, gross profit has been stabilized and shows signs of recovery. We will keep focusing on cost optimization and lean operations through adopting generative AI, manufacturing automation and R&D efficiency improvement.

In 2025, ProBio generated $388.7 million in total revenue. By excluding the LaNova deal, fee-for-services revenue demonstrated 21% organic growth, primarily driven by solid underlying customer demand for protein and antibody. Revenue and order momentum accelerated significantly throughout the year.

New order intake continued its recovery trajectory in 2025, growing at 22% year-over-year to $158 million, laying a solid foundation for 2026 growth. With fee-for-service revenue, the mix between protein and antibody and CGT offerings shifted, primarily driven by the robust recovery in the antibody and protein CDMO market.

Our global expansion strategy works well in driving significant growth. North American and European markets are now contributing 38% of total revenue, a notable increase that reflects our enhanced international footprint.

The adjusted gross profit was $258.4 million, and the adjusted EBITDA was $224.3 million.

On the expense side, SG&A costs increased primarily due to operational ramp-up expenses at our Hopewell CGT facility in the U.S. Meanwhile, R&D expenditures grew approximately 1.6x year-over-year, reflecting strategic investments in proprietary platforms and high-potential assets. Fee-for-services gross margin was temporarily compressed by initial ramp-up cost at Hopewell and the new antibody and protein CDMO capacity deployment.

Bestzyme revenue grew by 7.9% to $58 million. Adjusted gross profit was $23 million. Coupled with the increased R&D investment to enhance product competitiveness and develop innovative products, the segment shifted to an operating loss of $3.2 million, while commercialization of innovation will significantly improve our product mix and profitability in the coming year.

The business from international market ramped pretty well. Outside of China revenue increased significantly to 26%, which holds major strategic importance for future margin improvement. Margins in industry and feed enzyme fluctuated due to changing market dynamics, but we remain confident that ongoing product performance enhancement and cost optimizations will drive renewed margin improvement.

Expenses increased across the board as we further invest in R&D and the regional sales force. As Dr. Bai highlighted, these investments are critical to building a long-term competitive advantage.

That concludes my part. I now hand it back to our CEO, Sherry, to introduce our 2026 business focus and the full year guidance.

In 2026, our business focus will be on achieving high-quality growth while gradually improving profitability. For Genscript's Life Science Group, we remain confident in the long-term growth trajectory. We will strengthen our platform flywheel by innovating and integrating across gene, protein and new modalities; grow our global ecosystem through expanded customer reach, key partnerships and in-house solutions to boost revenue; scale automation and digitalization for faster, more efficient, cost-effective global delivery.

We expect the revenue growth for Life Science Group to be between 15% and 18% in 2026. We anticipate the adjusted gross margin to reach 52% with the adjusted operating profit margin expected to be around 19%.

For ProBio, we will further strengthen our commercial capabilities, seize the industry opportunity and accelerate CRDMO services business. Antibody and protein demand will stay strong momentum. In vivo related demand will boost customer needs in the CGT business. We will continue our investment on new molecular entities and platform, also strengthening our external business development capabilities to achieve licensing deals. We expect the fee-for-services business revenue growth to reach 25% to 30% (sic) [ 20% to 25% ] with the overall loss expected to narrow.

For Bestzyme, we are continuously working to launch a series of first-in-class and best-in-class products and to solidify our innovation advantage through patent applications and IP protection, laying the foundation for international market expansion. We will expedite the establishment of commercial manufacturing capacity for sweet proteins, paving the way for market launch. We expect the revenue growth for Bestzyme to be between 10% to 15% and with the adjusted gross margin increasing to around 43%.

For a group perspective, strengthening our capabilities in business synergy, globalization, automation and digitalization continues to be the key focuses in 2026.

This concludes today's presentation. Operator, we will now proceed to the Q&A session.

[Operator Instructions] First question comes from Yang Huang from JPM.

I have two quick ones. So first one is just trying to confirm how much revenue were recognize from LaNova deal in the second half because I think the cash payment we received is about $70 million. And if that's all recognized as part of revenue, I think organic growth in the second half is much higher than first half. What is the kind of key drivers here? That's my first question.

Thank you, Mr. Huang. This is Phil. I'm happy to address your question. So we received our proportion of LaNova second milestone payment in the second half of the year 2025. And please just refer to the inside information announcement we published by October 2025. And other than the LaNova deal, our underlying core business also achieved outstanding growth. And we noticed an overall acceleration across our Life Science Group and ProBio CDMO business.

So for Life Sciences group, gene-to-protein revenue was particularly strong with a robust growth of 51.5% and contribute 65% revenue mix of the total business. And at the regional level, Europe and Asian market both contributed strong growth driven by the funding of budget environment warming up and the industry trend. And the U.S. market also kept stable and profitable growth.

Other Life services, our product offerings, revenue mix also keeps increasing as another profitable growth engine on the basis that the total business grew by nearly 15% in the year. And in the second half, the revenue grew even faster, 18.7%. And our strategy of delivering standard and scalable product selling is also working pretty well.

ProBio, excluding LaNova deal, fee for service revenue demonstrated 21% organic growth in the full year and 25% organic growth in the second half was observed in the business, and it's primarily driven by solid underlying customer demand for protein and antibody.

And our global expansion strategy also works well in driving significant growth. North American and European market now contributed 38% of total revenue. So that is also a notable increase, reflects our enhanced international footprint.

Okay. Great. Second question is about the profitability. We saw in 2025, both Life Science and Bestzyme gross profit margin is actually declining compared to 2024. I think the management guided 2026 will have an improvement. Can you give kind of more detailed discussion how management plan to do to improve profitability for Life Science and Bestzyme?

Thank you. Yes. So for Life Sciences Group, there's a slight gross profit fluctuation purely from a year-over-year perspective due to the necessary investment to support our global expansion, and our aim is to build the mid- to long-term competitive advantage. And the product and portfolio selling mix shifting also impacts our gross profit a little bit. But in the second half of 2025, the adjusted gross profit improved -- actually improved steadily from the second half of 2024 and the first half of 2025 continuously, okay?

And our strategic investments will focus on differentiating technologies like next-generation gene synthesis and global protein smart manufacturing other than aggressive price wars. We also focus on cost optimization and operational efficiency improvement by adopting generative AI solution, manufacturing automation, which directly contributed to our margin performance against the competition. And by maintaining the market leadership, we are looking for invert for efficiency gains.

And as for Bestzyme, gross margin declined due to the intensified market competition and a relatively lower mix of high-margin products and price pressure. We are closely monitoring the pricing strategy execution and the commercialization progress of the new innovative product so as to restore the gross profit relentlessly.

Next question comes from Linda Shu from HSBC.

I'm Linda from HSBC. And first of all, congrats on the solid growth of this year -- of last year. And actually, I have two questions. One is to follow up the questions from Dr. Yang Huang. And we noticed that Life Sciences business has achieved a solid growth last year and also with a slight decrease in the GP margin. As we know that we will see the recovering of the global biopharma and also observe the CDMO's market share of China actually is increasing globally. So my question is that considering the current geopolitical uncertainties this year, what about the outlook of this business for the global market share this and next year?

Thank you, Linda, for the question. We hold a highly optimistic outlook on the long-term prospects of CRO and CDMO as a whole. Currently, global biopharmaceutical investment and financing have rebounded. Moreover, we observed a thriving upward trend in global biotech R&D across both Europe and the Asia Pacific region, benefiting from the growth of licensing activities by global pharmaceutical companies in the Chinese market in 2025. China's CRO, CDMO capacity utilization has also shown a substantial improvement. In 2025, geopolitical has a relatively minor impact on biopharmaceutical production capacity.

I will invite our business leaders to add more color.

Thank you. This is Ray, and I would like to first echo Sherry that with our platform leadership, the flywheel and with our expansion of our ecosystems and importantly, expanding to the in-house solutions as products, our scale and our margin were positive, will improve. And also, that -- I just echo Sherry, we are very confident for Life Science Group, and that's why our guidance of the revenue growth is higher.

That sounds great. And my second question is regarding the Legend, and we see that overseas sales of Legend is ramping for years. And also, it has been transformed into a biopharmaceutical achieving profitability. So could you please share some -- the development strategy of Legend in the future? And also, apart from including the Legend, do the company have any investment or prepared early-stage pipeline that can deliver solid growth or the growth in the future?

Yes. Legend is a great asset for us, and we could see the solid progress from Legend Biotech. We are not planning to set up new biotech company at this stage, though, we have a company like ProBio, where we can help biotech and biopharma to accelerate their drug discovery and development process.

Now I invite Allen, further lay out the strategy on ProBio.

Thank you, Sherry. Thank you for the question, Linda. So generally speaking, I think within ProBio, leveraging our integrated discovery platform, actually, we do establish some pipeline there, but the main business purpose is still to enable our clients to accelerate their R&D. So on one hand, we already have more than 30 predevelopment projects. But so far, majority of that are really early-stage binder or at the early stage pre-GCC stages. There are broad interest from industry for all those different kind of targets. And there are ongoing discussions with different potential clients as well. But generally speaking, those assets are at a pretty early stage.

Secondly, we developed a very innovative CD3 VHH platform, which has cyno cross activities. And with this CD3 VHH platform, actually, we also constructed quite a few TCE molecules including traditional molecules, but also the next-generation TCE platform technologies as well. By saying that, I mean, we are developing antibody masking technology and also co-stimulation technologies. And we believe those molecules will definitely have higher potential for collaboration with biotech or biopharmas.

And in addition to those molecule assets, we are also strengthening to develop some proprietary technology platform. First is about our in vivo CAR-T platform, leveraging our CD3 VHH, right? We developed the CD3/CD7 dual targeting lentivirus and also tLNP platforms. And we believe this is quite unique compared to most of the technology in the industry right now.

And also, we are also doing R&D for our traditional services. And for those parts, there is a potential for user fee to use our technology. But more important, the R&D part for those services are really to enable or empower our service part. Thank you.

Clear. And look forward to more innovative modalities and comprehensive collaborations of this green global strategy in the future.

Our last question comes from Laurence Tam from Morgan Stanley.

I have two questions. My first question is, what is Genscript's plan for Legend from a holding perspective and from a strategic perspective?

Okay. I will take this question. We are pleased that Legend is making significant breakthroughs in 2025. Legend announced that its CARVYKTI franchise achieved profitability for the full year 2025. Legend has brought hope to patients worldwide with more than 10,000 multiple myeloma patients choosing CARVYKTI as their treatment.

Additionally, with the physical expansion of Raritan facility, Legend now has the installed capacity to support annual production of 10,000 doses across all manufacturing nodes. In its recent earnings report, Legend also mentioned that it expects to achieve company-wide operating profitability. So we believe Legend will benefit our financials in the long run. Our Board will evaluate Legend's business and will always pick options to maximize shareholder value. Thank you.

So my second question is, so given increased regulatory scrutiny on genomics or gene therapy-related companies by the U.S., for example, we saw the Pentagon military list 1260H. I think Genscript was originally proposed by some lawmakers to be included at the end of last year. But in the list that was briefly released in February and withdrawn, I think Genscript was removed from that list. But -- so my question is, what is the company's strategy to mitigate customer concerns given those type of geopolitics?

Thank you. Firstly, I would clarify, there's no removing from any list. We provide raw materials to gene therapy companies. So from a regulatory perspective, we are not genomics and gene therapy-related company.

And as a global company, we will further enhance our transparency and communication as well as strengthen compliance through internal and external programs. We have also enhanced data security, and privacy measures and we will proactively engage with regulators and advisers to address issues before they escalate. Thank you. Hope it's clear.

Yes, that's very clear.

Thank you for all the questions. Due to the time limit, we will end the Q&A now. This also concludes today's conference call. Thank you for participating. You may now disconnect. Have a good day.