WuXi Biologics Stock

Okay. I think we can get started. Good evening, good afternoon, good morning, depending on where you are. Welcome. This is Yang, China health care analyst at JPMorgan. It is my pleasure to close WuXi Biologics 2026 Interim Results Conference Call.

WuXi Bio just reported a very strong first half with revenue up 18.4% year-over-year and total backlog increased by 30% year-over-year, and the gross margin also expanded to 46.2. So we are expecting a company give us more color on their strong first half. Joining us today are Dr. Chris Chen, CEO; Mr. Ming Tu, CFO; and Dr. Lina Fan, Head of IR. Following prepared remarks, we will move to a Q&A session. [Operator Instructions]

Now I'll turn the call over to WuXi Bio management team.

Thank you, Yang. Good morning, good afternoon, good evening, global investors. The panel of our talk is innovation, execution and global scale driving sustainable high growth. I think I want to highlight all 3 aspects: innovation, our innovation on multi-specifics on ADCs, our execution, our speed to deliver projects, our quality, and we can quickly scale from 200 projects to 300 projects for our programs and the global scale, we see more and more manufacturing coming to our site in global, in Ireland, in Germany, in U.S. So our dual site using China to launch the product and then have our global site as a backup as a secondary supplier now really works for our global clients.

So this is following the standard deck that I think I always want to open up the slide with this one page to highlight all the business key metrics. So we see a number of projects. One of the key metrics for our growth is growing 23%. It's an unbelievable number. I think -- so now we actually have more than 1,000 projects, 10 64 projects. When I started the company, I was dreaming if we get 500, 800 projects, it will be unbelievable. So now I have more than 1,000 projects. look at the pace we're going right now, it took us 15 years to go from 0 to 1,000 projects. It probably only take us the next 4 to 5 to 6 years. So next 5 years, 6 years to achieve another 1,000 assets. So the first 1,000 assets took us 15 years. The next 1,000 asset may only be 5 to 6 years. That's the pace of our growth.

Look at the organic projects growth from 86 first half of last year to 123, again, a 43% growth. Among them, a majority of them are new modality like ADCs and multispecifics, right? I have always say that the commercial manufacturing will be a key growth driver. We are seeing a 17% growth on the number of projects from '24 to '28. So as we have more and more PBQs Phase III programs and the commercial manufacturing, our backlog also grow very nicely. Historically, I always said our backlog is so big, it's very hard to grow. But our backlog only move when we sign $100 million, $500 million deals that can move the needle because it's so big already. As I mentioned earlier that we actually increased our capacity to 300 INDs a year. This is 5 to 10x the capacity of our peers. This shows we really can scale our business. We can capture all the tailwind from the new modalities from ADCs, from bispecifics, from the new AI-enabled molecules and from mRNA modalities. And on the manufacturing side, we can do 40 PPQs that essentially means 20 BLAs a year. For the past 3 years, we have grown our revenue in the teens without a meaningful addition of headcount. So that's why our productivity increased by about 10% a year as our team are fully booked, both in D and M. I D right now, we are already more than 120% booked. In manufacturing, next year, we'll probably be 100% booked. So as a result of this tight labor usage already, we are increasing our headcount significantly. You see year-over-year, our headcount increased by about 17%. Certainly, a majority come from the XTC business, but WuXi Bio, the other business also adding headcount seriously. So that again show our confidence for our accelerated growth. Our retention rate is still very strong at 98.7%. -- that's one of the key reasons we can scale our business from 200 INDs to 300 INDs in about 2 years.

And right now, we want to do -- we can do 20 BLAs. If our industry need us to do 30 BLAs, give us a year or 2, we can scale the business. So as Yang mentioned, we have very strong revenue growth, our revenue growth in RMB terms, about 18.4%. But as you know, the U.S. dollar versus RMB has quite a change this year. Our impact is about 500 bps. So if you use U.S. dollar terms or constant currency terms, our growth is actually 23.4%. For the past 4 years, this is the first time we see a growth more than 20%. And that really shows what I promised to global investors at JPMorgan 3 years ago, I said WuXi Biologics is poised for accelerated growth. We go from low teens to high teens, now hopefully to those 20s.

Our revenue growth is significant. Our profit growth is even more phenomenal. When you look at adjusted EBITDA growth, profit growth. What's more striking is actually our margin growth. Our adjusted gross margin grew 280 bps. As I mentioned already, RMB also appreciated 500 bps. That translates into a 300 bps downturn -- downward impact to our adjusted gross profit margin. So had the RMB did not appreciate, our margin growth would actually be almost 600 bps that's how impactful our first half business is. As most of you know, second half of last year, we have a very strong AR growth, that actually make our margin significantly better. But this time, our was actually right on target. So this margin expansion does not come from AR, but come from our execution, come from our business product mix, come from our WBS our more thorough, much better management. I think Ming will highlight all those margin growth drivers in his talk in the next 20 minutes or so.

So looking at now, our profitability is already at a record high and near record high of the company history. It's comparable to the 5 years ago when we had a very high utilization because of COVID. But the difference is now we have a global site. We have a site in Ireland, we have site in the U.S. that's actually much more higher cost base. So essentially, this can demonstrate even with carrying the U.S. side, Ireland side and the future German side, Singapore side, our margin can still be as good as our peak time in the past couple of years. So as the company continue to evolve, I also still promise investors our margin will continue to improve by about 100 to 150 bps last year. We promised 100 bps last year, we delivered 500 bps. And this year, we delivered another 250 -- 280 bps despite the 300 bps negative pressure from the currency wind. So I think the company is actually doing very well in terms of managing our growth. We have our growth is actually -- we continue to grow very fast with actually improving margin profile.

So all our investors are familiar with this funnel. I call this funnel, golden funnel or gold funnel. Today, I'm actually going to call it diamond funnel. So because our funnel already reached 1,000 molecules. It's unbelievable, right? So you see we added 123 projects organically and through acquisition, we added another 46. Among the projects added, actually 2/3 actually come from U.S. and Europe. We are a lot more selective in China in terms of adding new projects. So as I mentioned earlier, our team is already swamped. They are already 120% booked. So as a result, we're actually very selective in China. We're only picking very profitable, very, very promising projects in China. So among the new projects signed, 2/3 come from U.S. and Europe, 1/3 come from China. Among all the projects we signed, actually more than 70%, more than 2/3 are actually new modalities. They are ADCs and multi-specifics where we have higher margin, where they are a lot less competitive, where we actually -- our technology can really help make a huge difference.

So our market share on complex modalities are actually much higher than our traditional overall -- overall traditional mAbs or overall portfolio. So as more and more projects are new modalities, looking at the overall portfolio, with 1,000 assets, actually more than 50% are ADCs and multi-specifics. Again, that basically means our per project pricing is higher, our profit margin is higher, and we have a higher opportunity to capture -- to keep the programs in the portfolio because they are much tougher to work on. So the D to M conversion ratio is also high. So our funnel, our diamond funnel is getting healthier and healthier and stickier and stickier. And basically in the project, once they come into the funnel, they don't leave, right?

So Win-the-Molecule has always been our strategy. We have seen almost 80% growth of our Win-the-Molecule projects. We won 16 projects in the first half, including 4 late phase and 1 commercial directly, right? I think -- so among the late stage -- among them, 2 of them are actually biosimilars. I will talk about biosimilar later on. This will be a new driver for our manufacturing growth. So overall, with this funnel, now we have 78 late-stage programs, 28 CMO projects is already comparable to the global leaders in CMO. The other reason we call this a diamond funnel now, if you -- we have 500 program, more than 500 program in preclinical, 300 program Phase I, 130 program Phase II. If you do a probability adjust amazingly, almost every line give us about 60 commercial programs when their phase was determined. So essentially for the 525 preclinical program after 6, 7, 8 years, when some of them failed, some of them become approved. So that will give us about 60 to 70 commercial program.

For the 300 Phase I give us the same 60, 130 give us 60, 78 with 80% success rate, give us 60. So it's actually amazing. So almost every line here give us about 60 commercial programs. If you add this together, it become almost 280 commercial projects. So that's why I call this a diamond funnel. We only -- currently, we only have 28. But when all those state of those molecules are determined, our commercial project will go by 10x, right? So even if you are -- that's a normal basis, even you assume a worst case, industry failure rate is higher and some projects did not leave us for other manufacturing CMO, will still be at the bottom 200 manufacturing projects.

It's unbelievable, right? If you think there's 200 manufacturing projects, if you think every manufacturing project give us a RMB 500 million revenue, which is not very high, which is USD 70 million, USD 80 million. That means this will be RMB 100 billion revenue, RMB 100 billion revenue, USD 15 billion revenue when all the manufacturing are realized. And again, as you know, biologics has a life cycle of 30, 40 years. So the program we're manufacturing today, 10 years from now, when every program, when the state was determined, all the program will still stay. So our manufacturing will go from 28 programs to 200 programs and even 280 programs with the current portfolio. That's how powerful this funnel is. That's how powerful our CRDMO model is. I think that's why -- that's why I have told investors even back in 2017 when we IPO-ed, I said, everything you want to know about WuXi Biologics, you only need to look at the funnel. The funnel tells you everything. That's the beauty of the CRDMO model. So again, I want to highlight this. So with this funnel and with our stickiness of the funnel, we actually can really see a strong, sustainable high growth that's inherent in the WuXi Bio business model.

So I already mentioned the project growth, just give you a number, right? During COVID, our project addition is very strong. And post-COVID, it's sort of dipped a little bit, but now it's actually going all-time high, all-time high. So the first half of this year, the overall project grew by 43%, Win-the-Molecule grew by 78%. Why we are so successful with the molecule? Win-the-Molecule is continue very difficult. So biologics manufacturing, biologics is very hard. I use marriage as an example, almost as an analogy. It's almost like getting married. So when someone work with us, almost like getting married because it's a long-term relationship. And we want to manufacture the drug. development takes about 8 years, manufacturing another 30 years. You're talking about 40-year relationship. That's why I use marriage as an example.

So the stickiness that's basically the marriage of stickiness. The reason why we are still able to Win-the-Molecule is sometimes our peers actually stumble. And then our clients need to divorce them and then remarry and the new choice they have is WuXi Biologics. That's how hard it is to Win-the-Molecule. But over the past 8 years, we have won more than 128 programs. Win-the-Molecule is also very difficult because it's not your cell line, it's not your format. It's not your process per se. You have to learn about them. An analogy is almost like adopted child. You don't know about they have their own character. You have to be very careful with them. So Win-the-Molecule is actually very, very difficult. But so far, I'm very pleased to share with the global investors. We have won 128 projects. Every project come to WuXi we delivered.

So as I mentioned, most of the projects actually -- those are global peers, some they failed the program and then they pick WuXi, WuXi delivered. And some of the other programs are actually large pharma do them in-house, and then they want to find the best home for the program when they have limited in-house capacity. So they actually come to WuXi. So the 128 Win-the-Molecule program is a strong demonstration of our capabilities. So among the Win-the-Molecule program, we already contributed to 13 manufacturing projects. So we only have 28 so far. Almost half of them come from follow the molecule, half of them come from Win-the-Molecule. Last year, we announced our new cell line, which is truly a revolutionary change for our industry, right? We can do the cell line faster, do the -- make the productivity twice as good as our industry standard. So now our cell line has actually become a differentiator, help us win more programs.

So if my client -- if my current client has a program that only get 1 gram per liter or 2 gram per liter or even 3 gram per liter at a competitor, we can tell them they come to WuXi, we'll give you 8 or 10. Your cost of goods manufacturing will be 50% or less. And now your drug will be a lot more competitive in the market. Your margin will be significantly higher. I think that's how technology has really translated in technology advantage now is translating into commercial advantage because we want to use our technology to actually win more programs. So Win-the-Molecule is the same, follow the molecule is definitely the same as well. So now every Follow the Molecule client started with the best technology in the industry.

So I want to share with you the overall revenue growth. I mean if you look at the revenue growth of the different segment on the AR and early is actually amazing. It's a 27% growth year-over-year growth. U.S. dollar is 32%. The Phase I and Phase II program in the past 2 years, because a few big programs move from D to M, we see a dip I promised Investor will come back. So this time it has already come back. And then the PPQ and commercial, we grew 11% in RMB and 16% in U.S. dollar terms. The reason the growth is slower is because last year, there were a significant inventory build. The last year basis was very high. And then we only added 2 programs early this year. So as we add more program, as the program move forward, our manufacturing growth will still accelerate. So I still anticipate next 3 years, our manufacturing growth CAGR will be 30%. That basically means next year will grow much faster than this year. The year after in '28 will be even faster. So I think that's the growth dynamics of the company.

If you look at the region, it's actually very exciting that we see China and the Rest of the World now have the fastest growth. Traditionally, North America has been very largest market, very strong growth. This year continue to be the same. In North America, about almost 60% revenue or 14% growth, very, very decent. 14% because the base is so big, right? It's already 60% revenue. Europe, 70% of revenue as big as China and with a flat growth this year, mostly because we divested our Ireland site. And China, as I said, in the past years, it is like a flat, sometimes even negative growth, but now we see a 51% growth. This is actually in the condition -- under the conditions we are picking projects in China. We're very selective. We're only identifying high promising projects in China. We work with them. So Chinese market now contribution is as strong as Europe.

And as I mentioned earlier, Rest of the World, we see a significant growth and now getting close to 10% revenue. So we have 4 engines all firing at a different rate, and that gives us a very strong balanced growth. So I already mentioned years and years, the backlog -- our backlog is so big, it's actually very hard to grow. But fortunately, as we sign more and more R&D projects, the milestone backlog will grow and we sign more and more manufacturing projects, our service backlog will grow. So for the first time, we see a significant growth of the service backlog and the backlog within 3 years, all because of manufacturing projects. We have 78 PPQ -- 78 Phase III program and 28 commercial programs. So the backlog growth give us more assurance.

Again, if you look at the funnel, you know our manufacturing will grow. But the backlog give you more assurance that near term, the growth is already there. So look at the distribution of the different projects. As you see, bispecific growing at very fast at 32% rate, but the ADC growing even faster at 46%. So now bispecific and ADCs are already more than half of the company portfolio. Again, that's -- because they are harder to do, they have less competition. That basically means our project is even stickier. Once they get into the funnel, they don't leave. So I've been telling investors for traditional map, maybe there are 10 companies that are as good as us. But once you go to ADCs, maybe only 4 to 5, but you go to multispecific, only 2 or 3. So the multi-specific ADCs, globally, there are only 2 or 3 -- 2 to 5 players that are as good as us. That's why it's less competition. That's why it's higher premium pricing. That's why it's also better margin.

That's one of the main drivers for us to continue to improve our margin because the margin profile for those new modalities are significantly better than the traditional commodity maps or [indiscernible] maps. So mentioned bispecifics. So now this is already 20% of the company's revenue, it grow from a few percent to 20% in about 3 years. And it's still -- last year, we see more than doubling of this growth, more than 100% growth, right? So that's why it grew to about 18% last year. Now this year is almost 20% of revenue and it's still growing 30%. And multi-specifics really show the entire strength of WuXi's CRDMO model. I've been telling you over and over again, we have a very strong CD3 platform that will give us upfront payment milestone royalties. So on our part, our multi-specific platform is strongest.

On the D part, we have the largest portfolio. Even in manufacturing part, we have 3 projects already. That's already -- globally, there are only 20 commercial programs approved. So we expect these 3 to be generating -- for all 3 programs to be generating $100 million of revenue for us next couple of years. The earliest one maybe even as early as next year. So one of the bispecifics will achieving $100 million of revenue for us starting in 2027. And hopefully, the other one will be 2028 or 2029. So all the current 3 programs will be generating $100 million revenue for us each. And that to us is a very large volume manufacturing projects. We have 3 PPQs scheduled this year. I think I already mentioned that the multi is very, very hard to do on the right side is all the technical details I don't want to highlight because I already mentioned that to global investor last year.

So with that, I'll hand over to Ming for a more detailed financial review.

Thank you, Chris. So now I'm going to present our financial results for the first half of 2026. This slide here gives us the highlights of our financial performance in this reporting period. First, revenue, thanks to the strong biotech funding environment and also our share gains, our revenue continued to grow at an accelerated pace. As you can see that our revenue reached RMB 11.8 billion, 18.4% increase over the prior reporting period. The average U.S. dollar to RMB conversion rate declined from the [indiscernible] in the first half of last year to about 6.83% in the first half of this year.

If we adjusted the 5 points of the FX impact, our revenue growth on constant currency basis reached 23.4%. Our revenue increase in the first half was driven by RDM, all the 3 cylinders. Our research and discovery services segment, we were able to sustain the momentum from last year, continue to reach the fruitions from our innovative platforms after bispecific, multispecific and ADC. Milestone income from the past discovery projects almost reached USD 40 million in the first half. At the same time, our research protein production services delivered 40% of the growth year-over-year. We also have a full pipeline of the new discovery projects ongoing. The momentum of our will accelerate in the second half of this year and continue into the foreseeable future.

On development side, thanks to the strong biotech funding environment and also our share, we achieved a revenue growth for about 32% year-over-year on a constant currency basis. Thanks to the 123 new projects we scored in the first half, among which 107 were the pre-IND phase. This is a new record for any of the half year reporting period, representing over 60% of the global presence in the space. Our process optimization and the productivity improvement also enabled us to shorten the DNA to R&D conversion cycle to about 6 months. The early phase revenue also increased 15% year-over-year on a U.S. dollar basis as more pre-R&D projects are moving through the Diamond funnel at an accelerated pace. On manufacturing side, with the successful execution of our solo and Win-the-Molecule strategies. More and more projects were advancing into the later stages.

Win-the-Molecule strategy also added 16 projects to our portfolio with about 5 in the late stage, including 1 CMO project from a global bipharma and also a couple of the biosimilar projects. Now we have 78 projects in Phase III and 28 in commercial manufacturing stage. And the volume of these late-stage projects are ramping up steadily with the growth of our clients' drug sales. Overall, late phase and the commercial manufacturing revenue grew over 16% in the reporting period and now representing over 40% of our total portfolio in the first half. From a modality perspective, bispecific, multispecific and ADC continue to be the key growth pillar in our portfolio, contributed 55% of our overall revenue in the first half and over 70% of our new orders.

Moving over to gross profit, which increased about RMB 1.2 billion to over RMB 5.4 billion in the first half. The walking 28.1% growth in GP also gave us 350 bps of the lift in the IFRS GP margin and also 280 bps expansion in the adjusted GP margin. We have been talking about the FX headwind since the second half of last year. U.S. dollar continues its precipitous fall in the first half of this year. For every percentage point of the U.S. dollar devaluation will see roughly about 60 bps of the gross margin impact. So we absorbed roughly 3 points of the FX headwind. So on a constant currency basis, our GP margin could have extended over 6 points in the first half.

The key drivers behind the GP margin expansion were from volume leverage. As we increased our top line by 23.4%, while we still keep our head count increase at a slower pace. And we continue to tap into our existing capacities with much improved utilization in the first half. The 4 points of the volume leverage here more than offset the 3 points after FX induced the margin compression. Secondly, the productivity improvement from WBS, our lean manufacturing implementation also gave us about 150 bps of the margin improvement. The moderate from development sector also expanded 1 point, largely driven by the productivity improvement and also the higher margins delivered by the complex modalities as a bispecific and ADC now represent more than half of the pre-IND portfolio.

At the same time, the profitability from rate base and manufacturing sector continue to meet or exceed our expectations as the overall plant utilization continued to improve throughout the first half of 2026. Excluding share-based compensation, our adjusted gross profit margin stood at 48.4%, 280 bps improvement year-over-year, define the 3 points of the FX headwind, retaining our leading position in the global CDMO industry.

Moving on to adjusted EBITDA, which is a proxy of our operating cash generation capabilities, increased about 24.9% to about RMB 5.4 billion during the reporting period. This, together with our working capital and CapEx management, enabled us to generate $1.5 billion of the positive free cash flow. The adjusted EBITDA margin rate also expanded by 230 bps to 45.6%, one of the highest in the global CDMO industry. Adjusted net profit is the IFRS base net profit, excluding the impact of foreign exchange gain and losses, share-based compensation, fair value gain and losses from our investment portfolios. This is a proxy for our business profitability under the continuous operations. As you can see from the chart that our adjusted net profit increased a walking 38.6% year-over-year, exceeding 3.9 billion which also give us a margin expansion of almost 5 points to 33.4%.

The adjusted net profit margin expansion was largely driven by the $1.2 billion of the adjusted GP increases, partially offset by the increase in SG&A as we continue to expand our global coverage in business development and also invest in R&D and digitization. Chris, next page, please. This slide here shows our strong profitability growth over the past 5 years and also in the first half of this year. As you can see that all these financial metrics are improving year-over-year despite of the unprecedented FX headwind. Our IFRS-based net profit has grown at a CAGR of 13.1% during the past 5 years and now exceeded CNY 5.7 billion in 2025. In the first half of this year, IFRS net profit increased 5.8% to reach $2.9 billion. There are several cross currency here. First, we recorded $600 million of the gain from our investment in a biotech company, [indiscernible] IPO in April last year. This gave us a very difficult comparison year-over-year.

Secondly, we also had about $0.5 billion of unrealized FX loss in the first half due to the U.S. dollar devaluation, which negatively impacted the translation of our U.S. dollar cash and also U.S. dollar-denominated accounts receivable. On the flip side, our gross margin increased $1.2 billion year-over-year, more than offset the negative comparisons on the investment gains from last reporting period and also the unrealized FX translation losses and still enabled us to deliver 5.8% of the IFRS net profit growth. IFRS net profit attributable to the owners of the company grew by 4.3% in the first half, slightly lower than the net profit due to the minority interest pickup from FCC and also our 51% subsidiary, [indiscernible]. Basic EPS grew from $0.58 to $0.60 per share, 340 bps increase, largely in line with the IFRS net profit attributable to the owners of the company.

The quantum leave here is in the adjusted EPS, which grew 37.3% year-over-year from $0.59 in the first half of last year to $0.81 in the first half of this year. After we excluded share-based compensation investment gain losses and also unrealized FX translation impacts. Here, the most important metric is the adjusted EPS as it strips out the onetime noncash impact and it is the best profitability indicator of our continuous operations. Next page, please, Chris.

This is here gives us more detail into our gross profit and the cost components. As we talked about in the first half of this year, our gross profit margin was 46.2%, a 350 bps expansion from the same period last year, a multiyear high post-COVID. Excluding the $300 million of the share-based compensation, our adjusted gross margin stood at 48.4%, 280 bps improvement year-over-year. All these gross margin metrics were reported on an R&D basis with 3% of the FX headwind fully absorbed. In other words, our GP and also adjusted GP margin could have expanded by 6 points on constant currency basis. As we discussed earlier, the remarkable gross margin expansion in this reporting period was primarily driven by the operating leverage from the 23.4% top line growth on a U.S. dollar basis, improved capacity utilization and also the ongoing productivity gains through WBS and digitization initiatives. You can see the composition of our cost components in the second half below with roughly 16% in labor costs, 19% in material and 18.8% in overhead, which includes maintenance, utilities and also depreciation of the manufacturing facilities.

Labor cost component continues downward trends as -- was a couple of percentage points lower than our historical average as we focus on labor productivity improvement. For capital, revenue generation has been a crucial KPI for all our business units. As I mentioned earlier, the total number of the employees increased at a slower pace in this reporting period than our top line growth year-over-year. The material cost as a percent of revenue also improved 60 bps due to the productivity gains, yield improvements and also the mix impact from the higher growth from the development sector in our portfolio. The composition of our overhead component decreased about 240 bps year-over-year, largely due to the impact of the volume leverage as we grew our top line by 23% by tapping into our existing capacities with a much improved utilization rate. Hence, the overhead composition within our revenue decreased year-over-year.

Also in 2025, as part of our ongoing initiatives to optimize our global manufacturing footprint to improve the return on our assets. We divested our vaccine facility in Ireland and also our DP facilities in Germany. These divestitures also helped us to reduce the fixed overhead costs in the first half. Next page, please, please. Page 18 here is about the liquidity. At WuXi Biologics, we have a strong balance sheet and a solid cash position. As of the end of first half, we had about RMB 13.7 billion cash on hand sufficient funds to support our accelerated growth globally. Compared to the beginning of the year, our overall cash balances decreased about RMB 2 billion in this reporting period, largely due to the RMB 1.3 billion of the share buyback program as a return for our investors. XDC's acquisition of filed leading for RMB 1.2 billion and also XDC's retirement of RMB 700 million of the onshore loans. All these cash outflows were partially covered by our RMB 1.5 billion of the free cash inflow from the operation cycle. In the second half of this year, we're going to have more cash inflows from our balance sheet optimization, such as the divestiture of the [indiscernible] that Dr. Chen will present later.

So all these cash inflows here will also let us focus more on our core CRDMO business to support our global capacity expansion, share buybacks and potentially M&A activities. At WuXi Biologics, we always have a conservative funding strategy. For our RMB 65 billion balance sheet, we only have about $700 million of the debt, most of which are working capital facilities. And our gearing ratio, which is defined as an interest-bearing debt over equity is nearly 1.2%, 80 bps lower than the end of last year. At the same time, we have closed 7 billion of the bank facilities to tap into if we need to. Our CapEx spending in the first half was about RMB 2.8 billion, mainly for our capacity expansion in Singapore and in the U.S. and also WuXi's new facility in China. Subtracting working capital occupation and also tax payments. Our free cash inflow in the first half was RMB 1.5 billion, a new record in our history in the first half of the fiscal year.

Overall, our capital projects in this year are still on track. With some optimization here, our CapEx spending for the fiscal year 2026 will be about RMB 7.1 billion. But to meet the surge in demand, we will allocate more capital to capacity expansion next year. So our CapEx projection in 2027 will be approximately RMB 8 billion. With our operating cash generation capabilities from the business growth, our focus on working capital management and CapEx prioritization we are committed to delivering positive free cash flow in a meaningful way in 2026 and also in the foreseeable future.

Now I'm going to pass the stage back to Chris to share more insight into our business operations and technology innovations in the first half.

Yes. Thank you. Really, I want to give a global investor an update on our D&M. The most exciting part of business is essentially is the out-licensing business, where we receive upfront payment, milestone payment and royalties. I think this total payment already reached more than $100 million last year. We probably -- it will still be more than $100 million this year. And I also mentioned that this was one of the main reasons our margin improved significantly in the second half of last year. But the first half of this year, margin improvement come from the product mix come from the better utilization of the asset and come from our own management, WBS, right?

So look at the potential exciting milestone payment and royalties down the road. All the key programs are listed here. I think in terms of the milestones, quite a few CD3 bispecific program from GSK, the Merck CD3 CD19 programs, the BioNTech B7-H3 ADCs, those are near-term catalysts for receiving payment, both on milestone payment and eventually on royalties. I think we continue to work on more and more programs. I think every year, we want to license additional programs to global large pharma, to biotech companies so that we can receive them. So these programs 50 program, 50 royalty-bearing programs will generate a significant amount of royalties potentially in 2030 in the range of $100 million and eventually maybe even more than $500 million. So this will be a significant profit booster for us down the road. So as I mentioned, WuXi has a very exciting CDMO model, our funnel, our diamond funnel tell you everything about WuXi.

Our economics at WuXi is also very different because we have the R component, we have a royalty component. So our profit margin from the assets is significantly better than the traditional CMO. So even on the manufacturing alone, because we have a cell line -- we have very high pro cell lines, tell cell line royalties. So our economics are also better than traditional CMO. So the R part will bring us a significant royalty component. The D part, even the D part give us a very minimal cell line royalty. So I think what I listed here are different scenarios that you can see the profitability of WuXi versus our peers. So again, I use a big product as an example. If the royalty is 5% then actually, this is for Merck, BioNTech, Vertex, Lilly, Gilead, GSK, for all the programs, when they receive $1 billion sales, they actually give me $150 million next year right away, right? And then if they give us 100% manufacturing, my manufacturing revenue is also $50 million.

So basically it means the profit come from the royalty is actually 3 or 4x higher than the profit from manufacturing, 100% manufacturing, right? So certainly give us less manufacturing, the profitability is even higher. This again showcase the greatness of the WuXi CRDMO model. If we have AR for $1 billion sales drug, our net profit is actually $53 million. right? I mean versus traditional CMO, right, most of our industry peers, traditional CMO, their profit is actually $13.2 million. If you look at the bottom, the lightest column to the right column, the bottom, $13.2 million for traditional CMO for $1 billion drug. But for WuXi, our profit could be as high as $53.2 million. So maybe 4x higher in terms of profitability. That's how exciting our business model is.

So even if the program is 100% manufactured by someone else, my profit margin is still 3x higher than a traditional CMO. That's the beauty of WuXi CRDMO model. So even if a worst-case scenario where someone decided not to manufacture WuXi, our cell line royalty still give us about 30% of the profit of manufacturing alone. I think this is, again, all those are the beauty of our business model. That's a very quick update on. On the D part, I think the most significant message I want to share with you is that we increased our capacity from 200 to 300 in just 2 years. Again, last year, our capacity was only 150, right, last year -- last year, 2 years ago, it was only 150. Last year, we increased it to 200. Now we're going to increase to 300 because we see the pie is getting bigger and bigger. We also get a bigger slice of the pie. And also with AI-enabled molecules, we plan to see more and more molecules coming to our way. And we are getting ready for a new wave of more and more projects. That's why we increased the capacity by 50% in 2 years. This again shows our strong execution.

If you ask do manufacturing for you, you almost like you got an insurance policy. Look at our success rate, 99% for the past -- this is the past 8 years. But for the past 10 years, it's almost the same number, right? So that's why company trust us despite all those noise about the geopolitics, about tariff, about trade issues, right? And then if you look at the number of PPQs, which is a leading indicator of manufacturing growth, right, we have our PPQ number grow significantly in the past couple of years, right? If you -- 2022 was a local peak was a peak because of COVID. We have many, many COVID projects. So half of them are COVID project. If you take -- if you divide -- if you remove the COVID project, 2022 was only about 10, 11. And then '23, 16, '24, 16. But '25 become 28. And this year, we are already doing 34. As of now, next year, we're doing 30. And you know we have another 18 -- another 14 months to sign new projects. So most likely next year, this number will be record high as well.

So this number of PPQs really give us, again, a strong evidence of manufacturing revenue will grow substantially will become a bigger contribution to the company. The other amazing fact is that 100% of the PPQ so far are successful. That's our execution. That's our track record. That's our quality. I think I mentioned to investors last time, every PPQ, if you look at the next 10 years, the total contract from the PPQ could be $100 million, could be even $200 -- and if you look at the 30 PPQ, that basically 34 PPQ down this year, that basically means about $3.4 billion backlog or $3.4 million to $6 billion backlog once those PPQ programs become successful and once then they become a commercial product. That's why we are so confident about our manufacturing growth because all the leading indicators tell us it's going to be a hockey stick growth for manufacturing.

Last year, I mentioned earlier that our technology leadership now start to translate into commercial leadership, commercial success, higher winning rate of the projects. So our cell line technology now proven to give us even a much stronger opportunity in biosimilars Traditionally, biosimilars was not a big chunk of our business. Among the more than 1,000 projects, we have 17. So it's less than 2%. But this 2% will probably become 5% in 2 or 3 years and maybe even become 6% or 7% in the portfolio in the next couple of years, right? That's because with the new cell line, we can develop a product that's 30% to 50% less costly compared to our peers and then maybe half the scale. So traditionally -- previously, if you need to use a 12,000-meter reactor, stmlesssteel reactor, now you can use a 5,000iter disposable bioreactor. So this actually become -- make our disposable bioreactor more and more competitive.

So I already mentioned that we have less than 20 programs right now, but we already have 20 programs committed over the next 3 years. We're talking about additional 10. We have opportunity -- additional opportunity of 30 -- so essentially, we have 20 program right now. Next 5 years, we may go in for 16, and that's a 3x increase. So the biosimilar segment in a couple of years can give us $1 billion revenue, $1 billion revenue, and that's actually comparable to our total size as of today. So this new segment will give us almost double our manufacturing revenue in the next couple of years, right? I think that's how exciting our technology leadership translating into commercial success and is very, very meaningful. So as you know, a novel product go from D to M to commercial is 8 years. For biosimilar, it's probably 4 years, in half. So that's why our manufacturing growth will be faster and faster. So since we're talking about manufacturing, we think we have 4 key pillars that can really give us a strong conviction that our manufacturing will grow.

Follow the Molecule, starting next year, every year, we have more than 5 programs get approved. And that's a program, novel molecules that will treat different disease, cancer, autoimmune, CNS, right? So if you add next 3 years together, will be 20 approvals. So we only have 28 programs so far. So next 3 years give us about 20. So that basically means by 2029, we actually have almost 50 commercial programs. By 2030, we may have 60 commercial programs. So the number of programs will double in the next 4 years. That give us evident revenue growth. Our Win-the-Molecule, as I already mentioned, with the molecule is stronger and stronger. With the new cell line, we can even accelerate with the molecule. With molecule already contributed half of the commercial programs. almost half now and will continue to play a big factor. biosimilar. So each segment can give us $1 billion revenue growth in the next couple of years. That's why our manufacturing is so meaningful, right? And lastly, our drug product. Our drug product currently account for about 10% of the company revenue, but it's growing at a CAGR of 40%. So it will become a $1 billion franchise in the next couple of years. And that, again, adds to our biosimilar manufacturing growth.

So just the last line on the drug product side, our DP lines will increase -- our DP capacity will increase by fourfold in the next 3 years because we have so many programs, so many demand in there. DP -- so cell line is a good technology. DP is another technology that we have technology leadership that it will be converting to a commercial success. We cannot talk about the manufacturing without a very powerful quality track record. So far, every time FDA comes to WuXi, every agency comes to WuXi, every inspection will pass. As I mentioned to global investor, FDA actually waived 4 PLI inspection for us. EMA waived more than a dozen. So we have 20 -- 2020 scenarios when FDA and EMA actually cross our data, they actually don't even inspect us, where, as you know, some of our peers are already getting in trouble with FDA on [ 483s ] on warning letters, right, on the inspection delays.

So, so far, we are the best student in the class with 100% success on every regulatory inspection. We hope to keep it this way and then quality will become a competitive advantage will become a moat for the WuXi Biologics business. So as over the past 5 years, we have built an incredible network of 5 research centers, 10 development centers, 18 manufacturing centers globally, very diversified. And if you look at the manufacturing, in the next couple of years, 50% of manufacturing capacity will be outside of China versus development, 95% of development capabilities are in China, 5% are in the U.S.

Talking about the U.S., we already have a full supply chain scenario in the U.S. We have clinical manufacturing, commercial manufacturing, DES and DP. I think our first PPQ is ongoing in the U.S. right now. And as we finish the PPQ, we have our first commercial facility in the U.S. Hopefully, the product will be approved. It's a bispecific as well. Hopefully product will approve in the next year or 2, and we'll have a first commercial product in the U.S. As you know, our focus has been in Singapore. XTC has already opened the running -- TC already turned the GMP facility into GMP operation for both conjugation and drug product. So this is our global site, fastest global site readiness. From beginning to now it's only less about 2 years. So we're doing the same for drug product.

As I mentioned drug product is going to be a big business for us. We invested about a couple of hundred million dollars in Singapore to build a drug product facility with 5 lines that will eventually give us maybe around $500 million revenue from Singapore alone. As I mentioned drug product could be a franchise of $1 billion. Singapore alone could contribute to half of that. So as the number of projects come in very quickly, we are also looking at buying additional facility in China for -- if we can because as you know, buying a facility actually cost only $0.50 for dollar. But if you build one, it costs $1, but it also takes 3 years. So buying a facility and retrofit typically take a year. So you're saving 2 years of time and also saving 50% of CapEx. So whenever possible, we're buying additional capacity in China. And if there's no high-quality facility in China, then we'll build. So we'll both be building and buying in China. That's why we're going to be spending RMB 3 billion in the next 2 years in China to build and buy facilities.

The [ Chengdu ] facility, microbial is actually going to be ready next -- end of this year. We already have a commercial program. This also set us very well for GLP compound. So if some companies want to use fermentation to make GLP, we are ready for that as well. So that's the GMP facility in Chengdu. So I already mentioned that WuXi has invested in digital and AI in the past couple of years to make sure we leverage all those tools. So all those actually -- we are building the industry most advanced digital platform to capture -- to improve our efficiency, to capture all the data in one place, and this including our client portal, our digital twin of the lab and digital twin of the manufacturing process. So our Pro Lab is our digital tin manufacturing process. At one point in the next couple of years, we may be able to ask AI to run the facility on our behalf instead of running the facility with the human.

So as I mentioned, we want to focus our capital. We're actually diversifying best [indiscernible] is eventually backup supply chain we did 8 years ago. We did acquisition 7 years ago. And we -- now with the global supply chain fully established, we don't really need this business anymore. That's why we're divesting it and we get a very good return of investment. And this investment can then be channeled to up build our new facilities, buying facility in China or even buy back shares. I think every time I share with investors, I'm thrilled to give you an update on our technology. We are talking about the cell line formulation technology in the past.

Today, I want to update you on the ADC technology. I think Jim may have already updated you on the -- from the ADC teleconference. As ADC becoming more and more important, I think so the conjugation technology is very important. We have called WuXi -- we use elegant chemistry. This is actually very, very elegant. We use a simple chemistry. We don't need to use enzyme. We don't need to engineer antibody. We can actually do a site-specific conjugation. It's called [ WuXi DAR ]. We can do [indiscernible] mostly for ADC. D1 is for antibody oligo conjugate and DAR8 can be for ADC as well. So this is our own platform technology we have applied to more than 10 projects, 8 of them are already in clinical development, right? We also have developed our own payload linker. This is the WuXi [indiscernible], the WuXi [indiscernible], a novel payload, the DDR, the immune agonist, I think all those payload. So I think TC traditionally has been mostly focused on D&M.

Now that our partner TC will also becoming -- the royalty bearing component of TC business will start -- has already started last year will becoming hopefully very, very meaningful in the next years to come. cell line, I already updated you a few times. What I really want to show you is this is really, really cool. And again, with this cell line, we can be another couple of months faster on the process development, and we can make our partner cost of goods about half of the industry, right? And then that's why biosimilar turned out to be a perfect case, case study for those new cell line. And this cell line is also a good case for us to win more projects, win projects. Again, if someone else develop a cell line a couple of years ago for a company, we can go in and tell them that I can help you do a new cell line, which is you make your cost of manufacturing half. So they're investing $10 million, you're going to get $100 million back in the next couple of years. That's a very good return on investment.

So Ming already mentioned the WuXi Business System, essentially our way of lean manufacturing has already contributed 150 bps. I think that is one of the main reasons we said we can do 100 to 150 bps improvement every year. Even though we are already very good in every aspect, but we can still improve. This is the powerful nature of the WBS, WuXi Business System. We look at the material savings, look at labor efficiency, look at the cost savings, look at how do we get higher revenue, how do we improve quality with the WBS. As a global company come out of China, we are very proud that our ESG ratings continue to be very high. We rank always top 1% in most -- almost best rating in almost all the rating agencies, right, Dow Jones, EcoVadis, we are all global 1%. MSCI is AAA. I think so Sustainytics is also the best rating as well.

So in summary, I think if you divide the Bio business into 3 segments, by multispecific where the RDM's very, very clear. That's the best segment for us. AEC, you can see the FC growth. mAb, although it's antibody, but we've been doing this for 10 years, a lot of them getting into manufacturing. So FcRn programs, IDM-1R,D19,1S, IL-23, IL-17, TL1A, TR, IgAN. So all those manufacturing programs, some of them are going to be blockbusters or even potentially mega blockbusters. This, again, all 3 segments will give us a very exciting growth in the years to come. So to summarize, I think the first half, for the first time in U.S. dollar term, we see actually 20-plus percent growth, right? Our GP margin growth is actually 350 bps.

But if you look at the currency, give us a 300 bps downturn. So our margin actually grew almost 650 bps, and that's unbelievable. And again, that's where the normal, right? Our contribution is normal. It's mostly through our product mix, utilization and WBS. I think this profitability is also sustainable. That's why not only our margin will maintain this next year, we actually wanted to improve by another 100 or 150 bps next year. So because RGM are all doing very well. And looking at forward -- looking forward to later part of this year, we're actually raising the guidance in dollar terms -- in constant currency terms, we raised revenue guidance to 20% to 23% from 16% to 20%. So it's actually a very significant raise. And in R&D term, we're raising it also to 15% to 18%.

The reason we are so confident because we see a profitable growth, we see a stronger demand. We see a technology differentiation becoming increasingly commercial. We really see visibility in manufacturing growth. And lastly, we are well positioned to capture all the incremental demand from AI and from mRNA, the next-generation therapeutic platform because we have been incubating those platforms for years. I think we incubated bispecific ADC in 2017, 2018, now it's paying off. So we have incubating AI-enabled molecules and also mRNA platform for the past 5 years. I think this will be beneficial for us in the next couple of years. So again, we continue to see a 20% revenue CAGR over the next 3 years. Our manufacturing revenue CAGR will be even as high as 30%. And we'll see more and more programs that can generate $100 million of revenue for us, even including bispecific next year. So thank you.

Thank you for Dr. Chen and comprehensive introduction and remarks. Now we are going to start our Q&A session. I want to remind you, please take your questions in our Q&A box, and then we'll read your questions. Our pause for 10 to 20 seconds. And I say we already have a question in Q&A. Jan, are you going to announce the question?

Yes. I will read questions Yes. So first question is all from Laurence Tam from Morgan Stanley. So as like to understand what's kind of a difference between biosimilar contracts versus those branded drug or novel drugs biologic contracts?

That's a great question. So Laurence, as I mentioned earlier, we won those product by technology, not by discount. So the terms are almost very similar to novo programs. So in terms of the revenue, it's actually higher because for Novo, you just develop your cell line, that's it. For biosimilar, you have to tune it to match the original program. For development revenue, it's actually 20% to 50% higher than traditional manufacturing. But for manufacturing, it's almost the same. So that's why I was saying for 20 biosimilar program we're signing in the next couple of years. If each program give us a $60 million revenue, that's $1 billion manufacturing revenue. And that also come sooner because it only takes 4 or 5 years, so to get approved instead of 8 or 10 years. So the 20 program we're signing this next 3 years will give us $1 billion revenue when those programs become commercial. So that's another 4 or 5 years down the road. I think that's how powerful this biosimilar become really a strong driver for our near-term manufacturing growth.

Okay. Understood. Okay. Understood. And actually, I also have a question from my side. So it looks like the company is going to have more and more commercial projects, and it's also very likely we are going to see continued growth acceleration for the next few years. So if -- and the company just give us a guidance for the 2026, I know we are still away from next year and 2028. But I would like to kind of understand how should we think about those kind of magnitude of potential growth acceleration in the next few years?

Well, that's why we said our growth CAGR on the top line side will be at least 20%. On the margin side, we want to expand our margin by 100, 150 bps a year. So at a minimum.

Is that sailing we have given to the investors we give a bottom number, right?

This is the bottom. This is a baseline case. I think, as you know, if you do a model, if you see our manufacturing growth will really accelerate, I think the growth will probably be in the mid-20s next couple of years. So growth actually will accelerate. So truly, you see growth acceleration. Basically, '26 is better than '25, '27 is better than '26 and then '28 is better than 27%. So every year, we hope our growth pick up a couple of points.

Yes, understood. And here we have Chris Tan from Goldman Sachs team. He would like to ask about AIDD projects. So for AIDD projects, what type of service the company is providing? What -- who are the clients for those AIDD projects from biotech or tech companies or pharma companies?

Yes. For AIDD, we do 3 type of service. For AIDD, first, they need to generate data. We actually help them generate data. So they give us secret, we give them protein. We give them antibody, we give them the data. And those businesses are growing 40% a year. These are very, very meaningful. So -- and this is to help them build the model. And once they have the model, they have the molecule, they come to us for development. So that's the 30 programs were in development. So that's already 3% of our portfolio. And then lastly, we actually offer our AIDD service to clients as well. We have our own AIDD model. We have built -- we have already discovered 6 assets. Without AI, those assets are not feasible.

So essentially, without AI, with our lab with our scientist experience, they can only overcome one issue and the other issue pop up. With AI, we are able to crack all those issues and develop 6 assets successfully. So those assets actually has been in discussion to license them to global peers, global clients, just like our traditional licensing model. So I think -- so our client profile ranging from AI companies, from large pharma from biotech companies, actually. So AI is truly a tailwind for us.

Okay. Great. Another question. And I also would like to understand for the management, what make you most excited about your current pipeline, about the future opportunities? And what's also keep you up in the night when you think about this year and the next year?

I think the most exciting part is basically, again, the funnel continue. That's why I call joking diamond funnel. Funnel is getting bigger and bigger. And then once the product get into the funnel is sticky. So we're going to see many, many large-scale manufacturing projects, bispecific programs, ADC programs, traditional [indiscernible], I mentioned FcRn. I mentioned IgAN disease. I mentioned C1S, so IL-23, integrin. So many, many exciting programs on the ADC part, right, so [indiscernible]. So I think that's all those exciting commercial programs.

Okay. Got it. And I saw from [indiscernible] want to ask what's the price offering difference between WuXi and some of your overseas peers?

In terms of the R&D, it's almost on par. We are on par with the global leaders. In terms of manufacturing in China, we are maybe 10%, 20% lower. But globally, we are on par on the pricing side, yes.

Okay. So mostly on par. Okay. Maybe let's see. Since we are almost 8 minutes over our kind of 1-hour limit. So I think I will close the Q&A session for now. Management team, do you have any closing remarks you want to offer to our audience?

Yes. Maybe just 2 minutes on the closing. Sorry, I -- we took most of the time so that you don't have too much time to answer the question. So I think we are most excited our -- what we are most thrilled is actually the CRDMO model, right? The R&D continues to accelerate and it always stays there. So this nature of the business model is unbeatable, and we can also scale the business, right?

So as the portfolio is becoming more and more ADC and bispecifics, they're even stickier. They are more technically challenging. So the probability for us to keep the entire development, keep the manufacturing is even higher than traditional maps. So our portfolio is getting stickier. Our funnel is getting bigger and all those bode well for the future growth. So that's why I want to promise investors sustainable high growth. So every year, we'll see a growth expansion.

Okay. Thank you again, Dr. Chen. And also thank you very much, Mr. Tu, for your remarks and Q&A. If you have any further questions, please reach out to company IR or to us, and good night to everyone.

Thank you. Thank you.

Thank you. Bye, everyone.

Good morning, everyone, for those based in China and Hong Kong, and good evening to those -- sorry, good evening to those who are based in China and Hong Kong, and good morning to those who are based in the U.S. Welcome to the 2025 WuXi Bio Earnings Results for 2025. This call will be conducted in English. My name is Laurence Tam, China Healthcare Analyst at Morgan Stanley.

Tonight, we're honored to have the management team of WuXi Bio present to us their 2025 annual results. We have Dr. Chris Chen, who is the CEO of WuXi Bio; Mr. Tu Ming, CFO of WuXi Bio; Dr. Lina Fan, the Head of IR team; and Wallis Wu, also part of the WuXi Bio IR team.

The call will last for 1 hour and 15 minutes. There will be prepared remarks from management followed by a Q&A session. Investors can type their questions into the Zoom Q&A box at the bottom of the window, or you can e-mail me your questions at [email protected].

With that, I will pass it on to Chris to give us an overview of 2025 results.

Thank you, Laurence. It's great to give a global investor update for 2025. Yes. I think we believe we have a very unique business model called CRDMO. I think we're benefiting from all 3 exciting modalities of bi- and multispecifics, ADCs and traditional mAbs. So I think this combined exciting business model with all those 3 new modalities are delivering -- will deliver sustainable high growth for us.

So I will start with talking about annual results and then Tu Ming, our CFO, will talk about the financial review. I will then give an operational update. And then I always want to give global investors an update on our technology platforms and our WuXi Business System and ESG, and then I'll end with a summary and outlook for 2026.

For global investors, I think this slide should be very familiar. I've been using the same template for a while. I think I'm very excited to share with you that on this slide, almost every number is record high for the company, except the gross profit margin. As you know, during COVID, our utilization rate was very high. That's why our gross profit margin was record high. And now it's close to record high, but it's not the highest yet. But other than the gross profit margin, every other number is a record high.

[Audio Gap]

If you look at the number of integrated projects, we grew from 817 in 2024 to 945. And hopefully, next time when we report, we'll see more than 1,000 projects. We added a whopping 209 projects. I think this is a record high for the company. Our number of commercial projects also grew from 21 to 25. I always said the backlog is huge and it's very hard to grow. But this time, we actually see a very strong growth of the backlog as well, growing from $18.5 billion to $23.7 billion. We have a record high number of regulatory inspections. Still we are 100% success. Our target retention rate is still incredibly strong.

On the right side is the financials. You guys read from the news release already. I think I want to quickly highlight Revenue grew 16.7%. If you do -- continued operations is 25%. Adjusted EBITDA, 22.8% and adjusted net profit attributable to the owner of the company, 17.9%, right? I promised investors, we're going to improve our margin by about 100 bps every year for the next couple of years. And last year, we see a very strong 500 bps improvement in gross profit margin. As a result, our EBITDA margin and also net profit margin are both near record high. Our EPS grew very strongly at 48.8%.

This funnel, global investors are very familiar with already. I think I also shared with a global investor during JPMorgan conference. I think the 4 key numbers on the right side of the funnel really represent WuXi Bio. And based on this, you can actually see how strong our revenue growth will be, right?

We added a record 209 projects. We have 25 commercial programs. Our total funnel size is 945, and we have 74 programs in Phase III. Among the 209 projects added last year, about 2/3 of them are actually bispecific and ADCs. About half of them come from U.S. We also have 23 Win-the-Molecule projects, that's 11 plus 6 plus 6. Among the Win-the-Molecule project, also half of them are complex modalities. I think during the past 2 years, we have encountered quite some noise from the global geopolitics systems. But despite with all those noise, our funnel is very, very sticky. We lost about 4 projects during the past 2 years, these are [ only ] 4 projects transfer out.

On the right side, you see many, many projects terminated. These are actually terminated for cost, either program didn't work or our client decided not to proceed. They're not because WuXi Bio is not -- they're not because project transfer out of WuXi Bio. So on the right side, we actually only see 4 projects transfer out in the past 2 years. But on the left side, we see about 43 projects transferred in.

I use this ratio 10:1 to again show how sticky our business is. Again, despite all those noise in the past 2 years, we only lost 4 projects, and we won 43 projects. Interestingly, for the 4 projects we lost in the past 2 years, 2 of them may come back later this year. So I'll report next time when we actually sign them back.

So this gives you a summary of the number of projects we added. So before COVID, the number -- average number of projects added was about 60. During COVID, it becomes 100, 110. And then last year was again 209. This really shows our increased market share, global acceptance of WuXi Bio as a preferred partner and our strong track record of attracting more and more clients globally in U.S., in Europe, in China and in Asia, Japan and Korea.

Win-the-Molecule project has been very steady, about 20 projects a year. And then among them, some are early phase, some are late phase. So because over the past 7 years, we have won so many projects, every project are transferred in. Those are projects either completed at large pharma and transferred to us or completed at our peers and transferred to us. I think we have all those 100-plus projects are delivered successfully. We actually have 12 CMO projects already come from this Win-the-Molecule strategy. So now we are proven by our industry as a company who are most versatile, who are most -- who are able to receive anyone's process and make it work.

I think so we have worked with probably a dozen, more than a dozen different cell lines, different process, different media, and then we are able to make all the process work. So they are either ADCs or bispecifics or mAbs. I think this tech transfer in excellence really will drive our future revenue growth as well.

I mentioned tech-transfer-in, right? That basically means either large pharma or our competitor don't have enough capacity or fail to do the project and then it transfer to us. The other phenomenon in our industry is acquisition. When large pharma acquire biotech or when large biotech acquire an asset from China, if the program is already done at WuXi, what do they do? Do they transfer project to someone else? The answer is absolutely no. So for all the programs who are in the clinic, if the program is acquired either by a biotech company or by a large pharma company, they actually end up -- the projects stay at WuXi 100%. Beyond that, they actually -- because they know more about WuXi, because we are doing the project for them, they actually give us more projects. So over the past almost 7 years, we actually see 32 more assets coming to us because through the acquisition, clients get to know us better and they trust us and they give us more projects.

So again, all those slides basically show how sticky our business model is. So that's why I always said the funnel, if you look at the funnel, that's how the assurance I have for future revenue growth because the funnel is very sticky. Once the project get into the funnel, despite all the geopolitics, we lost 4 projects and then 2 of them may come back. And then we are talking about a total of about 900 projects in the funnel during the past 2 years.

I think in terms of revenue, we see a very strong growth in early phase, right, from R and early D or DNA to IND enabling. We see almost 32% growth. In terms of M, the PPQ and commercial, we see a 26% growth. In the middle, the program, who are in Phase I and Phase II, we see a decline. As I explained last time already, I think we've seen a similar trend last year, last time it's because quite a few very strong program, quite a few programs give us a lot of revenue in Phase II. Now we classify -- we moved them to Phase III because they are already in Phase III. Our client moved them to Phase III. As a result, we move them from Phase II to Phase III. That's why you see a very strong growth of Phase III and you see a decline of Phase II. So hopefully, this is only temporary, and we will see all 3 segments grow again.

If you look at it geographic-wise, we actually see China has been fairly stable and all other regions actually grow significantly. You see U.S. account for 58% of revenue. It's still growing 18% plus. Europe is 23% of revenue and growing almost 17%. So combining U.S. and Europe is actually more than 80% of revenue and is growing around 17% to 18%, right?

The highest growth actually went to Japan and Korea. We actually see almost 70% growth. So it's become now a very meaningful revenue. So a couple of years ago, it was only 1% to 2%. Now it's actually 6.5% of revenue, half of the China already, right? In China, we see a slight decline of revenue, but you have seen so many out-licensing deals. If you adjust the out-licensing deal of last year alone, you will see almost a flat year-over-year growth. If you put all the out-licensing deal in the past, added together, China, we will see a much stronger growth.

So overall, I think this -- we don't manage this. This is a result of our last year's operations, but you can see our revenue is very diversified in the U.S., Europe, 80% of the revenue. China and Japan, another 20% of revenue. And with -- other than China, every other region grows very well.

Investors are already very familiar with our backlog. I think I also -- I keep mentioning over the past couple of years, our backlog is already so big. It's very, very hard to grow. And when you look at from 2022 to 2024, it is true, the backlog barely grew, right, because it's so big. And now as we sign more and more large manufacturing projects, the backlog starts to grow as well. So we see a service revenue grow by $1 billion. We see milestone revenue grow by -- milestone backlog grow by about $4 billion, right? So I think this is a very healthy growth. And that again give us more confidence that we can deliver -- continuously to deliver high growth.

So our funnel is already -- have 945 assets. It almost mimic our industry. Among them, you see bi- and multispecific grow 30%. You see ADC project grow 30%. I think if you look at our portfolio, now complex modality is already more than half of the portfolio. And the more complex it is, the higher market share WuXi Biologics has because it's very hard to handle. We got a reputation to be able to handle a tough project in our industry.

So for traditional mAb, we may have more than a dozen competitors. But once we go to bispecific and ADCs, we're becoming a few -- only a few competitors. That's why we have a higher market share for those newer modalities. And that's the higher -- the complex modalities are also much more stickier. I'll explain later on, which is actually right in my next slide.

So as you know, so bispecific and multispecific are actually becoming very, very popular. We start to work on those projects back in almost 10 years ago. And so now, bispecific and multispecific actually is -- you can see strong growth in R, D and M. On the R side, our CD3 platform, now we have close to 20 royalty-bearing projects. On the D part, this is the largest portfolio globally. On the M part, we actually have 3 commercial projects. All of them hopefully have a multibillion dollar potential.

Bispecific is not -- developing bispecific actually on the CMC side. So development and manufacturing of bispecific is actually very, very hard. I want to give you one example, right? So if you use 1a/1b bispecifics, when you work on a cell line, you potentially get 1a/1b or you could get 2a or 2b or 2a/1b, 2b/1a. So if you don't do it well, you're going to get a mess. And how do you get the product you want from the mess is actually very, very complicated. So that's why for bispecifics, cell culture is very different, difficult. cell line is very difficult. You also need to purify the downstream. When you purify, you also lost the yield. And then what's key is that you need all the tools to look at it. So you need the analytics to look at it.

One analogy, what you're looking at for bispecific, when you look at the common company available tools, you're only looking at the tip of the iceberg. But the bottom, the iceberg under the sea, you need to use very high-power analytics. Not every company have this power and WuXi Biologics is actually the best at it. So you need to use a mass spec or very advanced tools to look at this.

We actually have a few cases where a large pharma acquired an asset and come to us. We actually found out the product -- the company they acquired claimed the product is pure with 95% purity. In our hands, when we use amplifying glass, to look at the iceberg, the company only see the tip of the iceberg, we actually see the bottom of it. It's actually only 70%, 65% pure. So that's how difficult it is for bispecifics. And because of that, when you have an issue, [ trouble shooting ] is also very, very difficult.

So I mentioned all those challenges of developing and manufacturing bispecifics. The message is bispecific is actually very, very sticky. Once the project come in, it's very hard for them to leave WuXi Biologics.

So with that, I'll hand over to our CFO, Ming, who will give you an update on the financials for 2025.

Thank you, Chris. So now I'm going to present our financial performance for the fiscal year 2025. This Slide 16 gives us the highlights of our financial performance last year. First, revenue, although there were still tariff and geopolitical uncertainties and also uneven paces of biotech funding recovery, our revenue continued to grow at an accelerated pace.

As you can see from the chart that our revenue reached RMB 21.8 billion, 16.7% increase over that in 2024. Sequentially, our revenue in the second half was about 18% higher than that in the first half. We're not just continuing our journey of solid growth over the past 5 years, but also transitioning into a phase of accelerated growth post-COVID.

Our revenue increase last year was driven by R, D, M, all 3 cylinders. In R, our research and discovery service segment, we were able to sustain the momentum from the second half of 2024, landing mega deals from our innovative platforms of bispecific, multispecific and ADC. Overall, upfront payments for our research services more than doubled last year and reached USD 150 million with potentially over 4 billion of the milestone income streams in the future years. We also have a full pipeline of new deals. So the momentum in R will continue into 2026 and also the foreseeable future.

On development side, with the tailwind of our biotech funding recovery throughout last year and also our share gain in the pre-IND space, we achieved revenue growth about 32% year-over-year, thanks to the 209 new projects we scored last year, among which 186 were in the pre-IND space. This is a new record, representing over 60% of the global presence.

Our process optimization and productivity improvement also enabled us to shorten our revenue conversion cycle from DNA to IND to about 6 to 9 months. The decline in our early phase revenue year-over-year, as Dr. Chen mentioned, is largely due to timing as 5 large-scale clinical manufacturing projects progressed from Phase II to Phase III, created a gap of about RMB 1 billion, which will be replenished by the projects from pre-IND phase over time.

On manufacturing side, with the successful execution of our Follow and Win-the-Molecule strategies, more and more projects were advancing through our funnel towards the later stages. Now we have 74 projects in Phase III and 25 at the commercial manufacturing stage. And the volume of these late-stage projects are ramping up steadily with the growth of our clients' drug sales. Overall, late phase and commercial manufacturing revenue grew over 26% year-over-year and now represented over 43% of our total portfolio during this reporting period.

From a modality perspective, bispecific, multispecific and ADC contributed half of our overall revenue in 2025. Moving over to gross profit, which increased about RMB 2.3 billion to over RMB 10 billion last year. The whopping 31% increase in gross profit also gave us 500 bps of gross margin expansion year-over-year.

The margin improvement was primarily attributed to the following factors. The first is a solid growth from R, the research sector, which gave us a positive mix impact as the upfront payments and the milestone income grew more than 2x during the reporting period. Margin rate for development sector extended 1 point, largely driven by the productivity improvement and also the higher margins delivered by the complexity of the modalities as bispecific and ADC now represent more than half of our pre-IND portfolio.

At the same time, the activity from late phase and the manufacturing sector continue to meet or exceed our expectations as the plant utilization rate in China continued to improve throughout 2025, and also our Dundalk, Ireland facility continued its ramp-up journey. The productivity improvement from WBS, our lean manufacturing implementation also gave us 150 bps of the margin lift. Lastly, SBC, our share-based compensation decreased to 200 million year-over-year as we continue to optimize our CMB structure, this gives us about 150 bps of the GP margin expansion.

Excluding share-based compensation, our adjusted gross profit margin stood at 48.8%, 340 bps improvement year-over-year, one of the leading positions in the global CDMO industry. Adjusted EBITDA, which is a proxy of our operating cash generation capabilities, increased about 22.8% to RMB 9.8 billion during the reporting period. This enabled us to have another phenomenal year from a free cash flow generation standpoint.

The adjusted EBITDA margin rate also expanded by about 230 bps to 45.1%, one of the highest in the global CDMO industry. Adjusted net profit is the IFRS-based net profit, excluding the impact of foreign exchange gain and loss, share-based compensation, fair value gain and loss from our investment portfolio or asset divestitures and some onetime restructuring charges. This is a proxy for our business profitability under continuous operations.

As you can see from the chart that our adjusted net profit increased 22% year-over-year to reach RMB 6.6 billion, 5.3 percentage points higher than the rate of the top line growth, which gave us a margin expansion of 130 bps to 30.2%. The adjusted net profit margin expansion was largely driven by the solid control in SG&A, partially offset by the tax expense increase year-over-year due to the Pillar 2, the adoption of the 15% minimum tax in Hong Kong, and also the onetime DTA, the deferred tax asset adjustment in Ireland in our 2024 baseline.

Next page, please. So this slide shows our profitability growth over the past 5 years, including IFRS-based net profit, net profit attributable to owners of the company, earnings per share and also adjusted earnings per share. You can see that all these financial metrics reached record high in 2025. As you can see that our IFRS-based net profit has grown at a CAGR of 27.6% during the past 5 years and exceeded RMB 5.7 billion in 2025. The RMB 1.8 billion of the 45% growth last year was primarily driven by the 31% increase of the IFRS gross profit, as we discussed earlier, and also the RMB 400 million of the net gain and loss from investment, divestiture and the foreign exchanges, partially offset by some onetime restructuring charges we took at the end of last year. These gains and also cash inflows from our investment and divestiture activities will give us more dry powder in the future for global capacity expansion, biotech incubating, M&A or share buybacks.

IFRS net profit attributable to the owners of the company grew by 46% last year, slightly higher than the IFRS-based net profit at both WuXi Bio and the subsidiary, WuXi XDC, grew at a similar pace. Hence, the financial impact of the minority interest pickup remains proportional to the net profit growth.

Basic earnings per share grew from RMB 0.82 to RMB 1.22 per share, 49% increase, 250 bps higher than the growth rate of IFRS net profit attributable to the owners of the company as we completed our 2-year USD 600 million share buyback program in the first half of last year. So our shares outstanding is smaller.

After we exclude share-based compensation, investment divestiture gain and losses, FX translation and onetime restructuring charges, our adjusted EPS stood at RMB 1.40 per share, approximately 20% increase year-over-year.

Next page, please. This slide gives us more details into our gross profit and cost components. In fiscal year 2025, our gross profit margin reached 46%, 500 bps expansion from the prior reporting period, a multiyear high post-COVID. Excluding the RMB 800 million of the share-based compensation, our adjusted gross profit margin was 48.8%, 340 bps improvement year-over-year. In the second half of last year, our adjusted gross profit margin reached 51.5%, another multiyear high post-COVID.

As we discussed earlier, the gross margin expansion was primarily attributed to the takeoff of the research and discovery services, which gave us about 1 point of the favorable mix impact from the upfront and milestone payments, which command 80-plus percent of the gross margin. We gained 150 bps of the margin expansion from WBS, our lean productivity implementation. The improved capacity expansion in China and also steady ramp-up in Europe also supported the margin growth. You can see the components of the cost elements in the stack bar below with roughly 17% in labor, 18% in material and 19% in overhead, which includes maintenance, utilities and also depreciation of the manufacturing facilities.

Labor component was about 2 to 3 percentage points lower than our historical average as we focus on labor productivity. Revenue generation per employee is a crucial KPI for all our business units. In 2025, our total number of employees only increased about 2%, while our revenue increased 16.7%. So the reduction of the share-based compensation expenses also contributed RMB 200 million to the overall labor cost reduction.

Material cost was down 1 point year-over-year, largely due to the material usage productivity improvement. The overhead cost as a component of revenue was down about 2 percentage points compared to the prior 2 reporting periods. There were several cross currents here. The first, as we expanded our global capacity from 156,000 liters at the beginning of 2023 to over 300,000 liters at the end of last year. The new capacity brought on more depreciation, utilities, maintenance and other fixed overhead.

However, as these capacities are ramping up, the revenue generated from the manufacturing sector were growing at 26% last year, a pace that's much faster than the increase of depreciation and other overhead expenses. Also during the last reporting period, as part of our ongoing initiatives to optimize our global manufacturing footprint to improve the return on assets, we divested our vaccine facilities in Ireland and also our DP facility in Germany. These divestitures also helped us to reduce the fixed overhead costs.

Next page, please. Page 19 here is about liquidity. At WuXi Biologics, we have a strong balance sheet and a solid cash position. As of the end of last year, we had RMB 15.7 billion cash on hand, sufficient funds to support our accelerated growth globally. Compared to the beginning of last year, the overall cash balances increased about RMB 5 billion, among which RMB 2.3 billion were generated from a free cash inflow from the operation cycle. RMB 4.1 billion cash was contributed by our asset optimization and divestiture activities, partially offset by RMB 1.7 billion of the debt reduction and also share buybacks.

We always have a conservative funding strategy. For our RMB 64 billion balance sheet, we only have about RMB 1 billion of debt, most of which are working capital facilities. And our gearing ratio, which is defined as the interest-bearing debt over equity is nearly 2%. At the same time, we have close to RMB 7 billion of the bank credit facilities to tap into if we need to.

Our CapEx spending last year was about RMB 3.7 billion, mainly for the capacity expansions in Singapore and also in the U.S. Subtracting working capital occupation and tax payments, our free cash inflow last year was a whopping RMB 2.3 billion, a new record in our history. This is the fourth year in a row for us to deliver positive free cash flow. With the acceleration of our capacity expansion in Singapore and the U.S. and also the RMB 1.5 billion carryover from last year, our estimated CapEx spending in 2026 will be about RMB 7.1 billion.

However, with our operating cash generation capabilities from business growth and also our focus on working capital management, we are committed to delivering another year with strong positive cash inflow in 2026.

Now I'm going to pass the baton back to Chris to share more insights into our business operations.

Yes. I want to give a global investment update on R, D and M. I already mentioned, bispecific is the highlight of this presentation. So we started investing traditional mAb or R on mAb 15 years ago. And 10 years ago, we started working on bispecific. In the past 5 years, we started working on ADC. So you'll see, I think this is a very successful story. We invested a couple of million dollars on the CD3 platform. So now the CD3 platform, the out-licensing of CD3 platform already generated in the past 5 years -- past couple of years, already generated $205 million of revenue and then at an 85% gross margin. So our partners, including companies like GSK, Merck and Vertex. So I think this is an incredible successful story.

So not only we -- this platform investment already generated more than RMB 200 million of revenue and very high profit, we also have RMB 5.2 billion potential milestone that can be achieved in the next couple of months -- couple of years. And then for every program using our CD3, we have a 2% to 10% royalties and average about 5%. And for all those projects, 100% of them -- 100% are going to our development. So that carries -- also carry into about $80 million downstream contract. I think this is a really very good example of how our business can really -- can help strong solidify the multi-dollar business model.

So that's the CD3 platform, I mentioned it's less than a dozen assets. Overall, we actually have 50 programs like this, right? So again, 15 years ago, we started working on mAbs with accumulated critical mAbs and then multispecific and then now ADCs. So all those royalty-bearing programs will help improve our margin profile in the years to come.

I think this is the first time we want to use one table to share with global investors our business model, our revenue stream is very different from traditional CMO. If the program started with us with R, if we are -- for this client, if we are seeing CRDMO, the economics of WuXi Bio is significantly stronger than any other business model, as you can see.

So I'm using an average biologics sales of $1 billion. Again, if we have a 5% royalty, that basically means every year for about 10 years' time frame, we'll get $50 million revenue from the sales royalty alone, right? And then that's the sales royalty from our R. And then if they manufacture with us, we waive the cell line royalty. But if they don't, we charge the cell line royalty.

So then you can look at different scenarios. The first scenario is 100% volume manufacturing with us, right? And we have $50 million revenue from the manufacturing. And we also have $50 million revenue from the sales royalty, and it's almost -- it's the same number. And with that, we are able to generate a net profit of $53 million for this program alone. I think that hopefully is 10 years, as I said earlier, right?

And even if the manufacturing volume is not 100% with us, it's 70%, our profit is actually $50 million. And even if all the manufacturing is done somewhere else, but if this is our R, our profit is actually $44 million.

If you go to the extreme to the right side, that's basically the CMO. If you're a pure CMO, with $50 million revenue, your profit is about $13 million, $13 million, right? So I think that really show how our business model is very different. So the CRDMO profitability is about 4x the traditional CMO profitability.

I want to even go to the extreme case. If we use our cell line, if we do not manufacture at all, we still have about $5 million cell line royalty and with $4 million profit. And that basically means if somebody else do the manufacturing, I don't do anything, but I have 30% of the profit of the CMO. That really -- I think this table, if you study this table, it really showcase how different our business model is. With the R, I can generate 3x to 4x more profit than the traditional CMO. With the D, even if we don't manufacture anything, we can generate 30% of net profit. And certainly, we want our M to be big. We want the M to grow as well. I think that's why this slide really showcase our strong business model and the strong -- a very unique business model, our CRDMO. So that's a very quick update on R.

On D, I think that's really the strength of the company. So, so far, we have delivered more than 786 INDs by end of last year. And last year, we delivered record high 156 INDs. And among the 38 projects were delivered at a 6 months time line. Just to give you context, most of our peers deliver project at 10 to 12 months time line. So we are almost twice as fast as our peers, as the competitors.

I was always joking with biotech CEO, I said, if we deliver a 6-month project for you and they pay you, you pay me $6 million to $8 million to deliver the IND. But I saved them 6 months. If their burn rate is $2 million a month, I save them $12 million, while they only pay me $6 million or $8 million. I think that's how WuXi can help the biotech community. That's why biotech companies prefer WuXi as a partner of choice, right?

So as a result of the recent growth, now we have already increased our capacity to handle 200 INDs a year and 20 product filings. So look, if you look at the bottom right chart, when we IPO-ed, we can only deliver 20 INDs a year. Last year, we delivered 156. This year, we delivered 180, a 9x increase in the past couple of years. I think that's an update on D.

On manufacturing, everyone know our manufacturing is excellent. We have a very strong track record. If you manufacture with us, it's almost a guarantee. If we said we'll deliver material to you by Christmas, we'll deliver material to you by Christmas, it's like buying insurance. That's our manufacturing. And one prerequisite or leading indicator of biomanufacturing, cumulative manufacturing, that PPQ. So that's a step. You said you'll do a PPQ, you file the FDA, and when FDA approved, you begin selling the product, right?

So on the left side, you see the PPQ growth. In 2019, we only have 6 projects. I think by end of this year, we have more than 137. I think this is based on the contract we signed as of today. Most likely this year, it will even be higher. If you look at 137, you may think this is a pure number. But for one -- for every successful PPQ, potentially for 20 years, that can generate for a reasonably -- for a reasonable biologic with $3 billion sales, 1 PPQ can generate a future potential of $3 billion in 20 years. So I assume $1 billion to $3 billion drug and the manufacturing, and if you look at 20 years, it's actually $3 billion potential.

So that's -- so I have 137 of them. And if you adjust for industry failure rate, if you adjust for someone else taking it home, adjust for all those variable, this 137 PPQ means cumulative revenue potential of $75 billion in 20 years. So on average, about $3.7 billion of revenue. That's how powerful this 137 is. $3.7 billion revenue, what does it mean? That means another WuXi Biologics 2025 revenue. So in this PPQ alone, you can actually see for the next 20 -- for 20 years, every year, we may have $3.7 billion of revenue. And that's how powerful it is, this PPQ number.

On the right side, you see before COVID, we do about only a couple of PPQs. And during COVID, we are getting into about 10 range. And now this year, we're getting into 30s, right? If you look at the blue and green color, that's a global client, mostly U.S. client. You see, we have 10 PPQ in 2014 (Sic) [ 2024 ], 20 in 2025 and 30 plus this year. Now again, 2 year 3x growth, 3x. That's really the number of PPQs we're doing.

So this -- all those bode well for our commercial manufacturing revenue down the road. I think what's the reason why companies love us, why they want us to do PPQ for them because as I mentioned earlier, our PPQ is 100% success. When they file the PPQ to the agency, we hope it's also 100% approval, 100% success in approval as well. And that's why global companies trust WuXi not only in the R&D phase, but also now more and more in manufacturing.

I think we -- Ming already mentioned that we have a WBS effort, and digital is another effort. Through WBS and digital, WuXi Biologics will continue to innovate, continue to improve our efficiency. You will see our efficiency improvement year-over-year.

So as the business grow, we are also investing more and more in the global. And we are investing in U.S., investing in Singapore. We finished investing in Ireland. We're also looking at Qatar. But now because of the war, we will reevaluate after the war. So Qatar right now is on hold. We will reevaluate after the war.

The U.S. investment is in mostly 2 locations. One is Cranbury, New Jersey, right, by Princeton. And we converted a small clinical facility into commercial facility because of demand. And we're building a much bigger commercial manufacturing facility in Worcester, Massachusetts. With all those facilities online, we can generate hundreds of million dollar revenue in the U.S.

I think every time when I meet investors, I really want to share with you what's exciting about WuXi Biologics on technology side. So we have a very strong execution track record. We have very high quality. We have faster speed. But we also have one of the best technology platforms. And I already mentioned over and over again, the bispecific platform, the CD3 platform, right?

And we also have a nanobody platform called SDArBody. But today, I want to highlight a few ADC-related technologies that WuXi Biologics are working with WuXi XDC to develop for the global community.

The first program is actually called WuXiDARx. This is a specific conjugation technology using a single chemistry. If you look at the global community, a lot of people are doing conjugating use a very sophisticated tool, a lot of very complex enzymes, very -- you have the engineered antibody to create a mutation for the antibody, and that will change the antibody properties as well. So we actually only use a single chemistry where we are able to do a site conjugation using a single chemistry. Not only this technology can be used for traditional ADC, we can actually use for dual payload ADC. We can put 4 payload 1 first and then put another 4 payload 2, or we can put on the right side, we can put 4 payload 1, 2 payload 2, 6 payload 1, 2 payload 2. So I think this gives a global community a lot of options on developing next-generation dual payload ADCs. We believe this will be a start of earning milestone and royalties for WuXi XDC.

Similarly, WuXi has developed a proprietary linker technology and also proprietary payload as well. I think between the conjugation and payload and linker and with all the WuXi's mAb, we can create next-generation ADCs for the global community. That's why I said 15 years ago, we started working on mAbs for the global community on R. And then 10 years ago, we started working on bispecifics and multispecifics. 5 years ago, we started working on ADCs. So we will see more and more milestone payment and the royalties, upfront payment, milestone royalties from the ADC technology as well. That's a new offering on R side.

On the D side, D is the workhorse of the company, more than 50% of the revenue come from D. The evolution of technology from D is also very, very obvious. 15 years ago, when the company started, we used what they call random integration technology. Random integration means because random is lower productivity. So 15 years ago, we have to look at 3,000 cells. It takes us 6 months. And in the end, we can produce 2 gram per liter. The technology we have right now, we just launched last September is called targeted integration. You may not know the details, but it doesn't matter. Look at the results. We only look at 1% of the cell comparing to 15 years ago, less than 30 cells with the time line reduced by more than half. Instead of 6 months, now it's 2.5 months, we get 4x more productivity.

So this technology can help our industry reduce the cost of goods by 30% with this technology. So we have -- this technology was only launched last September. Now we will have -- already have 50 projects using this. Our first IND filing with FDA in the next couple of months. Once FDA approves this, I think we're going to use it for every project from WuXi Biologics. Again, this will help our clients save 30% of the cost of goods eventually down the road. And I think this again shows how WuXi Biologics. We are working on -- we're innovating every step, trying to make the drug manufacturing process, the biologic manufacturing process more efficient, lower cost. I think this is really beneficial for the industry.

And with this technology, we can -- as I said earlier, last year, we delivered 38 INDs in 6 months. With this technology, we may be able to deliver 100 INDs in 6 months because every project will be saved by this amount in there. So again, I can make industry faster and faster and better and better, and the cost of goods cheaper and cheaper.

Another aspect of this technology is we will be using this technology to make a lot more biosimilars. Biosimilars, cost of goods is hugely important. As I said, with this technology, I can save the industry by 30%. Why not work on biosimilars. So we have already many, many biosimilar companies come to WuXi want to use this technology and eventually help them reduce cost of goods, help them improve the sales.

Now from the get-go, WuXi Biologics, our manufacturing platform is disposable. 10 years ago, the single disposal reactor is 2,000. Now we have -- go to 4,000, go to 5,000. And in our WuXi scale, it will be 6,000. So reactor getting bigger and bigger. But people are always challenging me. If I have a mega [indiscernible] faster, how can you do it? We have already proven 352 times, I can do it for you. As I mentioned, each reactor is getting bigger and bigger. We can also multiplex. The largest scale we run in China now is 16,000 liter scale. That's bigger than most of the stainless steel facility out there, right? Most of stainless steel tanks are 10,000, 12,000, even 15,000, but we can actually run 16,000 by multiplexing 4 or 4,000 reactors.

In Worcester, Massachusetts, or in Singapore, our single reactor is already 6,000. I can do 3, 6,000 become 18,000 liter reactors. But I think as I mentioned earlier, our cell line productivity is higher. So we may not need to go to large scale. But if I need to, I can do very large-scale manufacturing. The cost of goods is very comparable to traditional stainless steel. We have already proven this 352 times.

So as our industry move to more and more patient convenience, a new technology is needed, what we call high dose delivery. Traditionally, with a subcu injection, you can only do 1 ml. How do you pack more product into that 1 ml? It's called -- we use a technology called WuXiHigh. I can put as much as 240 mg of materials into that 1 ml. If you look at -- if you are interested in biologics, most of the biologics are 30, 50 mg per ml. So actually, I can pack 8x to 10x more into that 1 ml. That's why patients can do the injection themselves or nurse can do it in a few minutes instead of a few hours of IV, that's the WuXiHigh. This is also a technology that we collect milestone payment and potentially royalties from global community.

The other one is called hyaluronidase, it's an enzyme that can dissolve some tissue and have you get to a large volume, you can -- as big as 20 ml. I think this is a technology readily available in the industry, but now we are doing the biosimilar version of it. I think we already have many projects that's working on that.

So I think WuXi, from WuXi's perspective, I want to make sure we help our clients. Whatever they need, I have them for you. And that's the technology development that we have. So that's the 2 technology I want to highlight.

I think I already mentioned that WuXi Biologics business system is our way of continuous improvement. Every year, we look at how can we save costs there? How can we be more efficient in labor? How can we save materials? How can we save expenses? How can we optimize ESG? And how can we -- how can we increase our revenue? I think all those are the WuXi business system.

So last year, we did 400 projects -- more than 400 Kaizen projects. Overall, the business results is actually impressive, right? We achieved 150 bps improvement in margin. So I think this was a continuous effort. This is already year 5 of us implementing WBS. We'll continue to do that.

I'm also very proud of our ESG results. Every year, we now get the highest rating almost from every agency, top 1% on quite a few of them, AAA remain in rating agencies.

So I think that's the high-level summary that I wanted to share with the global community. I think in the end, I still want to share with you that I truly believe our business model is very unique. With the revenue -- with the royalty calculation slide that you can see our revenue model, our profit model is very different. Our business model is very different. R, D, M, we strongly believe R will lead to D, D will lead to M. Everything coming to our funnel will stay there, right? Almost everything will come to the funnel will stay there.

Our R is very unique, give us not only a very high-margin business, but also will lead to D and lead to M, right? I think for R, 15 years ago, working on mAbs, 10 years ago, working on bispecific. Now we're working on ADCs. So we are answering to the need of a global biotech community. Our D is the working horse of the company, right? We have delivered 38 projects at a record 6-month time line. This year, we'll probably deliver a lot more. We help companies save money by doing 100% success in delivering projects in the fastest manner. In M, I think we already have near a decade of large-scale manufacturing experience, right? We can really cater to the clients' need. And in our portfolio, now we counted many, many blockbusters, about more than 10 programs with $5 billion sales potential and more than 20 programs with $1 billion sales potential. So that will drive our M.

I shared this slide during the JPMorgan conference already. I think WuXi Biologics in the next couple of years will benefit from the 3 high-growth modalities. I already mentioned bi- and multispecific, right, we mentioned in the other -- previous slide. Bi- and multispecific grew actually 120% revenue for us last year. Now it's almost 20% of our group revenue. It is getting close to the 30% ADC contribute. There are 2 types of bispecifics. One is CD3 enabled and CD3, CD19, CD20, PSMA, CD19, CD20 or CD19 BCMA. All those programs could potentially generate -- each one of the drugs could be $5 billion, sometimes even $10 billion sales. Certainly, our industry is very, very -- chasing after the PD-1 VEGF. But there are many other dual model -- dual target bispecifics. So WuXi will benefit from all of those. Some of those are very high-volume multi-metric ton scale manufacturing, and WuXi will benefit.

And ADCs, I'm sure you have heard about from [indiscernible]. So it's 30% of revenue, and we have quite a few programs pending approval. And with all the emergency ADCs, the B7-H3, DLL3, ROR1, CLDN18.2, CLDN6. So tomorrow, if you hear good news on our bispecific or ADC, 50% chance WuXi Biology is behind them. 5 years from now, 70% chance, WuXi Biology is behind them. And that's how much contribution we made to the global community on bispecific and ADCs. We have been already working on that for 10 years. Now we have many programs that are getting to close to commercial stage. So the FcRn antibody, IGF-1R a antibody, CD19 antibody, C1 antibody, program for [indiscernible] disease, program for autoimmune, allergic reaction.

So again, in those portfolio, we can count on many programs will require multiple metric tons of manufacturing. That corresponds to $100 million, $200 million, $300 million of revenue for WuXi Biologics. And that's why I believe our business model, our business will continue to grow.

Oftentimes, investors ask me, what's your near-term potential? What's your margin look like in 2028, 2029, which is 2 to 3 years from now? I'm very happy actually, second half of last year, we already delivered the 2028, 2029 like margin profile. But if you see the second half of last year, our R is incredibly strong, our D is incredibly strong, our M are the strongest also in the past 5 years -- in the past 3 years. So that's why we are able to deliver a gross margin of about 48%, adjusted gross profit margin almost 52%, and adjusted net profit margin of 32%. And that's really the sort of the near-term margin potential of the company.

With that, I want to summarize 2025. Again, we have an incredible 2025. You see bispecific and multispecific growth. You see ADC growth, right? You continue to see us invest in new technology. I mentioned the cell line, the high concentrated formulation. So R, D and M all shined last year. And the momentum continues to shine. I think this 2026, momentum will continue to shine. We continue to see R, D and M, where R, CD3 even more proven. We signed 209 projects. Most of them will be translated into revenue in D this year. And I mentioned we have 10 programs with $5 billion potential with another 10 programs with at least $1 billion potential. So we have 20 blockbusters waiting for us to manufacture. And we have 35 PPQs based on the January data. And hopefully, by this time next year, we'll report to you actually more than 34 PPQ.

The business momentum in Q1 of this year continue to be very, very strong. So if you look inside, our business is growing very, very well. But outside, there are 2 war going on. We're not sure how Fed is going to do on interest rate. And also the RMB versus U.S. exchange rate give us some volatility. So because of that, we want to be conservative. So we want to guide a revenue growth of 13% to 17%, taking into account the RMB to U.S. dollar fluctuation, taking into account some potential challenges in biotech funding because of the war, because of the funding situation.

So I think this is still a decent growth. We certainly wanted to under promise, over deliver. I think that it will be another great year in 2026. Thank you.

Thank you very much, Dr. Chen and Mr. Tu for a wonderful presentation. And once again, congrats on a strong 2025. We will now move to the Q&A session. [Operator Instructions] So we have 2 questions coming from Alessandra David from the Ashmore Group in the U.S. So let me go one by one.

Chris, you sort of alluded to it on the guidance slide. But at the JPMorgan conference, you guided for soft acceleration year-on-year, and it was later confirmed to be 13% to 17% year-over-year. So can you comment on the reason for the change?

Yes. It's mostly currency, mostly the currency, right? Because I think because this year, because we have already seen very volatile RMB to U.S. dollar exchange. That's why I want to be conservative. We're baking quite some room for those.

And also the volatility in biotech funding, you mentioned, right?

Secondary.

That's secondary, yes.

So far, biotech funding has been strong. I mean we only saw 2 months of data, right? But like there's a lot of uncertainty this year in the macro backdrop. So we want to be conservative.

Okay. Thanks, Chris and Lina. And his second question is, there's a slowdown in China revenue or flat when you strip out the out-licensing deals. So can you comment on the onshore biotech funding environment?

Yes. I think overall, China, I think biotech funding may not be that strong, but there are a lot of deal activity and some IPO. So because of that, I think funding in China is okay. Funding in China so far is okay.

Next, we have two questions coming from [ Chris Tan, ] representing [ ZE's ] team at Goldman Sachs. Firstly, can you comment on the ramp, the capacity ramp in China versus overseas?

We don't -- because our manufacturing is already so big, we don't comment on a specific site. But overall, manufacturing utilization improved by a few percentage. That's why last year, margin was expanding. So that's why second half of last year, I mentioned margin is almost -- you can see this margin at 2028 because when every year, we improve our efficiency. Second half of last year is very evident.

Next, we have a question coming from Linda Xu at HSBC. With increasing proportion of new modalities and the progress of clinical trials and commercialization, could you give us the outlook of the IP-based revenue growth in this year and next year?

That's great. So I think the IP-based, sort of the upfront payment, milestone payment kind of income is actually very hard to predict. So that's why -- so last year, it was almost about 15% of profit as well. So I think as a rule of thumb, we want to guide you basically saying, we see a 30% CAGR, right? But last year, we see a very strong growth. It's almost like 50%. But overall, because it's so unpredictable, we still want to guide you on a 30% CAGR in 5 years. So this was still a very strong revenue and profit component. Any other question?

Okay. Next, we have a question coming from Vicki Tiu on the buy side. Can you comment on the contract pricing trend?

I think overall, I think the contract pricing is very stable. At the beginning of the year, we actually raised the price by about 5% to 10%. So because I think we see the global demand, I think for a CPI adjustment, it's actually very reasonable in our community.

Okay. So in line with inflation basically.

Yes.

Okay. Next, we have a question coming from Huang Yang at JPMorgan. Chris, you mentioned there are a number of M programs with peak sales potential of USD 5 billion. Can you let us know how long those drugs have been on the market? We would also like to get a sense of when we can see those drugs reach peak sales.

Yes. That's a great question. So, so far, we have -- among the 25, we see 2 of them. Among the 25 approved, we see 2 of them. But the other programs are still in Phase III. So they're not approved yet. But for 2 of them, 1 of them hopefully will be achieving $5 billion of sales very soon. The other one, hopefully in the next couple of years.

So that's our business model. Our business model basically, we work with the client and their program need to go from $1 sales to $1 billion to $5 billion. So it takes some time. That's -- so our business model is not as straightforward as straight CMO where you can do $50 million, $100 million revenue per project right away. I think that's our business. That's our business model.

We grow with our client. But the good thing is our revenue -- our M revenue will continue to grow, right? If you -- as a straight CMO, year after year, at some point, your revenue will decline. For us, our revenue, our M revenue for every program will increase and it will reach a peak and then will decline. So that cycle is actually 10, 15 years or even 15, 20 years. So we are at the beginning of that 15-, 20-year ramp-up. That's why I said our M revenue will continue to grow. But for the multiple $5 billion projects, 2 of them are already approved. One of them is already on the market a couple of years, one of them is only 2 years.

Okay. The next question comes from Hugh Sloan on the buy side. Would the company do more buybacks?

Yes, because we have a very strong cash situation. We are looking -- as you look at the CapEx, we are investing heavily. We are also doing more M&As. So you already see one M&A from XDC. So we're looking at all the options. And then buyback is certainly one of the ways to reward investors.

Okay. The next question comes from Zhang Jialin at Nomura. So what is the rate of the company retaining Chinese firms projects if they were out-licensed to MNCs? And what is the current market share based on your knowledge?

For the program, the Chinese company partnered with a global, Chinese company out licensed global. If they use CMO, we have 70% market share. And then every company who acquired the asset actually keep the project with us. So we have 100% retention of the program. So as I said in the earlier slide, so this is -- when I mentioned 90 program was acquired and then they add 30 program, that includes Chinese company program being acquired by a global company.

So instead of moving them away from WuXi, actually, they always -- so far, 100% project kept at WuXi. In the meantime, they actually give us more projects. So it's actually net even surplus. Not only there is no project transfer out of WuXi, instead, they actually give us more projects.

Okay. The next question comes from [ Jason Lai. ] There's been an increased focus on AI and how it could impact pharma R&D outsourcing as AI gets more advanced. What is your view on the impact of AI and if it could decrease pharma R&D outsourcing?

Yes. I think it's actually probably the other way around. So AI will make it more and more outsourcing, right? So our business model is very complex. So I want to explain R, D and M. For R, AI can make R more efficient. And if that's the case, if R is more efficient, that basically means there will be more and more D and M. So WuXi Biologics will benefit from that AI, right? Because again, if R is easier, every company can create 50 projects, who can handle that 50 new projects? Only WuXi Biologics has the capacity and bandwidth to handle that. So R, D and M will benefit from that.

On the R side, so far, I don't see a disruption of AI disrupting R yet. So our R will continue to benefit. But behind the scene, we actually use AI in every part of our business already. The reason we are so fast in D and M -- the reason we are so fast in D, the reason we are so good in M is because AI is already part of our process. And in R side, we already developed quite a few molecules with traditional technology cannot develop. Basically a wet lab, you cannot create a drug. But with AI, we're able to create the drug. But it's not from first principle. It's not from -- in silicon. It's basically, we use wet lab to create a molecule, not ideal, and we use AI to fine-tune the molecule, make it ideal.

Okay. So we're actually almost at the time limit now. So I will turn it back to Chris to do concluding remarks. Chris?

Yes. Thank you, Laurence. Again, right, if you look at 2025, like almost every metric is record high, revenue, profit, free cash flow. I think 2026, we hope to see similar. Everything will be record high. But the growth, we want to be confident we can deliver the revenue growth. That's why we factor in some variances of currency, of currency variability. That's why we give you a range of growth of 13% to 17%. But we hope we can do better than this. And thanks to the global investor support. Thank you.

Thanks again, Chris. This will conclude the call for WuXi Bio 2025 results. Thank you all.

Good morning, everyone. Welcome to this session. I'm Yang Huang, China health care analyst of JPMorgan based in Hong Kong.

Welcome to this session to be presented by WuXi Biologics. And the presenter will be WuXi Biologics' CEO, Dr. Chris Chen. Dr. Chen, we can get started.

Good morning. It's my time to report to you guys every year about the exciting progress of WuXi Biologics. So this year, we chose the title of A Scaled CRDMO Platform Delivering Sustainable High Growth. The scale at WuXi Biologics is incredible, and our business model, CRDMO, is very unique. And we want to make sure that we can deliver sustainable high growth.

I'm going to start with briefly talking about our business model, mostly give you guys a business update and strategic footprint expansion. I cannot come to this conference without showcasing our technology leadership and our ESG progress. And then I'll give you a summary and outlook.

Our business model is incredibly -- again, we said we are a scaled, integrated CRDMO model, basically a one-stop shop and with a huge scale. So our vision is every biologic can be made. We have delivered on that vision for the past 15 years. Every project that came to WuXi, we delivered. That's not an easy statement. Every biologic project that came to WuXi, we delivered. And that's why our mission -- our vision is every biologic can be made.

We said our mission is accelerating the discovery, development and manufacturing of biologics for global partners and global clients. We did that. And then last year, we launched our CRDMO+ strategy. We really want to continue to focus on our clients, continue the global expansion, continue to innovate with our technology and continue to be agile to make our clients the best partners of the work.

The enablers of our CRDMO strategy, we are very -- we are fully compliant with any global regulation. We have premier quality. Every BLA we filed gets approved. We are pushing into digital and WBS. WBS is our lean system, and we're proud of what we do.

As I mentioned, we are a scaled CRDMO platform. What's our scale? Look at every year, we can deliver 10 PCCs, 10 assets, for our partners to use. We can deliver 200 INDs. I cannot imagine any other company who can do 200 INDs a year, who can do 20 BLAs a year. We will do 200 INDs this year. As you guys have seen from the slide, we signed 209 projects last year.

So it's end-to-end, one-stop shop. So we started with, if you are an entrepreneur from Stanford University, we make the first milligram of protein for you, first gram, first kilogram, first metric ton. So as we scale manufacturing, our revenue grows exponentially as well. That's our business model.

We cover all the modalities you think of: monoclonal antibody, bispecific, antibody drug conjugate. Because the technology is our strength, the more complex the molecule is, the higher market share we are. That's why recently, for the past couple of years, ADC and bispecifics are about 2/3 of our portfolio. And they also continue to be the fastest-growing segment of our industry. So we benefit really from more complex modality.

So as a result, we won the 2025 Global Customer Value Leadership Award from Frost & Sullivan. So over the past 5 years, this week, everyone is very happy about M&A, right? Everyone is anticipating something big is going to happen. Over the past 5 years, 72 of WuXi Biologics clients was acquired, an average valuation of $1.4 billion. So because of our CMC work, we have helped 72 companies, 72 of my clients become acquired and become part of large pharma. And as a result, investors get rewarded with $100 billion of money.

So going to the right side, over the past couple of years, we have already filed 600 INDs, 600 INDs, over the past couple of years. This year alone, we're going to -- have filed 200. You see the acceleration. On the commercial side, we have 25 commercial projects, we have 74 Phase III programs. Our reliability is unheard of, go back to our vision, every biologic can be made. Our manufacturing success rate is almost 98%, 99%. So that's almost -- if you sign a contract with us, you almost like bought an insurance.

10 years ago, when I visited Boston Biotech, every CEO -- if you ask every CEO, 50% of them had a headache with biotech manufacturing. 50%. Half of them have -- if you're an investor, your portfolio company run into CMC issue, get a CRL from FDA. But now with WuXi Biologics' help, you don't have that headache. I think that's how reliable we are. And then on the regulatory side, as I said earlier, 100% of BLAs we filed get approved.

So really I want to give you an update on our business side. As I said, we are CRDMO. The R part is very unique. Again, if you are a professor here at Stanford, you come up with an idea for pancreatic cancer. Who can help you create that molecule? We can. Because we use our platform, we use our CD3 platform, we use the ADC technology, use our big library.

As a result of helping you get the molecule, we get 3% to 5% royalties. And if you couldn't -- if we use more technology, we can even get 5%, 8% royalties. And if we are lucky, we even get 10% royalties. So last year, the upfront payment and milestone payment from all those programs is actually a record high. And the biotech dollar we just generated from last year's contract alone reached $4 billion. Just CD3, as you know, our CD3 bispecific is a huge class, I believe is going to be more than 20 products approved. WuXi Biologics plays a key role in there.

Back in 2016, we started to invest in our own CD3 platform. We looked at everyone's CD3, we said, "That's not the best. That's not the best for the industry." We start investing in our own CD3 platform. We spent $10 million in 3 or 4 years. Now every year, we're getting $50 million to $100 million return, almost net profit. So that's almost already a 10x return.

Fast forward another 5 years or even 10 years, we may even get $1 billion of royalties from those programs. We have 20 programs that carry royalties, from regular 3% to 5% to as high as 10%. So again, 20 programs with 5% to 10% royalties, unbelievable. So this is an investment -- a couple of million dollar investment back in -- 10 years ago. Now it's generating $50 million to $100 million profit, and eventually will generate billions of dollars of profit. That's the beauty of WuXi Biologics are, and I think this is really exciting.

And again, if you have the program, back in 2018, we signed a program with CTTQ, and later with Curon/Merck, GSK, RD. RD just announced very exciting science -- I'm sorry, Candid. Candid just announced a very exciting program. And then Zai Lab. And then last Christmas with another major multinational companies. So those are the programs, again, hopefully, will generate hundreds of millions of dollars of revenue and profit this year, next year, and will generate hopefully $1 billion of revenue and profit 5, 10 years from now.

And those are the programs we're carrying royalties. We have a very exciting program from BioNTech, the B7-H3 antibody, Duality/BioNTech. We have a very exciting program from Merck, from GSK and from other large pharma who we cannot disclose. We have 50 programs like this, okay, 50 programs.

So those -- this -- the revenue and profit from this is already a significant part of our business today. Last year, we estimate about 20% of profit comes from this business. Although this is a very small revenue, but because they are pure profit, so it's a very small percentage of revenue, but it's already 20% of profit large year. The year before, it's 15%. Fast forward another 5 years, maybe about 25% of profit comes from royalties, milestones and upfront payment. That's why our margin will continue to lead the industry.

If you are an investor, this is famous, what we call golden funnel or diamond funnel, right? This funnel represents the more projects we're working on right now. It's unbelievable. Our funnel is getting close to 1,000 molecules. When I left Lilly and started this effort myself, my Lilly friend said, "It will be fantastic if you can work on 100 projects, 100 biologic programs." And then 15 years later, now we're close to 1,000 programs. And this tops any company's own portfolio.

Again, because we are a service business, every molecule in the funnel gives me money, gives me revenue and profit. So there is no scale issue. Right? No matter how much money you have on R&D, you have limits, you cannot develop 1,000 molecules. There's no limit. This could be 1,000, it could be 1,500, it could 2,000, it could be 5,000, if our industry has the need.

If AI can transform discovery, if someone can discover antibody in silico in a minute, I can develop them with -- they can give me 100 projects, I can develop them in a year. So we will be beneficiary of AI revolution in the next couple of years because we have the scale to deliver. We're delivering 200 INDs this year. Why not 300 in 5 years? Why not 400 in 5 years? There's no limit because every project contributes revenue and profit to us, right?

So if you look at this golden funnel, we have close to -- we have 945 programs. Last year alone, we added 209 projects. That's why I said, this year we'll probably deliver 200 INDs. We have 25 commercial programs, we have 74 Phase III programs.

So I always tell investors, when you look at WuXi Biologics, this is the only chart you need. You know we'll grow. You know our R is very good, you know our D is incredible, you know our M will give you a hockey stick growth, because of the funnel. As the program moves, that's the beauty of our CRDMO model, R will lead to D, D will lead to M. Even during BIOSECURE, our D to M conversion is more than 90%. Basically, clients -- once the project gets into the funnel, they don't leave. That's the stickiness of biologics. That's really our business model.

If you look at the funnel, one big -- one great thing is actually more than -- last year, we signed 209 projects, is record high. The year before was 150. When we IPO-ed 15 years ago, this was 20. So in about 10 years, the number of projects we signed increased by tenfold.

Among the 209 projects we signed last year, half of -- more than half of them come from U.S. More than half of them come from U.S. More than -- about 2/3 are the more complex modality, the most exciting modalities: bispecifics, multispecifics, the ADCs, right?

And then as I mentioned earlier, we also have 23 Win the Molecule programs. This is when my peers could not deliver, they actually come pick WuXi to help them resurrect or salvage the program. We have 23 programs like that. And among the 23, 6 of them are Phase III. So that basically means we'll help them do PPQ. Eventually, we'll be helping them do commercial manufacturing.

So this is unbelievable. Again, if you -- the only thing you need to remember about WuXi Biologics is this funnel. As the funnel grows, our growth will be there. Because as I said earlier, we deliver 100%. Every project coming to the funnel, we delivered. As a result, they stay in the funnel and they will go from R to D to M.

If you look at our portfolio, it's already -- because it's so big, they mimic our industry. So we have about 340 mAbs, we have 196 bispecific programs. Bispecifics is a relatively new modality, recently really become exciting. But we have almost 200 assets already. And then we have about 250 ADCs.

In our portfolio, we have almost 370 first-in-class programs. Again, go back to the concept of a Harvard professor come up with the idea on pancreatic cancer, we can help them deliver the first gram, first kilogram, hopefully, first metric ton.

In biologics, there are 3 most exciting modalities, and we are keen of all 3. Bispecifics and multispecifics, we have the largest portfolio, probably about more than -- globally, more than half of the bispecifics are within WuXi's portfolio. It's also the fastest-growing modality. It's also the highest-margin modality because we have R, D and M. But for CD3 platform, we carry royalties, milestones. For our D, it's more complex, so the pricing is good. And for M, we have, currently, we have 3 manufacturing projects. All of them hopefully can be mega-blockbusters.

So bispecifics is actually the fastest growing, most exciting, highest profit margin segment within all the WuXi Biologics' portfolio. It was not meaningful a couple of years ago. Last year, was already almost 20% of revenue. It's growing at a whopping 120%. So if you think about it, 2023 -- 2024 -- 2023, this is probably 4%, 5% of my business. 2024, become 10%. Last year, become almost 20%. And that's the fastest-growing segment.

As I mentioned, I already highlighted my CD3 platform, but the most exciting bispecific in this industry is happening at WuXi Biologics. You see the CD3xCD19, CD3xCD20, CD3xPMSA, CD3x19x20, BCMA. And that's one class. The other class is -- everyone is watching the PD-1 VEGF. We have multiple programs, PD-1/VEGF. We have DLL4/VEGF, EGRFxTDF-beta, 4-1BBxCLDN18.2.

So basically, if you read the news about a breakthrough of bispecific tomorrow, 70% chance WuXi Biologics is the CMC owner. And we'll benefit from this whole bispecific -- we will see next couple of years what the growth is going to be, but the past couple of years is very exciting. Again, go from 4% or 5% of revenue to 20% in 3 years, so a CAGR of almost 100%.

Because we spin off XDC, so everyone knows ADC, and they will be presenting this afternoon. But this is also a very exciting modality. We have 252 ADCs. We already have quite a few POC-validated mAbs. We have the HER2 ADC, TROP2 ADC, folate receptor ADC, Nectin-4 ADC, and a lot emerging. Again, it's probably very similar. Tomorrow, if you hear a breakthrough in ADC, 65% chance, 2/3 chance WuXi Biologics is behind that -- WuXi Biologics and WuXi XDC is behind that.

I said there are 3 most exciting segments of biologics. The other one is traditional mAb. mAb is not as exciting as it has once been. But because we have been working on this field for 10 years, now we have many programs that's getting to commercial stage that will give us incredible revenue: FcRn franchise, IGF1R. We have mAbs for autoimmune disease, for kidney disease, for allergy disease.

Yesterday, I'm with a client, he had the antibody for hair growth. Even for white hair, it grows back to dark. So I may need to produce 10 tonnes for that mAb for China alone, 10 metric tons. So initially, I was hoping for Alzheimer's, maybe actually the hair growth actually is better than Alzheimer's in terms of that modality. So for WuXi Biologics, we get to work with the most exciting partners globally. We have quite a few programs for kidney disease, for autoimmune disease, for pain and allergy, even for hair growth.

So that's why I think in summary, this slide, this is the most exciting part of WuXi Biologics. We will grow, we'll see even growth acceleration, because bispecifics is growing at a CAGR of almost 100% in the past couple of years. ADC, you see the XDC growth and continue to see strong growth fast forward. And on the mAb side, on the development side, it's growing on market because our size is so big. But on the manufacturing side, we'll see 30% to 50% CAGR in the next couple of years on revenue growth.

So I already highlighted multispecifics, bi and multispecifics, as really WuXi Biologics' most exciting platform. Because again, this is really such a good example, good manifesto of WuXi Biologics' business model. We have R, who generates hundreds of million dollars of revenue and profit this year. We have D, the largest portfolio. The D will carry into M. The M, we already have 3 exciting programs that's already -- 1 of them is already mega-blockbuster, 2 of them hopefully will become mega-blockbuster. So the M will generate hundreds of million-dollar revenue for us as well. And that's why I said -- so really, the multispecifics are really the most exciting part of WuXi Biologics' portfolio in the next couple of years.

So go back to our R, D, M. I already mentioned that every BLA we filed get approved, get accepted by U.S. FDA, EMA, by China, and that continues to be our track record. So it's almost like, there's a test, we always score 100 percentile in it. You can go to a website, search our peers, what their track record is. But so far, we are 100%.

So I mentioned very exciting R, very exciting D, and now the M part. A surrogate or a leading indicator of manufacturing growth or CMO growth is actually the number of PPQs. You see, our number of PPQs a couple of years ago was a single digit. During COVID, we benefited quite a lot from COVID mAbs, COVID vaccines. That's why in 2022, we had 22 COVID -- 22 PPQs. More than half of them are COVID programs. So if you take out the COVID program, it was about 10 programs in the past couple of years, and last year was 28. So go from an average of 10 to 30, so tripled the number of PPQs.

And then this, as of now, we have 34 scheduled. During this JPMorgan Conference, we'll probably sign another 3 or 4. At the end of this year, it will probably be much higher than this. So last year, it was about 28; this year, probably about 38 or even more. And then PPQ is a leading indicator of manufacturing growth. On the bottom we show you how PPQ is translating into product approval, translating into manufacturing revenue.

The nature of our business, most of our programs are new drugs. So they have a sales launch curve. So don't expect us to sign a PPQ today, $100 million revenue tomorrow. We will sign a PPQ today, we'll have $20 million, $50 million revenue in the next 2 years, but then we have to wait for FDA approval. And then we have to wait for sales launch. So from a PPQ to a peak sales probably require 6 years, and that's the patience, we have to wait.

So a lot of people are expecting -- a lot of investors keep asking, why cannot your M grow faster? Because we're working on new drugs, we have to allow themselves to peak. We have to allow the sales to grow. And that's why our revenue profile, M revenue profile, is there. M revenue is there, but it's going to grow faster than we expected, but we need some time. And that's the beauty of our business model, right?

So you'll see the M revenue will grow in a very fast fashion. Because 2025, as I said earlier, the number of PPQ already tripled to the average over the past couple of years. That basically means about 27, 28-ish of revenue will grow very, very fast.

Another factor is our PPQ success rate, 99%. We have done about 100 PPQs, we only have 1 of them had the issue. Our industry average, maybe 90%. That's a tremendous success factor. Again, that basically means if you want us to launch the product, we will help you launch the product on time. On time, with a 1% chance of failure, where our industry average is 10% chance of failure.

So as I mentioned earlier, most of our drugs are launching. Most of the commercial drugs are launching. So their revenue will need to ramp up. That's why we have close to 99 CMO projects, but our revenue is still relatively low comparing to our peers, because they're launching. And that's a good sign because it basically means our growth comes not only from number of projects, but also from project growth itself. So for example, for 1 program, we currently only have $30 million revenue. But in 5 years, we'll have $100 million of revenue. So that program will grow from $30 million to $100 million. In the meantime, we'll keep adding more and more programs into the funnel.

So as everyone knows, WuXi Biologics is a global company. We have a global footprint. We have a footprint in Ireland, in Germany, in U.S., in Singapore, and we just announced Qatar, right? So we are increasing our strategic investment in U.S. Our total investment in WuXi Biologics and WuXi XDC combined, our total investment in the U.S. will be about $1 billion. We want to provide an alternative supply chain in U.S. end-to-end, from the DNA to IND to BLA.

We are doing that in Singapore as well, an end-to-end supply chain. XDC was building a facility in Singapore, from piling the -- from piling the ground to mechanical ready, 15 months. It's unheard of. This is a project on time, on budget. So XDC will highlight this right now. We'll start generating revenue starting this year.

We are -- our drug product facility, this is a prefilled syringe, our bio facility will be ready next year. Our drug services facility will be ready. This is a large scale, 120,000-liter facility, for mAb, will be ready 2 years from now. So we're putting a lot of efforts in Singapore.

Our current effort is U.S. and Singapore. But we just launched a very exciting effort into Qatar. That's 6 countries we'll be operating in. We really think Qatar is probably the only country where we can replicate the execution and the profit margin of our China site, because it's such an attractive place. Before I went to Qatar, I didn't know much about the country other than World Cup, other than really the fascinating city. But once we get into Qatar, it's such a friendly business environment.

And we really wanted to make Qatar, make Doha, our future hub of biotech R, D and M. I envision we'll have thousands of employees in Doha by end of this decade. So Qatar is -- besides Ireland, besides U.S., Ireland, Germany, Singapore, China, Qatar is our sixth country. We'll have a significant capacity there. And you will see. Because we have very strong cash flow, we don't need any equity fundraising for the -- to support the project. Our own cash will be more than enough to support the project. So don't worry about any fundraising from WuXi Biologics.

As I mentioned earlier, technology is always a highlight of WuXi Bio. The reason we can deliver every project on time and on budget and the reason we can be much faster than our peers is because of technology. I want to highlight a few. The CD3 technology I already highlighted. The WuXiBody bispecific, we -- both technologies we invested back in 2016. Again, now you know, now it's a no-brain -- now everyone knows bispecific is important. But we kind of know bispecific is important 10 years ago. That's why we build the technology. That's why we can generate hundreds of million dollars of IP income from those technology already. And we have a multispecific platform, we have a single-domain platform, we have ADC platform.

Last September, we announced most exciting technology of WuXi Biologics' history. It's our new cell line. As you know, Wuxi Biologics' core core is based on cell, based on the cell. 15 years ago when I started with the company, we have to screen 10,000 cells. 15 years ago, it takes 9 months, 10,000 cells, get 2 grams per liter. Last month, 30 cells -- from 10,000 cells to 30 cells, from 9 months to 2 months, from 2 grams to 10 grams per liter.

So this is probably the best technology our industry can offer. And this is the only one in the service space we can offer. So we actually have companies who are willing to pay $100 million to license the technology. So this is going to be a game changer. For every program come to WuXi, we can get 10 grams per liter. So if every program is 10 grams per liter, then what's your bioreactor size? You only need a 5K reactor. 5K reactor already gives you 50 kilos.

It's incredible, this technology. But this is something -- again, this is something we start to cook back in 2019. We are very excited to stand here now, but the investment comes from 2019. If you think about 2019, we have what we call semi-targeted.

For those of you who are experts in biology, we found a spot. So typically, in our industry, you put a DNA mixed with a cell. The DNA -- you don't know where the DNA go into the cell. That's how you get a cell line. That's why you need to look at 10,000 cells to figure out which one is the highest producing. Over the past 5 years, we found a hotspot in cell genome. We know exactly where we want to go to. And we have the technology to deliver the DNA to that spot.

That's why every cell -- 10 years ago, because -- when you look at 10,000 cells, there are some 0, some 1, a few 2. But now every cell is 8 to 10 grams per liter. So technically, I don't need to pick. I just put a DNA together with the cell, take the cell, and that's your cell bank. That's why we can cut the time line from 6 months to 2 months, increase productivity from 2 grams to 10 grams per liter.

And this will transform our industry. Again, we can make -- because if it's 10 grams per liter, annual cost of biologics will be a few thousand dollars. If it's a recent -- for example, a PD-1. PD-1, the annual manufacturing cost of PD-1 using this technology is only a few thousand, $2,000, $3,000. We can make biologics really, really affordable.

I think because we pioneered the whole disposable manufacturing, a lot of investors, a lot of clients initially also doubt whether disposable works. If you have a 10-gram per liter, if you have disposable, now you know why it works. For WuXi Biologics, we planned this whole thing from the get-go, right? Because my 10-gram per liter times 5,000 to 6,000-liter reactor, I get 40 kilos. If you look at the first generation of Herceptin-Avastin, they were made in 20,000-liter reactor because the titer is only 1 gram per liter. So every bag, you get 20 kilos.

Now with my technology, everybody gets 40 kilo. I can double the throughput comparing to what the traditional industry output. And that's why my reactor scale is smaller. But if you have a grandfather cell line, if you have an old cell line, if you have a grandfather project, I can do it for you. Over the past couple of years, we have done 300 batches by multiplexing the reactor. One reactor is only 4K, but why don't we put 4 of them together? Become 16K. We did that in Ireland, we did that in China.

So I think with our capacity, we can actually deliver 30 metric tons. I mentioned earlier, a hair implant or hair growth antibody may need 10 metric tons. But I can build a 10 metric ton facility in China in 2 years. Now I can build it in Qatar in 2 years, in Singapore in 2 years.

So I think the manufacturing platform is super-rigid, is cost competitive. I think industry always have a debate, disposable, why disposable should be more expensive than stainless steel? We have a disposable manufacturing in the room. We've already proven with our 300 batch, there is no cost difference. Disposable, a single plastic bag is as effective cost-wise comparing to a stainless steel vessel, because your CapEx is lower, your footprint is smaller and you are more environmentally friendly.

So as our industry evolves, we see a lot of project go from IV to subcu. Even for oncology projects, patients want to do it at home. So as a result, we actually delivered all those technologies to enable, pay us to convert IV product into a subcu. We have done many projects already. So if you have -- I think if you have a drug that needs 4-hour IV infusion, patients have to stay in the hospital for 6 hours. Now with WuXi's help, we can convert it into a subcu you can administer at home, 2 minutes, 1 injection. All the technology we have enable that.

Drug product has been -- is also a core part of our business that's growing. We're already developing 500 formulations. We have a project, we can formulate the protein to 150, even 250 mg per ml. That's why with the -- if your dose is only 20 mg, we can be making it into 1 ml you can deliver at home instead of go to a hospital IV for 4 hours. Those are the technologies that we are developing. We have been helping global companies with that.

As our industry evolves, and this week you probably see AI companies everywhere, and AI is also part of the game for WuXi Bio. It's built into our platform. We want to be the world-leading digital CRDMO. I think we have a DaVinci Client Portal, so all the data, our client needs, you can access it from DaVinci. We have a BioFoundry, is our own system for documenting every data. Every piece of data is in the BioFoundry. We have -- manufacturing batch record electronic system to allow paperless manufacturing.

Really all those platforms are already in the works. And hopefully, by next year, we'll be launching all of those. So we're already launching piece by piece as of this year.

WuXi Biologics' vision of manufacturing is in 3 years, we don't need anyone in the plant. In 3 years, we don't need anyone in the plant. The plant runs by itself. It's fully automated, continuous processing. And that's why we're launching what we call PatroLab. This is a digital twin of our manufacturing facility. If you ever gets a chance to visit our Shanghai facility, you can already see it. We have it already running at a 50-liter scale. So it's a 50-liter reactor, but it continues to run. Every day, you get 10 grams per liter in there.

So you get -- it's a very small vessel, but every day you get 500 grams, and it keeps running in there. And then we have a digital twin that allows us to manufacture them. We use Raman to -- we don't even need to sample. We don't even need to sample. Because every data, the computer is monitoring it and helps us make decisions. So this is what we call our PatroLab. It's our own version of digital -- a digital version of a manufacturing facility.

We always are very proud of our ESG performance. But if you look at every metric, every metric, our ESG score is the highest -- one of the highest in the industry. That's something I'm -- really as a global company emerged from China, I'm very proud of what we have done and what we have been doing with ESG.

I think overall, we are on track to deliver 2025 with sustainable growth momentum into 2026. So we are on track to deliver a very strong 2025 with both top line and bottom line. I already mentioned to you that bi and multispecifics are our most exciting platform and the fastest-growing within Wuxi Bio because we have R, D and M.

We have already fully established track record in large-scale manufacturing with either disposable or our own high-producing cell line. We'll continue to invest in technology. So I highlighted the CD3 technology we invested, highlighted bispecific technology we invested, highlighted cell line technology we invested, right?

On the R side, we see a record high number of milestones and the upfront payment. On the D side, record number of projects. On the M side, the number of PPQ increased by 75% comparing to last -- the year before. We are very excited about Qatar and our future investment in Qatar.

Looking forward into 2026, I think we'll continue to see, and you already know the funnel, you can see the growth in 2026. We always continue to see R grow strong, D grow strong, M grow strong. We have quite a few blockbusters.

We had FDA inspection in our Ireland facility last month. We have 1 more FDA inspection next month in our [ Shijiazhuang facility, Hebei facility ]. We have 1 March, basically FDA coming to us almost every month for a product approval inspection. So we're expecting a few product launch this year. All those inspections are hopefully for mega-blockbuster products. So the revenue -- the explosive growth of manufacturing revenue will come. Thank you.

Thank you, Dr. Chen. Before we start Q&A session, may I invite Mr. Tu, the company's CFO, to join us on the stage.

So for our audience, if you have questions, you can raise your hand, but please wait for mic so that everyone can hear you. And also for our online audience, if you have questions, you can submit the questions through our conference digital app.

Any questions from audience? Here. Just please wait for mic.

For the 3 end-markets: bispecific/multispecific, ADCs and mAbs, what are the underlying market demand during the next, let's say, 5 years?

Because of confidentiality, I cannot disclose the program, but one of them should be a $5 billion product. The other one should be towards -- the other one, the analysts, because all of them are public companies, financial analysts expect $2 billion to $3 billion. So the 3 mAb -- the 3 bispecific combined peak sales should be around $10 billion. So they are really mega-blockbusters.

Congratulations to you and WuXi Bio as a whole. You definitely delivered a wonderful performance in 2025. And it's exciting to see that you have a huge investment in Middle East. Can you just elaborate a little bit more in terms of at what level of contribution to the future performance, let's say, in 2 years, as you mentioned that you will get to the project and finish in 2 years, and -- yes.

In Qatar, we probably expect $500 million to $800 million of revenue by end of the decade, by 2030. So 4 years from now, we'll be $500 million, $800 million in revenue.

Okay. And in Middle East, I'm wondering if there was any technical problems, let's say, to deploy the talent. So what's your strategy or plan to solve this problem?

You mean talent challenge?

Talent, yes.

Yes. I think we will be able to hire from global. I think certainly, initially, a lot of expats from China. But Middle East has a very diversified workforce, we believe we can win.

Chris, so obviously, the future milestone sort of outlook is really exciting for the company. But as an investor, one of the things that's hard to sort of think about is just how do you model that because it's so lumpy, right? But I guess the volume will increase, so then the lumpiness should kind of even out. What do you sort of think, just broad speaking, like guidance could be for milestone contribution, let's say, in the outer years, 3, 4 years from now?

Yes, that's a great question. I think that's why rule of thumb, you can assume the milestone -- the upfront milestone will grow at a CAGR of 30% and may accelerate when the royalty come in. Because just upfront milestone, as a company, we just assume it will grow CAGR of 30%. That's why I promised investors our margin will continue to improve. Because the milestone revenue will come in -- will continue to improve with our WBS, WuXi Business System, and then our efficiency improve over years. And then our global sites start to ramp up, right? Because we invested very heavily globally, we have U.S., Germany and Ireland. So all those loss will come into profit in the next couple of years. That's why our margin will continue to expand every year.

So just on the funnel and the termination stage, are most of those terminating and going over to a competitor, or are most of those terminating to say, "We're not continuing with this phase?"

So far, in the past 5 years, we lost 2 projects with competitors -- 2 projects to competitors. So out of 1,000, 2. But maybe we need to clarify, all the termination is actually the fate of the molecule, is not successful.

So we won 23 projects -- we won probably 100 projects over the past 5 years. We lost 5. So win-to-loss ratio is 20:1.

Over there?

Hi. You go very fast on the AI impact and digital. Can you elaborate a bit more? And what's your vision about the impact of this technology in your area and driving performance, I guess?

Yes. I think as I said earlier, if AI really can discover a drug, we will probably be the first beneficiary, because someone still needs to make it and test in human, right? So we are the most efficient maker of the protein or of the antibody, of the drug. So we'll benefit from that.

And then as a company, not every company use AI. So AI is part of our business strategy as well, we use in every part of our business.

Okay, then. I guess we're approaching to the end of this session. Thank you for joining this presentation by WuXi Biologics.

Thank you.