8/30/20

Hepalink Announces 2020 Interim Results

HONG KONG, Aug 31, 2020 - (ACN Newswire) - Shenzhen Hepalink Pharmaceutical Co., Ltd. (Stock Code: 9989.HK; "Hepalink" or the "Group") today announced the unaudited consolidated results for the first half year of 2020 ("1H2020") ended June 30, 2020 (the "Reporting Period").

Financial Highlights
For the six months ended 30 June 2020, the Group recorded:
- Total revenue was RMB2,635.6 million, an increase of 24.3% over the first half of 2019 ("YoY");
- Gross profit was RMB1,085.8 million, an increase of 47.9% YoY;
- Gross margin amounted to 41.2%, an increase of 6.6 percentage point YoY;
- On a non-IFRS basis, net profit attributable to equity holders of the Group (net of non-recurring profit or loss) was RMB505 million, increased by 668.8%;
- The adjusted net profit attributable to equity holders of the Group after deduction of non-recurring profit or loss (excluding the listing expenses after tax of RMB32 million) was approximately RMB 532 million.

In the first half of 2020, the sudden outbreak of COVID-19 has impacted many industries in varying degree. During the Reporting Period, the Group maintained sound revenue growth and profitability. For the six months ended June 30, 2020, the Group's total revenue amounted to RMB2,635.6 million, representing a year-on-year increase of 24.3%, while the gross profit of the Group increased 47.9% to RMB1,085.8 million; and recorded net profit attributable to equity holders of the Group (net of non-recurring profit or loss) of RMB505 million, representing a year-on-year increase of 668.8%.

Outstanding Performance of Our Businesses
The revenue from finished dose pharmaceutical products business increased by 37.1% to RMB631.3 million for the first half of 2020 on a year-on-year basis and accounted for 24.0% of the Group's total sales revenue. Gross profit increased by 31.1% to RMB272.8 million, with a gross margin of 43.2%. During the Reporting Period, as the major market of enoxaparin finished dose, Europe was affected by the unexpected COVID-19 epidemic, and the Group encountered varying degrees of challenges. The Group proactively strengthened its marketing efforts by further promoting hospital sales channels in European countries and building our pharmacy channels with a spillover effects from hospital to pharmacy. In June 2020, the Group's enoxaparin finished doses obtained the approval for marketing in Switzerland, which marked as an important step for the Group in EU market. The access to the Swiss market is a recognition of our excellence in the quality of products, and further accelerate the Group to achieve full coverage of European market.

The sale of heparin API business, which accounted for 55.4% of the Group's total sales revenue, amounted to approximately RMB 1,459.1 million, representing a year-on-year increase of 30%. The gross profit increased by 67.9% to RMB656.3 million, with a gross margin increased to 45% from 34.7% compared to the same period in 2019. The API business achieved outstanding growth and profit performance in the first half of 2020, which was primarily driven by the effectiveness of new pricing scheme formulated by the Group and its customers. This enabled the effective transmission of upstream cost fluctuations, and the gross profit level of the heparin API business improved significantly as compared to the same period of last year.

The CDMO business increased by 11% to RMB 386.8 million, and accounted for 14.7% of the Group's total sales revenue. The gross profit increased by 49% to RMB123.2 million, with the gross margin increased by 8.1 percentage point to 31.9% compared to the same period in 2019. The simultaneous enhancement of the Group's production capacity in the microbial fermentation and mammalian cell culture business lines, the further enhancement of its operational capabilities, as well as the successful cooperation with multinational companies and the maintenance of revenue growth contributed to the development of CDMO business. The gross profit margin of CDMO business was improved because of the increased utilization of scientific research and development.

Development of New Drugs is Progressing Steadily
During the Reporting Period, the Group anchored its efforts on research and development of innovative drugs. The Group made remarkable progress in the research and development of its two new drugs, Oregovomab and RVX-208. Oregovomab, the world's first immunotherapy drug, can be used to treat advanced ovarian cancer; the PFS of the phase I clinical trial group is 41.8 months, which was nearly 3.5 times in compared to the control group (12.2 months). The Group is making strenuous preparations for the III phase of the clinical trial, and it is expected that Oregovomab will become the most effective first-line treatment for advanced ovarian cancer after the completion of the phase III. Besides, RVX-208, which is intended to reduce major adverse cardiovascular events among high-risk cardiovascular disease patients with type 2 diabetes mellitus, was granted Breakthrough Therapy Designation by the FDA in February 2020. Its phase III clinical protocol was reapproved by the FDA in June 2020, indicating that the new drug pipeline of the Group was recognized and supported by the regulatory authorities.

Mr. Li Li, the Chairman of the Board of Shenzhen Hepalink Pharmaceutical Co., Ltd. stated, "The outbreak of COVID-19 is expected to have a significant impact on every industry this year. We believe it is confronted with the opportunities and challenges. We achieved high growth from pharmaceutical products, development of innovative drugs and CDMO business, which were primarily driven by our long-term competitiveness. The COVID-19 pandemic poses significant risks to public health, many countries start to implement policies on reservation of medical resources and equipment, which is expected to drive the demand in the medium to long term. In light of these uncertainties, we will continue to closely monitor the market and utilize our advantage of global operating model in order to seize the market opportunities and strengthen cooperation with customers." With regard to the plans for the second half of 2020, he added, "We will remain flexible and adjust our strategies from time to time to ensure that the Group can deliver steady growth. At the same time, the Group will continue to execute its strategies and plans to reach our annual targets and to achieve our goal of becoming a leading international pharmaceutical enterprise in the future."

About Shenzhen Hepalink Pharmaceutical Co., Ltd.
Shenzhen Hepalink Pharmaceutical Co., Ltd. is a global pharmaceutical company with business spanning the manufacture and sale of pharmaceutical products, development of innovative drugs and CDMO services. The Company's sales of pharmaceutical products consists of finished does pharmaceutical products which include enoxaparin sodium injection; active pharmaceutical ingredient ("API") products including heparin sodium API and enoxaparin sodium API; and other products mainly including pancreatin API. The Company has obtained exclusive development and commercial rights in Greater China for clinical stage innovative drug candidates which are being developed for the treatment of disease with an immune system axis. The Company are also developing a self-discovered proprietary drug candidate currently at preclinical stage. The Company operate a CDMO business providing R&D, manufacturing, quality management and program management services, through the Company's wholly-owned subsidiaries Cytovance Biologics, Inc. (the "Cytovance"), which specializes in the development and manufacture of recombinant pharmaceutical products and critical non-viral vectors and intermediates for gene therapy, and SPL Acquisition Corp. (the "SPL"), which provides services in the development and manufacture of naturally derived pharmaceutical products.


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