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Hong Kong, China, July 9, 2023 – WuXi Biologics (“WuXi Bio”) (2269.HK), a leading global Contract Research, Development, and Manufacturing Organization (CRDMO), today announced the proposed spin-off and separate listing of its subsidiary WuXi XDC Cayman Inc. (WuXi XDC) on the Main Board of the Hong Kong Stock Exchange.
WuXi XDC, a joint venture between WuXi Biologics and WuXi STA, provides end-to-end contract research, development and manufacturing services for bioconjugates, including antibody drug conjugates (ADCs). Its services cover antibodies and other biologics intermediates, chemical payloads and linkers, as well as bioconjugate drug substances and drug products. WuXi XDC has been successful in bringing multiple ADC projects to the Investigational New Drug (IND) filing stage in 15 months or less, nearly cutting in half the traditional development timeline. As of May 2023, 102 on-going integrated projects are under development at WuXi XDC, including 44 post-IND bioconjugate projects, among which 14 projects are in phase II/III.
“The establishment and development of WuXi XDC is another testament to WuXi Biologics’ effective business growth strategy, and demonstrates the company’s vision and determination to further strengthen its leadership in the bioconjugate industry,” commented Dr. Chris Chen, CEO of WuXi Biologics and Chairman of WuXi XDC. “The future of WuXi XDC is very promising. This listing will allow WuXi XDC to serve as an independent platform to fuel and realize its growth potential. It will also permit WuXi Biologics to continue to focus on our global CRDMO business capabilities, enabling faster, innovative development and manufacturing of biologics for partners and benefiting patients worldwide.”
WuXi XDC will remain as a consolidated subsidiary upon the completion of the proposed listing. The Proposed Spin-off is in the interests of the company and its shareholders for the following reasons.
The Proposed Spin-off enables WuXi XDC to develop a unique global leading CRDMO dedicated to bioconjugates, initially starting with ADCs and evolving into all bioconjugates such as peptide conjugates, oligo conjugates and chemical conjugates (from ADC to XDC). The ADC and bioconjugate market are at a growth inflection point, and WuXi XDC is uniquely positioned to secure opportunities in the fast-growing global bioconjugate market, some of which are beyond the business scope of WuXi Biologics. Moreover, the Proposed Spin-off will give WuXi XDC an independent fundraising platform in the broad capital market to meet the capital needs for building a global leading ADC and bioconjugate service provider and realize the growth potential of the ADC and bioconjugate market. As a result, WuXi Biologics will maintain more flexibility and capacity to allocate funding resources among its various businesses and enable its continued strong growth.
More defined business focus and strategy to support growth of the Company. The Proposed Spin-off will bring a more defined and delineated business focus tailored to the respective drivers of profitability and long-term growth of WuXi Biologics. This will also lead to a more direct alignment of the management’s responsibilities and accountability with its operating and financial performance for both WuXi Biologics and WuXi XDC, which will in turn lead to improved decision-making processes, faster responses to market changes and increased operational efficiency without additional capital pressure on WuXi Biologics.
More organized and efficient allocation of WuXi Biologics’ capital and resources as a whole. The enhanced business focus resulting from the Proposed Spin-off is expected to lead to a more organized and efficient allocation of the resources of WuXi Biologics. In particular, it will alleviate the capital demands to finance the ongoing capital expenditure plans of WuXi XDC and strengthen its ability to attract and recruit talent. As such, it will enable WuXi Biologics to allocate its resources more effectively to the biologics CRDMO business and improve its capital utilization efficiency without the need to consider WuXi XDC’s funding requirements.
Continued consolidation of financials with no material impact on WuXi Biologics. WuXi XDC will become a separate entity listed on the Main Board of the Stock Exchange while remaining a subsidiary of WuXi Biologics upon completion of the Proposed Spin-off. WuXi XDC’s financial performance will continue to be consolidated into the financial statements of WuXi Biologics. Given that WuXi XDC’s revenue and adjusted net profit for the year ended December 31, 2022 only accounted for approximately 6.5% and less than 5% of those of WuXi Biologics, respectively, the Proposed Spin-off will have no adverse impact on the financial and operational performance of WuXi Biologics.
Improved governance, market communication, operational and financial transparency. The foregoing will also be supported by enhanced governance of the businesses of WuXi XDC, and improved operational and financial transparency of WuXi Biologics and WuXi XDC following the Proposed Spin-off. This is expected to enhance market communications and enable investors to appraise and assess the value, performance and strategies of WuXi Biologics and WuXi XDC at different development stages more effectively.
Shareholder value creation. By virtue of the above, WuXi Biologics will benefit and enjoy greater shareholder value from the business prospects and results of WuXi XDC, as it will remain a subsidiary of WuXi Biologics upon the Proposed Spin-off. WuXi XDC is operating in the fast-growing ADC and bioconjugate market, and the Proposed Spin-off will unlock the intrinsic value of WuXi XDC and enable it to further enhance its reputation and leadership position. This in turn will benefit WuXi Biologics and its Shareholders, who will have the opportunity to maximize value creation and optimize the potential business growth of WuXi XDC after the Proposed Spin-off.
About WuXi Biologics
WuXi Biologics (stock code: 2269.HK) is a leading global Contract Research, Development and Manufacturing Organization (CRDMO) offering end-to-end solutions that enable partners to discover, develop and manufacture biologics – from concept to commercialization – for the benefit of patients worldwide.
With over 12,000 skilled employees in China, the United States, Ireland, Germany and Singapore, WuXi Biologics leverages its technologies and expertise to provide customers with efficient and cost-effective biologics discovery, development and manufacturing solutions. As of December 31, 2022, WuXi Biologics is supporting 588 integrated client projects, including 17 in commercial manufacturing.
WuXi Biologics views Environmental, Social, and Governance (ESG) responsibilities as an integral component of our ethos and business strategy, and we aim to become an ESG leader in the biologics CRDMO sector. Our facilities use next-generation biomanufacturing technologies and clean-energy sources. We have also established an ESG committee led by our CEO to steer a comprehensive ESG strategy and its implementation, enhancing our commitment to sustainability. For more information about WuXi Biologics, please visit: www.wuxibiologics.com.