GenScript Biotech Corporation (HKEX:1548), a leading biotechnology company, has reported a significant revenue increase of 43.5% to $561.4 million in the first half of 2024. The company's CARVYKTI, a treatment for multiple myeloma, has treated over 3,000 patients, outperforming historical CAR-T launches.
GenScript has also made strides in expanding its global presence, with ex-China revenue growing by 60%, now representing 21% of total revenue. The company's robust pipeline and expansion plans are set to address increased demand, particularly in the U.S. and EU markets.
Key Takeaways
- Revenue increased by 43.5% to $561.4 million in the first half of 2024.
- Over 3,000 patients treated with CARVYKTI for multiple myeloma.
- Ex-China revenue up by 60%, now 21% of total revenue.
- Over 350 patents secured, with more than 1,000 in the application process.
- Life Science Group's customer base grew by 5.4% year-over-year.
- ProBio segment saw a decline due to challenging biotech funding environment.
- Bestzyme's top-line growth exceeded 40%.
- Legend's revenue grew by 156% year-over-year.
- Cash position stands at $1.3 billion.
- Full-year guidance: Life Science business to grow 10-15%, ProBio to decline 10-15%, Bestzyme to grow 25-35%, and facility expansion for Legend.
Company Outlook
- GenScript anticipates pronounced growth for CARVYKTI in the second half of the year.
- The company plans to focus on R&D for Bestzyme in synthetic biology and enzymes.
- Legend aims to start commercial production at the new Obelisc facility in the second half of 2024.
- GenScript aims to achieve an operating profit in 2026.
Bearish Highlights
- ProBio's revenue declined due to a difficult biotech funding environment.
- The company is addressing concerns raised by a select house committee regarding national security.
Bullish Highlights
- Strong growth momentum following a misunderstanding with customers in June.
- Expansion of production capacities to meet global demand.
- Positive signs of a turnaround in the biotech and CDMO industry.
Misses
- Full-year top-line guidance revised from 15-20% growth to 10-15% due to the need for clarification with customers.
Q&A Highlights
- The company's shareholding in Legend is considered a valuable asset, and decisions will be made in the best interest of shareholders.
- The exact capacity and contribution of the Novartis (SIX:NOVN) plant cannot be disclosed.
- The profitability improvement in the first half was driven by long-term investments in platform improvement, reduced operational and administrative costs, and automation.
GenScript Biotech's interim results demonstrate a company with strong growth and a promising pipeline. The company's CARVYKTI has shown exceptional performance in the market, and with the expansion of its global footprint, GenScript is well-positioned to meet the increasing demand for its products and services. Despite challenges in the biotech funding environment, the company's diverse portfolio and strategic investments in R&D and production capacity suggest a robust outlook for the future. As the company continues to navigate regulatory and national security concerns, its focus remains on delivering high-quality solutions and creating a positive social impact.
Full transcript - None (GNNSF) Q2 2024:
Aixi Bai - General Manager of Bestzyme:
Li Chen - Chief Executive Officer at GenScript ProBio:
Operator: Good day, and thank you for standing by. Welcome to GenScript Biotech Interim Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chief Financial Officer, Shiniu Wei. Please go ahead.
Shiniu Wei: Thank you, operator. Good morning, everyone, and good evening for colleagues joining us from the U.S. This is Shiniu Wei. Welcome to GenScript's 2024 interim results conference call. Joining me on the call today are Mr. Robin Meng, our Chairman of the Board; Ms. Sherry Shao, our Rotating CEO; and Dr. Patrick Liu, Off-Duty Rotating CEO and Chairman of GenScript ProBio. We also have other senior executives from the business participating. Before we begin, I'd like to remind everyone about the forward-looking statements we will be making at the con call. Actual results may differ materially from those indicated by such forward-looking statements because of various important risk factors and changing market conditions. We do not undertake any obligation to publicly update any forward-looking statements. In today's call, Sherry will share our first half business highlights, while I will present our first half financial results and share financial commentary. Then we will open up for Q&A. As a reminder, you can find today's presentation on our Investor Relations section of the company's website. Now, I'll hand it over to Sherry.
Sherry Shao: Thank you, Shiniu. Let's go to Slide 4. GenScript delivered another strong top line growth in the first half. The group's revenue increased by 43.5% to about USD 561.4 million. Adjusted net loss of the group was significantly narrowed to about USD 79 million. In particular, our groundbreaking product for treating multiple myeloma, CARVYKTI is making a significant difference in the lives of multiple myeloma patients. By the end of first half, more than 3,000 patients have been treated by CARVYKTI. This remarkable progress was made possible by our strategy and our dedicated employees. By the end of the first half, our global employee base exceeds 7,000. Among them, about 12% of our employees are R&D focused, showing our commitment to building industry innovation. We also further strengthened our IP position. Now, GenScript has accumulated more than 350 patents and we also have over 1,000 patents in the application process. In the first half, we secured EcoVadis Bronze rating, demonstrating our commitment to sustainability and our unwavering vacation of becoming a reliable partner for global clients. Moving to Slide 5. Before we dive into the business part, I'd like to share our recent progress on sustainability. Guided by our corporate mission, make people and nature healthier through biotechnology, we integrate sustainability into our long-term growth strategy. This commitment has led to significant achievements. As a member of the United Nations Global Compact, we align our environmental, social and governance initiatives with global standards. Our dedication through sustainability has been recognized with the Bronze Medal from EcoVadis, the world's largest business sustainability rating platform. This rating positions us among top 35% of all companies evaluated by EcoVadis, affirming GenScript as a trusted partner for our global clients. This year, we took a major step to address climate change and support our customers' environmental goals by committing to the Science Based Targets initiative. After completing a comprehensive greenhouse gas inventory and verification, we are on track to submit our near-term and long-term targets for validation by the end of August. In our operations, we focus on reducing energy consumption through various energy efficiency programs, technological upgrades, innovation and increased use of renewable energy. Additionally, we work to lower carbon emissions across our value chain by engaging suppliers on environmental issues. Together with our global business partners, we are dedicated to shipping a sustainable future for all. Next page. Turning to our first half business highlights. Let's start with the Life Science Group. In first half, despite the geopolitical tensions, we maintained a robust growth momentum. Our customer base remains healthy. In the first half of the year, our customer base consisted of 20% non-profit organizations and 80% industrial customers. Our customer base continues to grow. During the half, we have over 39,000 active customers, representing a 5.4% year-over-year growth. We are committed to saving industry-leading time lines and delivering unmatched results. In the first half, we further accelerated our turnaround time in business lines. To strengthen our core competencies in the gene synthesis market, we launched the 4 business days FLASH gene synthesis service. This service features both the fastest turnaround time and the most affordable price in the industry. Thanks to our efforts to integrate our gene synthesis and protein services, we now provide the fastest antibody expression in the market, delivering results as fast as 5 business days. We've also introduced our 10 business days, Rush mRNA services, further setting the industry standards for mRNA agencies. We are also pushing the boundaries of innovation by continually introducing new platforms to meet our customers' emerging needs. In our protein line, we have launched a comprehensive protein production platform for novel modalities such as a variety of different biospecific antibody designs. We are continuously enabling novel CRISPR technology by launching prime editing gRNA and GenCircle double-strand DNA services. Additionally, we introduced self-amplifying RNA to meet emerging demand from customers, staying ahead of the curve in biotechnology advancements. Our Life Science business offers a wide range of services and products with gene synthesis being a key starting point for most of them. Since the second half of last year, we have been directing resources towards gene protein business integration. Through automation gene production and internal collaboration between protein and gene synthesis, our protein business line has achieved a 30% of year-over-year revenue growth. The percentage of monthly gene items decade for protein segment has also increased by approximately 9% since the beginning of this year. We believe this growth momentum in the protein business should continue. And we will continue to leverage cross portfolio capabilities to unlock higher customer value in the future. Next page. Turning to Life Science capacity expansion, we provide top-tier capacity for our global clients. In the first half, our focus is on improving our U.S. and Singapore sites. At our New Jersey site, we have shortened automated gene synthesis delivery time by over 25%. Revenue from the New Jersey site has seen a 30% year-over-year growth and our site utilization rate continues to improve. In Seattle, both mRNA and gene plasma services have grown over 100% in terms of revenue. At our Singapore site, we successfully launched our automated gene service and we are able to provide 8 business days gene protein services at this site. All those results in a revenue increase over 100%. As shown on our slide, we are now in Phase 3 of our modular capacity expansion approach. From 2024 to 2026, our focus will be on strengthening our global production capability to address customer needs in different markets. Slide 9. Turning to ProBio, our biologic CDMO segment. We have further enhanced our capabilities in both the protein and antibody drug and cell and gene therapy platform. Starting with discovery, we have upgraded the single B cell antibody discovery platform, leveraging our proprietary cross-feed expression platform to deliver functional antibody leads in just 1 month. We have also upgraded our developability assessment offerings to deliver high-quality candidates to the CDMO business. In terms of the development and manufacturing platform, we launched the UproCHO medium system. This system is profiled proprietary medium system designed for ProBio cell line to GMP and has been proven to significantly optimize productivity and product quality in fed-batch, intensified fed-batch and perfusion processes. We have also further enhanced our antibody average titer, which now stands at 6 gram per liter with maxima titer of 15 gram per liter. This will further help our customers to reduce future drug manufacturing costs. Additionally, we have shortened cell line development turnaround time through an industry-leading 10 weeks, facilitating customer project development time. Turning to plasmid. We have continued to enhance our turnaround time and improve our titer for plasmid manufacturing. We launched the ProSyn cell free linearized DNA technology and with the help of this platform provides and accelerate various customer projects. We are now also able to offer a foremost FDA- ready R&D CMC service. And our pro titer for plasmid is now around 2 gram per liter. For our viral vector line, we are now able to deliver AAV CMC projects with 200 liter GMP manufacturing capacity. Additionally, we have opened a commercial GMP viral vector facility in China and launched PC/PV/PPQ and GMP manufacturing services. Turning to Slide 10. For the biotech and the CDMO industry, we believe there are emerging signs of a positive turnaround. We have observed that our sales orders are gaining renewed momentum and our cell cycle discovery business has outperformed the rest of the portfolio, indicating a healthy recovery trend for business. In terms of our track record, we secured 13 CMC projects, including an antibody drug and about 40% is ex-China project. We gained 24 CMC projects in CGT. In terms of R&D approvals, ProBio helped our customers earn 3 new R&D approvals, including an antibody drug and 16 new R&D approvals in CGT. We received our first 2,000-liter CMO order in first half, which marks a significant milestone for our CDMO business. The experience we gained from this project will enhance our commercial manufacturing capabilities and strengthen our commercial quality system, paving the way for us to become a more competitive global CDMO. Next page, in terms of ProBio's capacity, we launched a commercial biologic manufacturing facility in April. ProBio also expanded its plasmid and viral vector production capabilities in New Jersey. We acquired the Hopewell site, which now features a complete process development and manufacturing team focused on CGT/CDMO. This cutting-edge facility will serve as the hub for our North American operations. We are seeing an increase in inbound customer interest for the services we plan to deliver from this site. Next page. Moving to our industrial synthetic biology products segment, Bestzyme. With over 40% top line increase, Bestzyme's growth significantly outpaces that of other companies in the market. By collaborating with local distributors and international partners, we have been able to accelerate our international expansion. Compared to last year, our ex-China revenue increased by about 60%. And the ex-China revenue now accounts for about 21% of our total revenue. We are also strengthening our IP position by securing more patents. 2 of our core products, they are more stable by [indiscernible] have been recently granted patents. Additionally, we are enhancing our internal capabilities in IP protection and regulatory compliance. We are committed to providing our customers with high-quality products with integrated and our long track record of R&D investment supports that commitment. We also expanded our product portfolio by launching products with new batches and upgraded microorganism strength to increase production efficiency. The next page for Bestzyme, we will focus on R&D. We are also expanding our R&D staff for Bestzyme and the R&D focus will be on Syn-bio and enzyme business. Turning to Slide 13. As for our synthetic biology pipeline update, we are focusing on regulatory approval and pilot production for Natural Sweet Protein and Lactoferrin. For Natural Sweet Protein, we have completed industrial-scale trial production. We have attained self-affirmed GRAS status and submitted a GRAS notice to the U.S. FDA. We launched our Natural Sweet Protein in the U.S. market last month. Regarding Lactoferrin, we are collaborating with universities and clients on functional studies. In 2024 we aim to submit GRAS certification and initiate industrial-grade trial production. We plan to commercially launch this product candidate in the U.S. in 2025. Bestzyme has established a solid position in the enzyme market and our future growth will be driven by both organic growth in enzymes and breakthrough in synthetic biology products. Slide 14. Turning to our cell therapy segment. Our leading product, CARVYKTI outperformed historical CAR-T launch, setting a new standard for CAR-T launch. In the first half, Legend achieved net trade sales of USD 343 million on CARVYKTI. In terms of ongoing chemical trials, we completed CARTITUDE-5 enrollment in July and announced positive overall survival results in the second interim analysis of the CARTITUDE-4 trial. We also launched CARVYKTI lines of therapy starting from the second quarter of 2024. Turning to manufacturing, Legend initiated clinical production at the Novartis facility in July 2024 and meaningful progress on the Raritan site expansion, with expected approval of the new Raritan section in second half 2025. We continue to advance early-stage pipeline candidates across hematological and solid tumor indications. The group launched on a new state-of-art research center in Philadelphia and began preclinical development in the autoimmune field. Legend has a solid financial position to fund sustainable growth. By the end of first half, Legend had a cash position of USD 1.3 billion and its revenue continues to grow at a fast pace. With this cash position and revenue growth, Legend to fund operating and capital expenditures into 2026 when Legend anticipates achieving an operating profit. Importantly, we continue to see growth in patient demand and we are reiterating our expectation for pronounced growth for CARVYKTI in the second half of the year as we continue to add more drugs and expand our capacity. Slide 15, the U.S. and EU markets contributed the majority of the net sales of CARVYKTI. Therefore, addressing market demand in this region plays a critical role in CARVYKTI's future sales growth. In Europe, we have started the clinical production of cilta-cel in Ghent. In the U.S., we initiated clinical production at the Novartis facility in July 2024. And we signed a commercial CMO agreement with Novartis during the first quarter 2024. We also received FDA and EMA approval to expand antivirus capacity from 20 liters to 50 liters batch size, more than doubling our capacity. Next page. Turning to our pipeline, I'm pleased to share that we recently completed CARTITUDE-5 enrollments. As you might recall, this randomized Phase III study evaluates patients with newly diagnosed multiple myeloma for whom stem cell transplant is not planned as initial service. If we were to receive approvals based on CARTITUDE-5 and CARTITUDE-6, it would translate into an additional 52,000 patients annually. That concludes the update on business highlights. Next, I would like to invite Shiniu to share the company's financials.
Shiniu Wei: Thank you, Sherry. Next, I will share the financial results. For those of you following us on the webcast, please turn to Page 18 of the slide deck. Overall, GenScript delivered solid top and bottom line results in the first half of 2024. The group's revenue increased by 43.5% year-over-year to about $561.4 million. Adjusted net loss of the group was significantly narrowed to about $69 million. The Life Science Group achieved external revenue of $217.7 million, maintaining a healthy growth rate of 9.5%. Due to the headwind in biotech funding environment, external revenue of Probio declined to $37.1 million. Bestzyme made great progress in the first half, beating our internal estimate by about 10 points. Its first half external revenue grew about 44% to $26.1 million. Driven by continued capacity expansion, manufacturing efficiencies and strong demand of CARVYKTI, Legend achieved a strong 156% year-over-year revenue growth. In the meanwhile, Life Science Group's improved profitability with adjusted operating profit increased by about 24% to $47.8 million. Probio had an adjusted operating loss of about $18.9 million and Bestzyme's adjusted operating profit was about $2.3 million. Last, Legend's adjusted net loss was narrowed to $119.4 million. Turning to specific business units, for Life Science, despite geopolitical tensions, we have observed the Life Science Group continued to maintain stable growth with improved profitability. External revenue was nearly $217.7 million, representing 9.5% growth. Among different service lines, the growth of protein business outperformed others and achieved a 30% year-over-year growth. The growth was mainly due to the enhanced synergy between gene synthesis and protein and antibody services as well as our continued improvement in turnaround time and platform innovations. The adjusted gross profit for Life Science Group increased by about 8.5% year-over-year to approximately $120 million. Our effort in automation, linked projects and labor efficiency have resulted in an adjusted 64% gross profit margin. I'm also glad to report that the adjusted operating profit margin has continued its healthy growth trend over the last 2 years. Thanks to our SG&A leverage, adjusted operating profit grew almost 24% year-over-year in this business. Turning to ProBio. External revenue decreased to about $37.1 million. As you may recall, the biotech funding environment was extremely difficult in the second half of last year, resulting in low order intake for ProBio. That translated into lower revenue in the first half of this year. As we are seeing a recovery in new orders for ProBio first half of this year, we expect ProBio revenue to recover in the second half. The adjusted gross profit was about $5.9 million. The drop in gross profit was due to lower capacity utilization and price competition. The SG&A and R&D expense decreased mainly due to our linked management gene optimization in Q4 2023 and we are also more focused on high value-added R&D projects with more discipline. ProBio's adjusted EBITDA was negative $3.1 million. With a cash position of over $194 million, ProBio has ample resources to carry out our business plan. As you may have noticed, we took a $37 million impairment of ProBio's long-term assets. This is based on our thorough evaluation of the market conditions and price trends as well as our own cash flow forecast of the business. We also had a $113 million fair value loss from ProBio's preferred shares. Again, this is based on our assessment of the market condition. We now believe the preferred shares to be more like debt that have to be guaranteed by the group other than just a part of ProBio's standalone enterprise value. While we believe it is prudent to do so to reflect the market condition and current business trends, we began to observe signs of potential recovery. In the first half, we noticed new orders has regained its growth momentum. We believe this trend will continue and we remain optimistic about the second half. Turning to Bestzyme. External revenue was about $26.1 million, representing an accelerated 44.2% growth, which was above our internal expectation. Due to our continued execution of our key account strategy and our years of innovation in enzyme portfolio, Bestzyme successfully delivered industry-leading results. Revenue from the feed enzyme business grew about 42% while the industrial enzyme portfolio grew about 39%. Both portfolios' top 3 leading products have been seeing healthy growth trends and our key accounts continue to increase their purchases from Bestzyme overall. The adjusted gross profit increased by about 42% to $11 million. As we guided, we have seen a hand-in-hand increase in both revenue and profitability for ProBio's enzyme's business -- for Bestzyme's enzyme business. The adjusted operating profit rate has now hit 8.8%. Other expenses have also increased but without significant impact to profitability. Last but not least, turning to Legend. First half, Legend generated $280.3 million in external revenue, representing an increase of 156%, mainly due to the update of CARVYKTI as well as milestone payments and revenue from collaborations. Expense-wise, the increase in research and development spending is mainly due to continuous R&D activities for cilta-cel, including start-up costs for clinical productions in Belgium and continued investment in solid tumor programs. Selling and distribution spending increased to $54.3 million to support commercial activities for cilta-cel including the expansion of the sales force and preparation for second-line indication launch. Administrative expense increased to $67.3 million due to expansion of administrative functions and infrastructure to increase manufacturing capacity. Legend has a solid balance sheet. With cash position of approximately $1.3 billion, Legend is expected to fund operations and capital expenditures into 2026. Now, turning into our guidance on Slide 24. For Life Science business, we expect the full year revenue growth to be between 10% to 15% and gross profit margin to remain around 55%, plus or minus 1%. The anticipated operating profit to grow -- we anticipate operating profit to grow faster than revenue. The reason for the adjustment in guidance is mainly to reflect the geopolitical impact on our business from June and March. In July, we noticed that the business is in a -- has recovered a healthy growth trajectory. Due to industry headwinds and market conditions, ProBio's revenue for the full year 2024 is projected to experience a decline of 10% to 15%. But we also noticed that the sales order is recovering, so we expect the second half revenue to improve sequentially from the first half level. For Bestzyme, due to Bestzyme's strong performance, we expect the revenue to have a 25% to 35% growth, an increase versus previous guidance. The gross profit margin to be around 40%, we anticipate adjusted operating profit margin to be close to 5%. For Legend, we expect initial commercial production and new Obelisc facility in second half '24 and complete physical expansion of Raritan site by the end of 2024. And our long-term goal for facility expansion is to support production capacity of 10,000 annual doses by the year end of 2025. This concludes our prepared remarks. Operator, let's open the line for questions.
Operator: [Operator Instructions] Our first question comes from the line of Lin Hua Zao from Goldman Sachs (NYSE:GS).
Lin Hua: This is Lin Hua from Goldman Sachs. I have 2 questions. First one is about the updates on the briefing request by select house committee back in May? And can you share any updates on that? And maybe elaborate what have we done on the mitigations? And further on this, how can you also comment on the potential changes of shareholding of Legend as part of the evolving geopolitical tension environment?
Shiniu Wei: Thank you, Lin Hua, for the questions. For your first question about the briefing request by the select committee, will have Sherry address that? And your second question about our shareholding in Legend, Robin, our Chairman of the Board will address that.
Sherry Shao: Thank you, Lin Hua. For the first question, our company has engaged external resources in legal, government affairs and public relations. We have a completed extensive review together with our advisers on our company's operations, particularly supply chain and data protection. So, we do not believe we put any concern to any country's national security. And we have also reached out to U.S. administrative agencies to offer our facts. To date, we have not received any further requests from any administrative agencies asking further information. We also have done extensive reviews of the proposed Biosecure Act. We do not believe we are a company of concern to the U.S. or any other countries. And we will remain focused on delivering the fast, high-quality and most cost-efficient solutions to our customers and patients to save lives and create positive social impact. That's all.
Shiniu Wei: Thank you, Sherry. Robin?
Jiange Meng: Okay. Sorry, I was muted. Thanks for the question. And we are very proud that we have a successfully made [Technical Difficulty]. And we do believe that Legend is a highly valuable asset because it has successfully [indiscernible] Bestzyme's product that has created a significant patient benefits as well as promising growth and promising investment return as well. GenScript's Board and the management will always have the shareholders' best interest in mind and make the appropriate decision accordingly. So, thanks for the question and I hope that I have answered the part of your this question.
Shiniu Wei: Thank you, Robin.
Lin Hua: Just quick as a follow-up on the first question. Have you -- have we tried or have you considered any proactive mitigation strategies in terms of trying to increase our external communications with -- in terms of lobbying and legal? It seems that based on what you have elaborated, we have engaged a lot of legal resources for internal reviews. I'm just curious about if there's any external mitigation strategies that you might be willing to share?
Sherry Shao: Exactly. Yes, after the internal reviewing, just as I mentioned, we also offer our facts to the U.S. administrative agencies. And we also have positive and timely and transparent communication with all the shareholders. And especially, we are continuous to communicate with our customers to let the customer understand the whole picture.
Operator: [Operator Instructions] Our next question comes from Yang Huang from JPMorgan (NYSE:JPM).
Yang Huang: This is Yang from JPMorgan. Can you hear me?
Jiange Meng: Yes. Yang, we can hear you clearly.
Yang Huang: I have two quick questions. First one is on top line growth. So, in the first half this year, we saw kind of most top line growth of a company come from cell therapy which is Legend, whereas non-cell therapy business offered almost like a non-linear growth, mainly dragged by our CDMO business. So, can management talk about any plan to turn around of non-cell therapy business? And is there a time line we can expect when we will see growth again for non-cell therapy, especially for ProBio business?
Shiniu Wei: Yang, thank you for the question. I will take this one. I think as you pointed out, if we peel the onion a little bit more, we can see within the non-cell therapy business, Life Science and Bestzyme both had very good growth. Particularly for Bestzyme, we now expect this business to continue to compound and drive growth and value for our shareholders. ProBio did offset the growth from other segments within non-cell therapy this first half. However, as we had explained, this was mainly due to a poor order intake from second half last year. Now, we have observed a turnaround in new order trend first half of this year and we do expect meaningful sequential improvement in ProBio revenue in second half compared to first half of this year. So overall, we think we have very bright prospects for all 3 of these non-cell therapy businesses and we do expect 2025 non-cell therapy business to continue to grow.
Yang Huang: My second question is, can management remind us on the revenue and the cost synergies between cell therapy business and the non-cell therapy business? And given we see some pressure on non-cell therapy business, is there any plan that the company might start some new line of business different from existing ones? So yes, that's my second question.
Shiniu Wei: So again, I'll take this one. So, speaking of the numbers, there's not much cross-selling between GenScript's non-cell therapy business and Legend at this moment and we are intentionally making Legend operations more independent from the rest of GenScript in this environment for a better safeguarding of all shareholder values. However, from the past experience of incubating Legend, we do have a lot of know-hows and expertise and we are leveraging those to service a lot of our other cell and gene therapy customers, especially for Life Science and ProBio businesses. And as I mentioned earlier, we see very bright projects for all 3 of our existing non-cell therapy businesses. Therefore, we do not intend to start any meaningfully different business segments within non-cell therapy at this moment. Each one of our existing business has tremendous potential and huge markets. It is up to us become more competitive and take share in these markets and thus creating shareholder value. Thank you.
Operator: [Operator Instructions] Next question comes from Daisy Cheng from Morgan Stanley (NYSE:MS).
Daisy Cheng: I have 2 questions here. The first one is for the industrial synthetic segment, revenue was up over 40%. Do you see that trend to go into the second half '24 and even the next year? For the second question is regarding the ProBio segment. Segment's gross profit margin dropped nearly 19 percentage points to 5% for non-adjusted scope. Can we just explain more what's the driver behind? And what's the pricing trend of the CDMO segment in last year?
Shiniu Wei: Daisy, you're breaking up a little bit, but I think I got your questions. So, first question with regard to Bestzyme's performance, we'll have Dr. Aixi Bai to take that.
Aixi Bai: So, I think there [Technical Difficulty] in the first half of the year. So, the first reason is we focus on our key account strategy. So, we have invested in more resources and technical services to our key accounts and this resulted in 18% increase in revenue growth for our top end customers and that is the reason, so we are ready to invest in more sales and marketing expense expenses into the international market since last year and has resulted growth rate [Technical Difficulty] for our international business. So, the third reason is that the base [Technical Difficulty] rather relatively small in the first half of last year. So, in the second half of the year, we will continue with our strategy and expect the [Technical Difficulty] growth rate. Thank you, Daisy.
Shiniu Wei: And your second question on ProBio's performance, we have Dr. Li Chen.
Li Chen: Thanks, Shiniu. Daisy, thank you for your question. In terms of a ProBio CDMO gross profit margin question, the gross margin dropped mainly due to the price erosion and also the low capacity transition. We also write down contract costs associated with projects that customer won't pursue them anymore due to whichever reason, including the lack of funding. With the first order of our 2,000 liter in execution mode, and we are working on more 2,000 liters orders in the forthcoming second half of 2024, we expect that gross profit margin in the second half of 2024 and '25 will be similar as the first half of 2024. We do forecast our revenue will exceed that of first half, as Shiniu commented earlier. However, with the new capacity in place, including 2,000 liter viral vector commercial production and also the U.S. GMP facility operation and [indiscernible] operation, the depreciation and operating costs will also put pressure to our overall gross profit. Having said that, we have a strong focus on the market outside of China, building a strong commercial team in the U.S. building the manufacturing footprint in the U.S. and especially in viral vectors to serve customers in cell and gene therapy treatments globally. So, that is our overall projection about ProBio.
Operator: [Operator Instructions] Next, we have Wanhua Wu from CICC.
Wanhua Wu: I have 2. The first one is what's the demand and order situation of Life Science and CDMO overseas customers? And what's the impact of geopolitics concerns? And what strategies does the company have to alleviate customers' concerns and cope with possible future changes? That's my first question. And for the second, for cell therapy, Novartis plants have started production in July and the [indiscernible] will be approved in the second half of 2025. And how much production capacity will be released for each of them? And looking forward to the future, how do we expect the pace of capacity release?
Shiniu Wei: Thank you, Wanhua. For your first question, we'll have Sherry addressing that.
Sherry Shao: Yes, regarding your first question, we saw, definitely saw a drop in June, particularly for U.S. market. As I mentioned, it took time and efforts to clarify the issue with our customers. Now that the misunderstanding is clear, we are seeing stronger growth momentum in July. And well, the -- we can see a quick recovery of the gross momentum for Life Science in July. And similarly, in ProBio a few orders slipped for a month or 2, but we are closing them now. So, we have the confidence, the stronger momentum will continue.
Shiniu Wei: Thank you, Sherry. And Wanhua for your second question about Novartis production contribution. Our agreement with Novartis actually prohibits us from disclosing the exact capacity and contribution. So, it's unfortunate that we cannot share the number with you. However, both Novartis plant as well as Raritan expansion as well as our Belgium facilities are integral parts of our plan to achieve the 10,000 doses annual capacity by year-end 2025. And we are very confident that this is a very solid plan and we are executing against that and we will be able to deliver that capacity by year-end 2025. So, I think that's all we can say at this moment. And we did share in our slide deck, a time line for each facility to come online and you can also take a look at that.
Operator: [Operator Instructions] Next, we have Wilfred Yuen from Daiwa.
Wilfred Yuen: Got some quick ones on Life Science. Can you give us some more color on the profitability improvement in the first half? I saw the segment administration cost down 19%. So, what is the driver? Second is on various production sites in China, Singapore and the U.S., can you give us some updates on the status in terms of the utilization and profit margin? And lastly, on the segment top line, we revised our full year top line guidance from 15% to 20% to 10% to 15% growth. You also mentioned about the impact on -- from the Biosecure. So, just can you give us more color on the impact?
Shiniu Wei: Thank you. For this question, we'll have Dr. Li Chen to take that.
Li Chen: Sure. Thank you for your question. First is about the profitability. And the driver for us to improve our profit is due to our long-term investment in terms of our platform improvement, not only from automation, the management, but also from the innovations of the platform itself. And also that we reduced quite significantly for our operation and administrative cost and that made our profitability even better. So, this is our commitment for long term as well to improve the profitability. And the second question is about the production site status globally. We have been effectively expanding our capable capacities around the globe and fulfilling them based on the global demand in a localized way. I think at the beginning, we introduced a little bit about the productivity improvement and the fulfillment improvement in our Singapore site as well as the New Jersey site as well as Seattle site as well. So in the future, we will keep expanding our global capacities in such an effective way. And your third question is about the color of the top line guidance revision. Yes, as Sherry just mentioned that we had a little explanation work to do in the past several months. And it took us some time and effort to clarify the issues to our customers externally. And with [indiscernible] clearer and clearer, we start seeing things back to normal. And that's -- and for the first half of the year, I wanted to update with everyone that we have been increasing our customer numbers that we serve, which means we received our products and services with 5% increase for the first half of the year. So again, it's our commitment into the market that we will deliver more reagents and the tools to Life Science researchers in a better [indiscernible], easier and more affordable and more accessible way. And thank you for your questions.
Shiniu Wei: Thank you, Li. And just to add a little bit more color. In terms of the G&A leverage, as you may recall, last year first half, we were in preparation to start up our Life Science building in Zhenjiang, A lot of the associated costs went into G&A. And this year, as that building is in production, we are absorbing that cost in our cost of goods sold and we have good leverage in the production side. Therefore, we did not see meaningful impact to our gross margin and there's a reduction in G&A as well. So, thank you for the question.
Operator: Thank you. This concludes the Q&A session. I see no further questions at this time. I will now turn the conference over to our CEO, Sherry.
Sherry Shao: Thank you, Maggie. Thanks to everyone for your questions and your interest in our company. We apologize to us that we couldn't get to because of time, but don't hesitate to reach out to the Investor Relations team with any remaining questions you may have. We will see you on our next call. Thanks.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you.
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