Genscript Biotech Corp Aktie

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

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

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

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

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

Now I will hand it over to Sherry.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Next question comes from Linda Shu from HSBC.

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

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

I will invite our business leaders to add more color.

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

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

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

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

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

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

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

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

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

Our last question comes from Laurence Tam from Morgan Stanley.

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

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

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

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

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

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

Yes, that's very clear.

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

Hello, everyone. This is Josie Zhou, Interim CFO at GenScript. Welcome to our 2025 interim results conference call. Joining on the call today are Mr. Robin Meng, Chairman of the Board; Ms. Sherry Shao, Rotating CEO of GenScript; Dr. Ray Chen, President of GenScript Life Science Group; Dr. Aixi Bai, General Manager of Bestzyme; Mr. Allen Guo, CEO of ProBio.

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

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

Now, I will hand over to Sherry.

Thank you, Josie, and thanks to everyone for your ongoing support for GenScript Group. In the first half, GenScript Group delivered rapid growth despite the complex geopolitical environment. The Group's revenue grew about 82% year-over-year. The adjusted profit from continuing operations grew significantly to approximately USD 180 million.

Turning to each segment. Our GenScript Life Science business continues to deliver steady growth. Excluding the impact of the collaboration with LaNova, ProBio biologics CDMO business reported a return to revenue growth after the industry headwinds. Since then, our industrial synthetic biology segment continued its industry-leading growth trajectory.

For our associated company, Legend Biotech, its best-in-class CAR-T product, CARVYKTI has treated over 7,500 patients. In second quarter, CARVYKTI net trade sales grew 136% to USD 439 million, making it the strongest CAR-T launch to date.

In the U.S., more than half of its utilization is in the earlier line setting. Legend anticipates achieving operational breakeven for CARVYKTI by the end of 2025 and company-wide profitability by 2026, excluding unrealized foreign exchange gains or losses. We believe Legend's improved financial performance will benefit the Group's profitability in the long run. By the end of the first half, GenScript Group has a global workforce of over 5,700 members. Our global footprint is expanding rapidly due to automation and digitalization, our manufacturing-related employees have decreased. However, we have expanded our R&D teams to enhance our leading position in the industry.

As of the first half, the Group's cash position stood at USD 970 million, funding our global expansion, R&D progress and capacity ramp-up. Before we dive into the business part, let me share an update on our impressive sustainability achievements. In recent years, ESG has emerged as the gold standard for global corporate competitiveness. In the first half, our significant breakthroughs across global ESG ratings brought us to a leading position, including the silver medal from EcoVadis. The MSCI ESG rating upgraded to AA, Standard & Poor Global CSS score elevated to the industry top 7% and inclusion in the FTSE4Good Index series. As a result of years of strategic investment and continuous improvement, these achievements highlight our ability to meet the evolving expectations of our clients and investors.

We are also broadening our reach within the global sustainability community by being part of the United Nations Global Compact, UNGC, and the Science-Based Targets Initiative, SBTi, and a supplier partner of the Pharmaceutical Supply Chain Initiative, PSCI. In our operations, our ESG practices have contributed to financial savings through improved operational efficiency. Our strong ESG performance has resonated positively with our stakeholders by helping our clients meet their goals and driving value creation for shareholders.

Among others, I'd like to highlight data security as part of our governance practices. All of our 16 global operating entities have been certified to ISO 27001 for information security, ensuring the highest international standards in data security and IP protection. As we look ahead, we remain dedicated to advancing our ESG initiatives, further strengthening our competitive edge and contributing to a more sustainable future.

Now, I would like to invite leaders from each segment to present the highlights from the first half of the year. We will begin with Dr. Ray Chen from the GenScript Life Science Group.

Thank you, Sherry. This is Ray, Ray Chen [indiscernible]. Let's move to the Slide #6.

On August 8 this year, which is our 23rd anniversary, we celebrated our 5th [indiscernible] with a successful relaunch of global brand. This strategic investment [indiscernible] of who we are and how we lead in the industry, defined by rapid change and intensifying competition. It underscores our commitment to market leadership, differentiation and value creation. Our customers told us clearly that GenScript is more than a service provider. We are enablers of discovery, co-authors [indiscernible] and trusted partners in possibility. We are very proud to confirm our Net Promoter Score in the industry, validated by a recent robust global study of 660 diverse and influential respondents across the life science ecosystem.

At the core of our platform lies [indiscernible] philosophy, Scripting Possibilities. It captures, empower our scientists and partners worldwide to turn possibilities into realities, accelerating innovation and results every single day. For our customers, this means a more intuitive human-centered experience. For our teams, it is a badge of pride and service. This brand relaunch uniquely positions us to capture dynamic opportunities, expand our [indiscernible] and drive sustainable long-term value in an increasingly competitive biotech ecosystem. We are privileged to serve a global community over 42,000 customers in the first half of this year, delivering [indiscernible] high-quality services and products [indiscernible] scientific progresses and more than 112,000 citations in leading journals citing us, GenScript's impact and credibility are undeniable.

This achievement validates our leadership and inspire us to relentlessly move forward, Scripting Possibilities together with our customers, driving industry-leading innovations that shape the future of science and healthcare.

At GenScript, integrated [indiscernible] is not just a technical advantage. It is our [indiscernible] uniting the world's #1 platform with protein, mRNA and cell and gene engineering, we deliver solutions no single platform competitor can match. This allows us to win on both speed and scope and the market response is very clear.

In modern drug discovery, speed is everything, and we set the pace. Our FLASH gene delivers sequence to plasmid in 4 business days. Our TurboCHO moves sequence to antibody in just 5 business days. These timelines R&D cycle for up to 50% faster than competitors and [indiscernible] biotech innovators. Importantly, [indiscernible] complex constructs, bispecifics, multispecifics, those are the areas where many stumble, but GenScript consistently delivers. Our end-to-end fully integrated Gen 2 antibody, Gen 2 protein sequences secures [indiscernible] loyalty, especially in high-stakes projects. The [indiscernible] services revenue grew 52% in the first half of 2025, now approximately representing 30% of our Life Science Group.

The TurboCHO high-throughput platform now fulfills [indiscernible] from leading AI drug discovery in the [indiscernible] bispecific and multispecific antibodies. [indiscernible] it's not just a differentiator. It's a repeatable, scalable model [indiscernible] allowing us to penetrate both household [indiscernible] and in-house markets and fulfills sustainable revenue growth. In the first half of 2025, the customers who outsource our TurboCHO delivered [indiscernible]. For the customers who produce protein in-house, we supplied 40% more gene items year-over-year.

Also, our AmMag instruments are increasingly embedded in our customers' labs. We installed 154 controllers and 200 modules globally, [indiscernible] 17 out of top 20 pharma core facilities. And we are expanding further the launch of cell-free express and upcoming TurboCHO expression kit [indiscernible] high-performance [indiscernible] worldwide and [indiscernible] importantly at half of the current cost of our [indiscernible]. This will further expand our [indiscernible] significantly drive high-margin product revenue and reap [indiscernible] how protein expression is done in-house [indiscernible].

Moreover, in cell and gene engineering field, while [indiscernible] we accelerate. We are the first to integrate the full workflow from genes to [indiscernible] mRNA in just 3 weeks, including [indiscernible] and the cell mRNA. Our gene CRISPR solution supported 18 approvals across FDA, NMPA and EMA. By delivering industry pioneer and capabilities, GenScript has become the partner of choice for innovators pushing the boundaries of cell and gene therapy, driving cutting-edge scientific advancements today and tomorrow. This is the power of our proprietary platform synergy, providing unmatched speed, multimodal breadth and flawless technical execution, translating directly into the market share gains, larger addressable markets and accelerating revenue.

Of course, in today's volatile environment, dependable supply is highly, highly demanded. It's a competitive advantage of GenScript. Our all-weather strategy is to build on [indiscernible] to navigate economic and geopolitical shifts, [indiscernible] growth through flexible production and operations and thrive across turbulent times and diverse economic environment. Over the recent years, we have strategically diversified our global production across key regions to guarantee the speed, reliability and consistent delivery worldwide.

By the [indiscernible] middle of '25, 4 out of our major production sites were run as fully automated, AI-driven lights-out facilities, providing 24/7 outputs without -- with minimal human interventions with robust AI scanners and real-time quality control. We will also achieve 60% cost reduction in our U.S. molecular biology facility this year. And by the year -- by the end of the year of 2026, [indiscernible] full automation will cover 60% of our strategic services [indiscernible] greater accuracy and stronger resilience.

Diversification drives flexibility. Automation powers operations. Together, they will forge an all-weather supply chain that transforms volatility into strength and disruption [indiscernible] and turbulence into sustainable [indiscernible] and this is our commitment [indiscernible].

And that will wrap up my updates on the GenScript Life Science Group business. Now, I will turn it over to Allen, CEO of ProBio.

Thank you, Ray. Hello, everyone. I'm Allen, CEO of ProBio. Now let's turn to Page 9.

I'm delighted to share ProBio's first half highlights. We are excited to witness a recovery after navigating the industry headwinds over the past 2 years. In the first half, through platform innovation, timeline optimization and quality system enhancement, our antibody and protein and CGT-CDMO benefit have achieved a number of milestones. Our discovery business, we rolled out services tailored to industry trends. For example, one of the challenges in developing TCR-related therapies is the low affinity between targeted TCRs and peptide MHCs on tumor cells with cancer target identification. To address this challenge, we have developed a TCR platform that integrates affinity maturation, in vitro functional characterization and in vivo pharmacological evaluation.

In terms of antibody and protein CMC services, we developed a new expression factor, ProMax, featuring exceptional productivity and stability. With this, we launched an industry-leading Express CMC service, which shortened the timeline from gene synthesis to top stack delivery from 6 monthly to 4 monthly, significantly boosting the efficiency of new drug development. Notably, we delivered the first PB2 project in the first half. The BLA is expected to be submitted in the second half, which marks our first non-COVID BLA project. Through collaboration with global pharma, we have upgraded our data integrity system to meet regulatory requirements from FDA, EMA and NMPA.

In the CGT business, we launched the Power SDNA stream, which enhanced the yield of DNA drugs and vaccines to 3 gram liter. We have also shortened the timeline for GMP [indiscernible] and GLP-grade plasmid, which will expedite the development of new drugs in this area. On viral vectors, our upgraded AAV CMC platform is equipped with a streamlined process development modules, reducing the overall CMC cost by 30%. On lentivirus, we completed our first pre-approval inspection from the South Korea MSDS with expected approval by the end of 2025. And in response to increasing demand for in vivo CAR-T development this year, we have developed antibody retargeted LV and LNP platform with our patented CD3 and CD7 reagents for which PoC studies have been completed.

On the CMC platform, we have delivered 2 IT projects for immuno-CAR-T therapies based on LVB platform and have ongoing CMC project for LNP platform. We anticipate in vivo CAR-T-related services will drive CGT/CDMO business growth in the coming years. On ProBio antibody and protein CDMO business, we continue to accumulate our track record. We added 20 antibody and protein CDMO projects in the first half with 50% from outside of China. We help the clients obtain 9 new IND approvals. Notably, we successfully delivered clinical batches to 2 multinational pharma companies, marking a significant breakthrough for our business.

Thanks to years of dedication to platform upgrade, we have observed a substantial increase in projects involving bispecific, multi-specific antibodies and complex proteins, reflecting clients' trust in our technology and platform. On CGT/CDMO business, we added 30 new CGT/CDMO projects, including an integrated in vivo CAR-T CMC project covering VHH, MIA, LNP and completion. We also signed 2 pivotal clinical projects, one of which was transferred from another CDMO to ProBio.

Regarding approvals, we helped the client secure 9 new R&D approvals in the first half, including 1 AAV project and 2 MIA LNP projects. These challenging integrated projects are a testament to our capability. Additionally, we successfully delivered several GMP virus batches to a top multinational pharma. Moreover, we assisted one customer to successfully license out their cell therapy project in the first half.

In terms of capacity, along with industry recovery, our antibody and protein CDMO facility in Zhenjiang is now at full occupation. We are now expanding new capacity in Zhenjiang, and it will be fully operational by early 2026 to better support global clients and late-stage products. For CGT, we will focus on capacity expansion for our Hopewell facility in the U.S. In the first half, we launched the GMP Plasmid production, and we have already successfully delivered multiple GMP principal orders. For viral vectors, we have launched AAV service in August and have already received our first AAV CMC order from a U.S. client.

In the first half, we received upfront payments from LaNova, and on Merck's Q2 earnings call, the company disclosed that the LM-299 technology transfer was completed in July and expected to recognize a milestone payment of $300 million associated with the technology transfer in Q3. Merck also confirmed that the LM-299 project is progressing smoothly. On our agreements with LaNova, Hopewell is entitled to 25% of a technology transfer milestone payment from Merck.

As part of our future revenue stream, we are strengthening investment in NME projects. To date, we have accumulated 16 all-licensing projects, 4 of which have entered clinical stages. Depending on partners' research, funding, and R&D efficiency requirements, we offer flexible collaboration models, including fee-for-service, co-development, asset buyout, and licensing out. Currently, we have over 30 pre-development projects with high-value targets. Notably, our proprietary CD3 VHH and CD3 TCE pipelines feature innovative constructs, better developability, and improved efficacy and safety, primarily tasking cancer with potential application in autoimmune disease as well. We are now engaging several multinational pharma companies on molecule licensing out now. Potential collaboration might be achieved by end of 2025 or early 2026.

Now, I hand it over to Dr. Aixi Bai, General Manager of Bestzyme.

Thank you, Allen. Hello, everyone. This is Aixi Bai. We are at Slide 13 right now. Bestzyme maintained the industry leading growth in the first half. However, due to the holiday season in China, the overall enzyme industry experienced a slower growth in the first half, but we expect a strong recovery in the second half. Thanks to our significant investment in R&D, Bestzyme's patent portfolio is outpacing the industry. Three out of our 5 top-selling enzyme products showed a sustained growth, and we've seen steady increase in purchasing from key accounts as well.

Our innovative detergent enzyme, launched in 2023, grew at a 58% CAGR over the past 3.5 years periods, and now ranks among our top 10 best-selling enzyme products. We are optimistic about its continued rapid growth in the coming years. In the first half, we optimized 2 new super acid-resistant amylases, enabling the same efficiency with 13% less enzyme dosage. In downstream alcohol applications, adding our super acid-resistant amylases can reduce the usage of acids and alkalis by over 75%. In the synthetic biology pipeline, our sweet protein has secured the FDA-GRAS status, and we continuously optimize production, product performance, and cost structure.

In the second half, we will start the construction of a 5,000-square meter commercial manufacturing facility for sweet protein, targeting completion in 2026. As you may have noticed from our financials, Bestzyme's R&D expenses grew about 62% year-over-year.

Now, I'd like to show you how we use this money. Our current R&D focus is on 2 areas. First, we're expanding our R&D teams in enzyme and synthetic biology products to accelerate product innovation. Another focus is on early-stage strain screening. We aim to boost our strain screening throughput by roughly 153% by year-end, which is vital for accelerating new product development. Also, we are increasing small-scale fermentation throughput to boost process development efficiency. We launched 3 new amylases for green processing this year. In the second half, we will upgrade our new fatties and our new proteins for animal nutrition. Going forward, we will focus on improving efficiency, supporting environment-friendly applications, and offering comprehensive enzyme solutions to our clients.

Next, I'll hand it over to Josie to introduce the Group's financials.

Thank you, Dr. Bai. Now, let's move to Slide 16. I will introduce the Group and each segment's performance in the first half of 2025. Since Legend Biotech was deconsolidated from the Group, the revenue figures I mentioned below will exclude Legend's revenue for 2025. In the first half, the Group's revenue increased by 81.9% year-to-year to about USD 519 million. All 3 segments achieved a growth, among them GenScript Life Science grew by 11.3% to about USD 248 million, ProBio grew by 511% to around USD 247 million, and Bestzyme grew by 8.4% to USD 28.3 million.

The adjusted profit from continuing operations grew significantly to about USD 178 million. At the Group level, the net loss was about USD 24.5 million, which was also significantly narrowed compared to the same period last year. The loss in this period was largely affected by Legend Biotech, mainly from 2 parts, Legend's current period loss and the amortization impact of 3.2 billion variation increase when it was deconsolidated in 2024.

Legend Biotech's current period loss was mainly caused by non-operational foreign exchange gains and losses. In the second quarter of this year, Legend Biotech achieved adjusted profit. For more details on Legend's first-half performance, please refer to Legend's relevant performance release. With Legend anticipating achieving operating profitable for corrective at the end of 2025 and the company-wide profitability in 2026, we believe Legend will be a sustainable growth driver for the Group's profitability in the long run.

Now, let's move to the performance of each segment. In the first half, [indiscernible] Life Science's group's revenue was nearly USD 248 million, an increase of 11.3% year-over-year. Based on recent month trends and seasonal validity, we anticipated stronger growth in the second half. From the perspective of revenue composition, the proportion of protein and antibody business in total revenue is rising rapidly, and it now accounts for more than 30% of total revenue.

Revenue from industry customers, particularly pharma customers, further increased, largely due to the development of more MNC companies. The adjusted gross profit of Life Science group lost 5.3% year-over-year to around USD 126 million. The adjusted gross margin was about 51%, which was slight compared to the second half of 2024. Expense-wise, there were no significant fluctuations. The rise in selling expenses was primarily due to our global sales strategy, and the expense accounted for roughly 9% of revenue. Overall adjusted operating profit was USD 46.4 million.

Gross margin has been temporarily impacted by a change in product mix. Global capacity expansion [indiscernible] strategy in the past 2 years with anticipated margin resilience to be driven by bold yet smart investment. Through enhanced automation, expanded capacity, and elevated global productivity, margins are on track for improvement.

ProBio revenue reached about USD 247 million, with fee-for-service revenue showing double-digit growth. We are excited to see that ProBio has returned to revenue growth after 2 challenging years, with continued order recovery throughout 2025.

For fee-for-service, the share of revenue from antibody and protein and the CGT services has no significant change compared to the previous reporting period. By reaching revenue from American and European markets are growing, thanks to the successful execution of our global market strategy, ProBio's adjusted gross profit came in at around USD 182 million. The adjusted EBITDA stood at USD 164 million. The fee-for-service margin was impacted by capacity ramp-up. Excluding the impact of new capacity in the first half, the margin was flat compared to the corresponding period.

Expense-wise, I will highlight there was a significant rise in the administration expenses, largely due to our new capacity facility in Hopewell, U.S. As the facility was not yet fully operational in the first half, the associated startup costs have been booked as the administration expenses. We anticipated these costs would be booked to cost of goods sold in the second half once the facility is fully operational. With a cash position of USD 371 million, ProBio is well-positioned to execute its business plan. Additionally, we are on track to receive a maximum payment from LaNova in the second half of this year.

Bestzyme's revenue reached to 28.3 million, representing an increase of 8.4% year-over-year growth and nearly 10% growth in constant currency. The adjusted gross profit was 11.4 million while the adjusted operating loss was 0.6 million. Revenue growth in the first half was primarily impacted by the Chinese New Year holiday season. We anticipate a strong rebound in the growth in the second half. The gross margin for industrial enzymes and feed enzymes has experienced some fluctuations due to the market change. We are confident about further improvement in gross margin driven by high margin products and cost optimization.

By region, driven by our global strategy, Bestzyme's ex-state China revenue proportion grew to 23%. Increasing revenue from international customers will contribute to and improve the margin. On the expense side, our investment in R&D and the sales team expansion across regions led to a significant increase. As Dr. Bai highlighted earlier, these investments are essential for building our core competencies.

I will conclude my financial update here. Our CEO, Sherry, will take you through the full-year guidance and our business focus for the second half of 2025.

Thank you, Josie. The slide -- Page 21 shows our guidance for each segment. For GenScript Life Science business, we are revising full-year revenue growth outlook to 13% to 15%, driven by strong demand momentum and deeper penetration into strategic markets. We are maintaining a flat adjusted gross profit despite growth investments. So, we can scale without margin erosion. We expect an adjusted operating profit margin around 18%, reflecting disciplined cost management and ongoing efficiency gains.

For ProBio, excluding the impact of the LaNova collaboration, we maintain our revenue guidance. We also expect to recognize a new milestone payment in the second half. For Bestzyme, we anticipate faster growth in the second half due to seasonal factors. As a result, we maintain our guidance about revenue and gross profit rate.

To conclude the presentation, I will highlight our business outlook for the Group and each segment. Building on our successful global brand relaunch, GenScript business is well-positioned for the next growth phase. By leveraging integrated proprietary platforms as key differentiators, we will expand market penetration for protein, mRNA, and cell and gene engineering. To support in-house R&D needs, we are accelerating portfolio transformation by launching ready-to-use keys and other [indiscernible] life science reagents, consumables, and instruments.

Leveraging newly launched capacity and capabilities at our Hopewell facility, ProBio will intensify its market penetration for CGT in the U.S. market. We are committed to continuously advancing our CDMO platforms to ensure cutting-edge service offerings. Concurrently, we are making substantial investments in the development of NMEs. We aim to identify and advance promising drug candidates, ultimately seeking out licensing opportunities to unlock their full therapeutic and commercial value.

On Bestzyme, we will continue to reinforce our competitive advantage through patent applications and IP protection, supporting further international market penetration. In terms of capacity, we will expedite commercial manufacturing capacity for sweet protein, paving the way for its market launch. By leveraging synergy across business lines within each segment, we are able to deliver unique value to our clients with faster speed and a superior quality.

The Group also drives synergy across the 3 business segments to address customer demand and redefine the industry landscape. On top of that, globalization, automation, and digital transformation are also key priorities for our 3 segments in the dynamic and ever-evolving environment.

That wraps up today's presentation. Operator, please open the floor for Q&A.

[Operator Instructions] Our first question comes from [ Linhai Zhao ] from Goldman Sachs.

This is Linhai from Goldman Sachs. I have 2 questions. The first one is for ProBio. Based on the presentation deck, it seems that the fee-for-service in the first half decreased year-over-year, while the cost of 66 million is also higher. Can you share a bit more on the underlying reasons and how should we look at the recovery trajectory in the second half and beyond, given that we are seeing increasing orders? That's the first question.

The second question is for Bestzyme. I understood that the impact from seasonality in the first half generated some headwinds. Can you also elaborate a bit more on the product breakdown? The presentation showed that innovative enzymes show strong growth, while the top 5 enzymes are not all growing in a year-over-year basis. Any colors on the breakdowns and how we should look at the growth in the second half would be appreciated.

Thank you for your questions. So for the first one about the ProBio, I think we have to separate the revenue from the LaNova piece and to elaborate each. The first one as the previous announcement, as of end of June, we have received a total upfront payment of $213.8 million under the LaNova license agreement, of which $213.4 million was received in the first half of the year. So, due to certain pending matters, we recognize revenue of about $200 million pending in the first half of the year based on the principle of [indiscernible].

Excluding this impact, our fee-for-service business achieved a 2-digit growth. So, the cost of our fee-for-service has been impacted by the capacity run-up, and excluding the impact of new capacity, the margin in the first half was flat compared to the corresponding period. And for the second half of the year, we anticipated that the gross profit will be flat compared to the first half of the year. So, we are on track about the product cost of sales for the fee-for-service.

Yes. For the second question about Bestzyme, and as mentioned that the first half-year revenue increase was primarily impacted by Chinese New Year holiday season. And for the breakdown of the business, we noticed that there's no significant change for the industry enzyme and the feed enzyme. But for the second half of the year, we're expecting a stronger rebound, and our gentleman of Bestzyme, Dr. Bai, will share you the business plan for the next half of the next half-year.

Dr. Bai, can you share the feed? Thank you.

Yes, sure. First, thank you, Linhai, for the question related to Bestzyme. So, looking at that to the second half for both industry enzyme and the feed enzyme, we have already launched, and we will launch new products, including alpha-amylase, phytase, and protease. So, these 3 enzymes, they are best in class. So, we have confidence that this enzyme will help us get more room in the second half. Additionally, our sales personnel now in India have been fully deployed. So, we will promote these products in India, in the U.S., and in China. That's why we expect a better growth in the second half of this year.

Thank you, Linhai.

Just a quick follow-up on the first question. Thanks, Josie, for the answer. May I try to understand a bit more, since you mentioned that after the breakdown, the fee-for-service actually have a double-digit growth for the first half? Is that what I'm hearing?

Yes. So for the first half of the year, the revenue from fee-for-service will achieve the double-digit growth, yes.

And because of the revenue from LaNova, we recognize that it's around $200 million due to some uncertain matters. So, we just recognize around $200 million in the first half.

Next, we have Yang Huang from JPMorgan. Please go ahead.

This is Yang Huang from JPMorgan. I have 2 questions. The first one is it's nice to see the company has received the first upfront payment and also in the second half, the company is going to receive another part of technology transfer fee. So, does management have any kind of color on future milestone payment, like how much and around what time we could see further potential milestone payments from this deal? That's my first question.

The second one is given all the segments of the company continue to see global expansion, does the company has any kind of vision in terms of long-term revenue contribution from outside China? And will continued expansion ex-China will affect a long-term margin? I would like to have some color on that.

Thank you for your question. So, for the first question about LaNova, Allen, please help to answer.

Okay. Thank you, Huang, for the question. So, generally speaking, based on the second quarter earning for Merck, we have disclosed that a tech transfer milestone has been reached, right? So, generally speaking, it's expected to recognize our milestone payment of $300 million for this milestone hit. So, from this portion, we shall be entitled to receive 25% of this milestone in the second half. But in the meanwhile, the clinical trial is still ongoing. So, depending on the progress of the clinical trial, then some further milestone payments will be reached.

And then ProBio is also entitled to receive 25% of those following milestone payment. However, since there are some uncertainties on those clinical trials, we do not have a very clinical, very clear milestone timeline right now. So, I think -- but generally speaking, Merck has already mentioned that so far the clinical trial is progressing smoothly. So, let's follow on the progress of Merck clinical trial. Thank you.

Thank you, Allen. So, for the second question about the capacity in the global, and this is really a very good question. [indiscernible] supplier global is what we are committed to build for our global customers, and this is our greater competitive advantage. No matter from China, Singapore, Europe, or U.S., we always wanted to be close to our customer, providing guaranteed speed, reliability, and consistent delivery worldwide. This robust global and local will keep providing flexibility and resilience for our customers. We will fully leverage this advantage of each product, each production capacity to achieve sustainable business growth.

Meanwhile, we continue to reduce costs through R&D-driven innovations, AI-powered automation, digitalization, and the lean operations. We have always achieved a continued improvement in gross profit margin, especially in large size U.S. and Singapore business. And we will be confident in strong growth and healthy profitability both short-term and long-term through this kind of strategy. Yes, so thank you for your question again.

Next, we have Daisy Cheng from Morgan Stanley.

This is Daisy from Morgan Stanley. I have 2 questions here. The first one is about the tariffs. We understand that GenScript has limited late-stage exposure requiring direct cross-border drug transportation as of now and has a globalization extension plan underway. But given the increasingly complicated global supply chain dynamics, could management help us to quantify a bit what's our current direct China to U.S. route shipping exposure by revenue percentage? And do we have any hedge plan on the way? This is the first question.

Okay. So for this question, our CEO, Sherry, will give you an answer.

Thanks for -- Daisy for the question. Just as you mentioned, in the first half 2025, tariffs had a low impact on our profit due to the nature of our business, less than USD 4 million. So over the past few years, the proportion of our global capacity has steadily increased across the Life Science business and the ProBio. Bestzyme had a small presence in the U.S., so tariff poses no significant threat. So overall, thanks to our global business footprint, we are confident in our ability to navigate policy fluctuations.

Okay, thank you.

And my second question is about ProBio order trends. I noticed that ProBio obtained USD 71 million new order in second half '24, which achieved a double-digit half-on-half growth. So what's the current backlog and new order trend for ProBio in first half '25? Any update here?

Thank you for your question. So ProBio CEO, Allen, will have to explain this. Allen?

Thank you for the question, Daisy. So generally speaking, we have observed steady growth for 2025. So by July, we achieved a 9% year-on-year growth for all fee-for-service order. So generally speaking, we observed a clear recovery for antibody and protein R&D ever since the second half of last year. And for our Discovery, we achieved around 20% year-on-year growth. And for the CMC part, we also achieved significant growth in terms of product number. However, since we saw a big late-stage project in the same period last year, so for value-wise, we achieved about single-digit year-on-year growth so far.

And for the CGT segment, as you know, there's still headwind globally. But due to our continuous efforts and also relentless upgrade of CGT platform, we actually achieved more than 20% year-on-year growth for viral vector. But unfortunately, for the plasmid, we are still facing very strong price competition. And so far this year, it's a negative single-digit growth. But in the meanwhile, I think that this year, there's fast-growing interest in developing in vivo CAR-T. And at ProBio, we do have integrated capabilities and also platform for lentivirus, for MI-LNP, and also VHH. We believe this increasing demand for in vivo CAR-T will support our [indiscernible] CGT business growth definitely.

And in terms of backlog, since it varies based on clients' plan of the project. And sometimes clients will change the scope and they may cancel the project. So we do not disclose any backlog information anymore. We will pay more attention to active backlog for internal resource and also capacity deployment. Thank you.

Next, we have Wilfred Yuen from Daiwa.

Okay, congrats for the first progress and thank you for taking my questions. My first question is on Life Science. What is the key driver for the guidance upgrade? Can you give more color, more business area, and regional market of driving up the growth? Can you also talk about the reason behind the growth margin drop in the first half and the second half margin outlook?

Secondly, on the capital allocation, we have nearly $1 billion cash on hand. Do you have any update on how do you want to deploy your cash?

Okay, thank you for your question. Yes, for the first one, for the Life Science, and we noticed that over the past 2 years, our growth margin has taken a temporary hit because of the change in our product mix, expansion of our global capacity and our pricing strategy. But as you can also see on Slide 17, the gross profit margin for the first half of the year keeps stable as it was in the second half of 2024. And we are confident our margin will stay stable and even get better because of the smart and the bold investment we are putting. We are setting up automation and expansion of our capacity and making our global operation model productively. So we are on track to see the margin improvement.

And maybe Ray can add more to explain this question. Thank you. Ray?

Okay, thank you for the question. First, you're asking about which of the growth [Technical Difficulty]. Thank you.

Thank you, Ray. For the second question about the capital allocation, our CEO, Sherry, will give you an answer. Thank you.

Yes, we have the healthy cash position to support our strategy. Firstly, besides current capacity expansion plans mentioned in the slides for each segment, further CapEx investment globally will be needed for sustainable growth. Secondly, as we outlined, we are transforming our business from traditional focus on fee-for-service and small portion offshore products towards exploring out licensing and collaboration opportunities to boost the R&D benefits. Last but not least, in the long run, the Board and management will actively seek options to maximize shareholder's value. Thank you.

Next question comes from Wanhua Wu from CICC.

I'm Wanhua Wu from CICC. I have 2 questions. The first one is what are Bestzyme's future blockbuster products? And when are they expected to bring -- to begin mass production? And the second one is, how will the AI-driven protein engineering business achieve growth? And what's the current proportion of AI-based business in Life Science business?

Thank you, Wanhua Wu, for your question. For the first one related to Bestzyme, Dr. Bai, the General Manager of Bestzyme will answer this question.

Thank you, Wanhua Wu for the question. So actually, in the first half of the year, we launched 2 new amylases. Both of them have already entered mass production, and they are currently being tested by our clients in both China and India. These 2 products delivered the best-in-class performance. They can enable significant process optimization and cost reduction for our customers. And in the second half of this year, we will also launch phytase and protease for our animal nutrition customers. Both of them are also best-in-class in the industry. So for the last several years, since we have been heavily investing in R&D, so we expect to launch a number of best-in-class animal products every year.

Thank you, Dr. Bai. And for the next question about the Life Science, our Life Science President, Ray Chen -- Dr. Chen will explain this. Ray?

The AI-driven [Technical Difficulty]

Thank you, Ray. Thank you for your questions and the ongoing support for the Group. We apologize for not being able to address all questions due to the time limitation. If you have additional questions, please do not hesitate to reach to our Investor Relations team. We look forward to contacting you on next call. Thank you.

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