Thank you for dialing WuXi Biologics' Business Update call. Today, we're very honored to have the WuXi Biologics management team, the CEO, Dr. Chris Chen, the CFO, Mr. Ming Tu, and also Head of R&D, Dr. Lianfen, join the call to discuss the recent business update with investors. I'm Zhisheng Chen, China healthcare analyst at Goldman Sachs. Before we formally kick off the session, I would like to highlight that this call is strictly for clients of Goldman Sachs and WuXi Biologics only, and this conversation is not intended for the media and is off the record. Participants will be removed from the call if they cannot be properly identified. This call is not for the purpose of sharing, receiving the public or otherwise confidential information. Attendees are public side market participants who may not receive and should not request non-public or otherwise confidential information about issuers or securities about the market securities. Today, our call, we're going to have about 20 to 30 minutes of prepared remarks from the management, and it's going to be followed with a Q&A session. For Q&A, you can actually see the Q&A box in the Zoom app. If there's any question, please type your question into the Q&A box. I'll be more than happy to read those questions on behalf of you. When management's presenting, you feel free to keep any of the question you might get interested. Now without further ado, I'm going to turn the call to Chris. Thank you, Zhi. Yeah. Good morning, good evening, good afternoon to our global investors. I really wanted to talk about what innovation-driven, sustained high growth, to give you an update. Traditional biotech companies, their job is really to find the next product or biotech and large pharma. For WuXi, it's very different. Our job is to fine-tune every process. How do we make the manufacturing process faster, better, and cheaper? I think that's why technology is always very, very important. I wanted to use this opportunity to really give you guys an update on the technology we've been working on, and then how that can benefit the global community, including large pharma and biotech globally. Right. This is a summary slide. I really want to share with you the two key technologies we are working on right now. One is called PatroLab. I highlighted it briefly at JP Morgan recently. Because there was no time, I did not go into it. Today, I will go into a little bit more details. This is our AI-enabled process monitoring system. Eventually, it can run a manufacturing process with the software so that can be really a state-of-the-art global. This can be applied to all global facility with a state-of-the-art control system. Eventually, in the next three to five years, we can run the manufacturing process even without any human in there, so-called dark manufacturing facility or continuous manufacturing facilities. That's the PatroLab, right. The other technology I want to highlight actually is really our new cell line technology. I also briefly touched upon it during the last call, today I really want to go into this to say why and how it may change our industry. This is very, very important. We have other technology. I won't go into details here. The WuXia™ cell line to make very tough-to-make proteins. The WuXiHigh, basically to make an IV drug, convert an IV drug into a sub-Q. Now we see globally, there are many, many companies interested in converting their IV drug into a sub-Q, right? IV drug, the patient may stay in the hospital for four hours, five hours, even a day. Sub-Q, a couple of minutes, they can go do whatever they want to do. It's very convenient, especially for autoimmune. We see a very high demand on sub-Q drugs, but now even for oncology, sub-Q drugs become popular. Lastly, the FX is our microbial platform. Over the years, we have been developing those technologies. In the meantime, we actually share this with global community through publication. This is actually a very recognized or established peer-review journals. We publish them. In 2017, we published three papers, last year we published 55 articles. Just talk about how do you build a cell line? How do you do continuous manufacturing process? How do you develop a bispecific? How do you purify a protein? Those is the actually contribution WuXi Biologics make to help the global community. Not only we know how to do it, we want to share with the global community how they can do it better. Again, I want to highlight two technologies today. One of them is our new cell line. As you know, cell line is a key part of bioprocess development. The cell line determine product quality, whether you have a good product or not, and determine also cost of goods. If you have a good cell line, your cost of goods may be inherently lower than your peers or your competitors, right? Over the years, we have been working on four generation cell lines. WuXia, the current cell line we're launching called TrueSite, is actually our fourth generation cell line already. It took us almost 10 years to develop it, but most intensively, five years. From 2015- 2019, we're trying to develop the process, but we didn't get there. That's why we end up call it a semi-targeted integration. Finally, now, last year, we launched a targeted integration. What does it mean? If you put the DNA into the cell, it initially is random. 10 years ago, 15 years ago, it was random integration, you don't know where the DNA go. That's why to get a high-producing cell line, you need to look at thousands of cells, even 10,000 cells trying to pick the high-producing one. Even with that, you can only get two gram per liter. This is two gram per liter was state of art 10, 15 years ago. As we move into the semi-targeted integration, basically, you know where the DNA go to, but it's not 100% sure. You get to five gram per liter. Now with the current technology we're launching, we can routinely get eight, 10, 15 gram per liter with only 30 cells. You are looking at 1% of the cells you were looking 15 years ago, you get three to four times more productivity. The whole process is four to five months shorter. Again, as I said earlier, WuXi Biologics, we don't intend to develop any drug, but we want to make the whole process of drug development, of drug manufacturing faster, better, and cheaper. That's why we invested essentially 10 years of time to make this happen. Now that this happens, it's actually very cool. This can potentially transform our industry. In what ways? I show you actually, we launched the technology back last October. Now we have 50 projects already, and we really see the power of this technology. First, is a project we've done. In the early days, we get 1.5 gram per liter. Even with the last technology, we only get three gram per liter. Now with this technology, we get eight gram per liter. This is a PoA stage, bispecifics. If you think about it, from one gram per liter to eight gram per liter, we are reducing the cost of goods by 60%. This is how powerful this technology is. We can really make the difficult-to-express protein, especially the bispecific, multispecifics, or some tough protein, not a regular mAb, much, much easier to manufacture. Not only we can get three to four times higher productivity, but we can actually get higher quality as well. That's the case number two, right? Again, this is a bispecific program. In the early days, we can get a couple of gram per liter, but the product quality is very bad. With this new technology, not only we get five gram per liter, basically twice the productivity, but the product quality is much higher. That basically means you're losing a lot less during the purification process. This, again, will reduce the cost of goods by 50%. Lastly is another product quality profile called mannose. It's a glycan structure of a protein. We want to make sure we reduce it. In the meantime, improving productivity. In this case, again, we get 2X. All three of them happen to be bispecific antibodies. It is almost the same for traditional antibody as well, and then for complex proteins. Again, for this technology, not only you can get higher productivity, but you get better quality as well. What does it mean for our global clients? That basically means we can do the project faster for them, and we can reduce the cost of goods from the get-go. The cost of goods that using this cell line is about a half of our industry competitor cell line. I was joking with my biotech client, biotech partner, "If you don't work with us, you are already at a disadvantage from day one if you don't use our cell line." Because cell line, as I said, it's taken us almost 10 years to develop it. Now companies are almost adopting in a very fast manner. I already mentioned we have 50 projects already. One of the large pharma actually wanted to use this cell line for all their global projects, all their projects, all their future projects. Because they have been working on a similar system for the past five years, and they have not able to deliver the results. This really can help our partners become faster, better, and cheaper. Typically, the productivity improvement is about 2X. That basically means my partners, if you choose to work with us, your cost of goods inherently is already 30% lower. What's more interesting is actually because the productivity is higher, the scale of manufacturing need to be lower. Most of my clients and future clients don't need to use large-scale 20,000-liter reactor. A 5,000-liter disposal bag will do the same output as a 20,000-liter stainless steel reactor because the productivity is about four times more. That's how powerful this is. This essentially basically means most of my future clients don't need super large scale. They need a decent scale manufacturing. It gives them very competitive cost of goods, right. This has implication for almost every biotech company. Again, if they choose to work with us, their cost of goods is almost half of the global peers, right. For biosimilar companies, right, this is very important. As you know, biosimilar competition is getting harder and harder. Cost of goods is one of the key metrics for them to be profitable. For the past 10 years, we have not focused on biosimilar companies because they usually have a lower margin, tend to ask for lower price. Now with this technology, I can serve every biosimilar player, right? Again, we don't need a super large scale to get a cost of goods. Even a moderate scale gives them a very reasonable cost of goods so that they can compete. We have one extreme case. I visited a company in Shanghai last month. They have a bispecific antibody. It's a CD3 TAA tumor antigen, right? I can make the cost of goods for them at about $2 a dose. If they need 12 dose, the cost of drug manufacturing is actually $24 for whole year of supply. It's unbelievable, right? Again, $24 for a whole year of supply of drug. If they sell for $2,400 a year, their margin is 99%. This is how powerful this technology can be and together with our other platforms, right? I think this is very clear. That's why I said this is very transformative. That's why I want to spend quite some time explaining to you how this technology differentiates us. I think currently, we are the only company in the service space that offer this technology. A few large pharma has this technology, but their productivity is not as good. It's probably only a fraction of ours. Large pharma's in-house technology on this 1 is comparable to the current other cell line. We are able to do it ahead of the industry in term of giving. For bispecific, we have achieved 10 gram per liter. That was the $24 cost of goods for a whole year of patient drug supply. That was because for a bispecific antibody, we achieved 10 gram per liter. Their dose, their drug is very potent, they only need 1 milligram. That's why we can offer such a compelling case on drug manufacturing cost for a whole year of supply. I already mentioned PatroLab. PatroLab is actually a very cool technology. Again, this is something we have been working on for five years. We finally are applying this to PPQ, essentially for commercial production for a few projects. Once it's approved, we'll be applying for almost every WuXi Biologics site. Traditionally, when you manufacture, you have technicians do a sampling every hour and monitor offline to see what's going on, make sure everything's on track. With this technology, we put a probe in the reactor. The probe monitor 24/7, every minute, what's going on. The probe actually can monitor 40 parameters. We have our own algorithm. It's AI-enabled, can deconvolute the data from the probe and tell us what's the amino acid concentration in the cell, what's the cell density, what's the product concentration, what's the product quality. It's amazing. One probe can monitor 40 parameters. Because with this technology, I don't need to take any sample. The process just run itself. The AI behind the scene look at this batch versus the historic batch, whether it's 10, 20, or 100. We only need three to five batch to establish model. Once the model is established, the AI will tell everyone how the batch is going. That's what you call, on the right side, it's called process orchestration interface. Basically, AI will tell the operator or the technician or everyone, our clients, what's going on. This is actually a cloud-based technology. All this data is actually in the cloud. Our client can actually see this data real time from their laptop, from their desktop. This is a very powerful technology. Eventually, with this, we may be able to build a facility that we don't really have any physical human in the manufacturing facility. Everything will be run by AI, with those technology. Two technology I want to highlight. Now, I want to give you guys a really update on business momentum, right? Everyone know our funnel, right? I think the funnel really tells you, I always said, if you want to know about WuXi Biologics, you only need to know the funnel, and the four key numbers in the funnel. First is how many project we added. For the first four months, we added 69 projects, a 50% year-over-year increase. It's unbelievable. Last year was already record high year for us. We signed 209 projects. The first four months, our project number increased by 50%. Among the 69 projects, about two-thirds of them are from U.S. and Europe. Among the programs, we also have five win-the-molecule programs. Among them, two are actually late phase. All those metrics are trending very well. Basically, we're going to have another exciting year this year, and also exciting next year because it give you momentum for next year. We still have 25 commercial program, and we have 78 phase III programs, right? Those will continue to give us more momentum to really drive our future manufacturing growth. As I mentioned already, the business momentum is incredibly good. The first two months of the year, the number of project actually doubled in the first four months because, first two months, January and February, are usually light months for two reasons. One is the Chinese New Year. The other one is actually because everyone trying to rush to finish the project, assign the project by December. By the time in January and February, there's not much project to be signed. January and February tend to be a low month, a slow month, right? Now we actually doubled in January, February, but overall, for the first four months, we see a 50% increase. The business momentum continues to be strong this year. We also see more and more companies want to sign up more project with us at the same time. We have one global company signed 16 programs, want to sign 16 program with us in two years. Another one, 12, another one, eight. Just this first four months alone, we have three companies want to sign 35 project with us, 38 project with us. For this company who want to sign 16 program alone, basically they will give us about a $5 billion manufacturing potential in the next 10 years. This one client alone. That's how powerful our business momentum is. I mentioned our project growth is about 50% in the past four months, and overall, bispecific and multispecific, actually the same growth. We have more and more multispecific and bispecific. We are increasing our capacity from 200 projects a year to 300 projects a year as we see, right? Because our new cell line, we want to work more and more biosimilar projects. Because of AI-enabled new drugs, we may have more projects coming from our AI part. Lastly, because we're signing more and more capacities, more and more projects, we need to increase our project capacity by 50%. Unbelievably, we can do it. I already work with the team. By mid of next year, we'll be increasing our capacity to 300. Basically, in 12 months, we can increase our capacity by 50%, right? Lastly, all of you are very interested in manufacturing projects. Now I'm very glad to share with you that top three of our manufacturing project will each reach $100 million revenue this year. Every year from starting this year, we'll maybe have two or three more of those projects. Manufacturing really start to ramp up. Last year, our manufacturing growth was 26%. This year, we believe it's going to be 30%. The next couple years, the CAGR of manufacturing revenue growth is actually 30%. The project momentum and because we quickly fill our capacity in both D&M in China. As a result, we're hiring another 1,000 people, and we're investing additional RMB 3 billion in China to build more D&M capacities. All those about RMB 3 billion of capacity in China will probably give us another RMB 8 billion-RMB 9 billion revenue in the next 5 years. Again, that's the business momentum we have, and that's the confidence we have. This is for the first time we're increasing our capacity in China and adding a significant amount of people in China. That really basically means our D&M are already very close to full capacity in China. I already mentioned bispecific is one of the key modalities we're working on. It's unbelievable because we have very strong technology on R, and we have the globally largest portfolio on D. Even in manufacturing, we actually have a very high market share already. Globally, there are only less than 20 commercial programs, and the majority of them is actually made by large pharma themselves. The company like Roche, AbbVie, Regeneron, Amgen, and J&J. I mentioned 20 programs. Maybe there are only four or five programs are really outsourced. Among the four or five outsourced, I already have three. That basically means unlike traditional mAb, WuXi Biologics is not a strong player in M because we are a latecomer. We are late into the M game. For commercial, we may already have 50% market share in the commercially outsourced manufacturing. Right. Our market share in bispecific manufacturing may already be 50% in terms of the number of projects. Because again, most of the other programs are made by large pharma in-house. This is unbelievable. I already mentioned during the last call that bispecifics, they're very hard to do, require a lot of technologies. Technical strength is a must-have for you to win bispecific projects. Our incremental winning rate of bispecific is actually more than 60% already. I think, based on my knowledge, there are only about 400 bispecific projects out there. Our cumulative market share is already 50%. Our incremental market share is even higher, more than 60% market share. That's because we have the technologies to make bispecifics. We actually have already more than 12 trispecifics. We have even two tetraspecific. They are actually very, very complex molecules. This year, we also increased our pricing of bispecific by 15% because we believe we are only a few companies who can do it. Our new cell line together with our expertise can really help any company with a bispecific to advance much better than their peers. That's why we are increasing our price by about 15%. I think I have already explained to global investors that WuXi Biologics has a very different model. We call ourselves CRDMO. The R part, although very small, but gives us a very high margin because our partners, our clients, when they use our R, when they use our IP, whether it's a CD3 or dual payload ADC or the mAb, they need to pay us about 5% royalties of the product sales. In this case, I want to show you the example. If it's a billion-dollar product, a billion-dollar sales a year for biologics is actually very easy to achieve. Most biologic drugs are actually $3 billion or $5 billion, right? This is just a low number overall. If it's a billion-dollar drugs, if they use our R, they actually need to pay us $50 million sales royalty a year for about 10 years. Right? I want to give you different scenarios where if we are doing both R&D and M, what's the overall profit looks like for us? The first case where our R is also 100% manufactured by WuXi. In this case, we get $50 million royalties. We also get another $17 million from manufacturing profit. Our overall net profit is actually $53 million. Even if the manufacturing goes somewhere else with 30%, our profit actually reduces a little bit. Because the portion that they manufacture outside of WuXi, they need to pay royalties, cell line royalties. You own the cell line royalty piece. They need to pay me a $1.5 million cell line royalty. For the 30% volume I don't manufacture, they may pay me $1.5 million cell line royalties. As a result, the profit is actually very similar. I have an extreme case where, I have the R, but I don't manufacture at all. Then I actually get $5 million from cell line royalty and additional $50 million from sales royalty. My profit is actually $44 million. What's amazing in this case is actually even if I don't manufacture, I get $5 million. If I manufacture 100%, or if someone else manufacture 100%, the profit is $13 million on the right side, on the fourth column. If we have R, if someone decides not to manufacture with us, I actually get a $5 million profit versus if I manufacture 100%, I get $13 million profit, right? Basically, even if we don't do manufacturing, we actually still have about 40% of the profit. This is unbelievable. This is our cell line royalty. I always tell global investors we have a very different business model, right? If we have 50 programs with the R, and those programs are now from Merck, from Lilly, from GSK, from Vertex, from Gilead, and from AstraZeneca, right? This will give us very, very different metrics, very, very different profit profile. When the R part becomes more and more significant, our margin will be even higher and higher. Recently, now everyone recognizes doing product development in China is actually super fast. Pfizer CEO, Albert, said from PCC to POC in China is about half of the cost, twice the speed. That's why everyone wants to come to China to do this. We actually partnered with a few local agencies here in China to go from bringing PCC to POC. Essentially one-stop shop. Not only we do a CMC, but we also manage the clinical trial for global clients. This gives us more inflow of new projects. This is a new initiative we're working on right now. I think that's a very quick business update. As you know, we have three high-growth modalities powering WuXi Biologics growth. That's why I believe our growth will accelerate. I already explained to you in great detail about bispecific and multispecific. Even today, at ASCO, PD-1/VEGF from Summit, actually, they got very good data. Hopefully we'll be making a lot more. We have two programs. We're making the PD-1 and VEGF mAbs for them. Hopefully, this will generate significant revenue for us. We also have many CD3, CD19, CD3, CD20 programs. For bispecific and multispecific, I already explained a lot. For ADC, you see the growth, they are actually projecting CAGR of 30%-35% growth the next couple of years. For mAbs, there aren't many D projects, but M. In the past 10 years, we'll be doing many development. Now they are getting into manufacturing space. We have FcRn antibody, we have IGF-1R antibody, we have CD19, C1s, IL-23, IL-17, FGFR4, β7, TL-1A. All those antibody will be approved in the next two or three years. That will give us a lot of manufacturing growth. That's why I'm confident our manufacturing will grow at a CAGR of 30%. If you look at the modality, the bispecific and ADC are each growing probably about 30% the next couple of years. The mAb will grow about 10% because the base is very big. There aren't many new projects in early development, but the manufacturing will drive the growth. If you look at the blend, bispecific and ADC account for half of the, basically the top two modality, the left two modality, half of the revenue. The other half is actually mAb. The top left, sorry, the top two grow at 30%, and then the right one grow at 10%. That give us a 20% growth CAGR as well. WuXi Biologics, over the years, we really have unparalleled capabilities to enable our client to achieve rapid value creation. I want to give you a couple of example. One client, the company was formed two years ago, that was recently sold for $2 billion. Another biotech, they work with us about half of the pipeline, and in two years from formation to about $3 billion market cap. What's amazing is the third example. This is a company from formation to $6 billion in three years. They only have one program, the key program. They only have three programs. All three programs are working at WuXi. 100% asset are by WuXi. Again, three years, we can help them create a market cap of $6 billion. The next program is a five years, market cap from $3 billion to $9 billion. This is unbelievable. One of the VCs in the U.S., they give us one program in 2021. This year, I have 23 programs. This VC's portfolio company giving me 23 programs in four years. In return, we enabled a market cap of $30 billion for them in four years. This is a value we created to global investors. That's why the VCs love us, global biotech company love us, and we are the enabler of a biotech evolution, right. If you look at the number of INDs we have, definitely we're number one globally. Since 2018, we already have 126 molecules being acquired at an average about $1.3 billion. What's amazing, all those 126 molecules are now actually still at WuXi. Our retention rate is 100%. If you read a deal tomorrow, if there's a deal about more than $1.1 billion, about a 44% chance is WuXi Biologics enabler of that. Is the enabler of that. This again, show how we can help the global community, help our clients. I really want to summarize, I think our technology leadership, excellent execution, and also our very strong quality position really poise us very well for really accelerated growth. Right. I want to re-emphasize, we want target growth of 13%-17%. Because RMB appreciate significantly, the first half of the year already appreciated 5%, right? We only essentially show a 3% effect here. The other 2% we'll absorb them ourself. Basically, if you exclude the currency effect, our target growth is actually 16%-20%. Last year, we also divested some asset. If you look at a continuous operation, our 16%-20% means actually 18%-22% growth. This year, basically, we want to reaffirm that continuous operation-wide, we're actually growing 18%-22% in U.S. dollars sense. In RMB, it's about 14%-18%. Right. The reason we are so confident we can reinforce that guidance is actually our R is robust, our D is very strong. I already mentioned the cell line. The pipeline, really we'll see hopefully a lot more biosimilar project next couple of years. That will give us even stronger pipeline, because the D to M conversion for biosimilar is much faster than traditional mAb. We see additional programs being approved this year. That give us more. We have record high number of PPQs this year, 34 PPQs. Right. That will give us really a very strong manufacturing growth. For the past couple of days, we already initiated the share buyback. We want to buy a total of $400 million because we think the shares are really undervalued at this point. Right. Looking forward, in the next three years, starting in 2026, we want to see a revenue CAGR of 20% over the next three years, because we're very confident our manufacturing can grow a CAGR of 30%. Our development can grow a CAGR of 10%, that give us a blend of 20%. Each year, we have two or three projects that generating manufacturing project revenue, about $100 million each. That really give us a very strong confidence of the overall accelerated growth. Overall, WuXi Biologics offer premium quality, very innovative technology, perfect execution, industry fastest speed, and a relatively competitive cost. That's why our clients continue to be very happy with us. We continue to gain market share and then give us accelerated revenue growth and profit growth. Thank you. Thank you, Chris. This is a very interesting presentation. Now we're going to get into the Q&A session. Just a reminder, as some of the investors join later, that you can actually put your question into the Q&A box in the Zoom app. I'll be reading those questions on behalf of you. Anything related to today, presented technology, business update, you can actually throw your questions. To start with, Chris, I think you mentioned about those very interesting new technology, PatroLab, WuXia™ TrueSite TI™. Regarding the WuXia™ TrueSite TI™, I'm kind of interested, because in the past few years, you keep iterating, and the technology platform right now, we were kind of getting to TrueSite TI™, which is 4.0 kind of version, using targeted integration. Two questions on that. Number one is, if we're talking about targeted integration, we do notice that some of the biotech companies, like Regeneron, they have this kind of technology a couple of years ago. Is WuXi kind of late into the space? The second question, for next iteration, what kind of technology direction you're going to be looking at? For the, call it fourth-generation cell line. Far, we are the only company in the service industry offer it. As you know, Regeneron, some large pharma have it, but their expression titer is actually fairly low. It's actually comparable to current cell line. Ours is actually very unique. It's a fourth generation. It's also very high producing. Far, this cell line probably the best in our industry. We'll continue, again, our job is to make the process faster, better, and cheaper. We're going to invest in next-generation technology and processing. With this technology, we can already make the cost of goods half of the industry average. If you have a program, if you work with the global peers, the cost is $100 per gram. We can make it $50 per gram already. This is already a huge benefit to the industry. We're continuing to innovate and work on next-generation technology as well. Got it. Thank you. For the PatroLab, well, this is definitely a very interesting concept, fully automated, and it's actually going to be save you a lot of the cost. You mentioned about you already applied this to the PPQ. We're trying to understand with this kind of a new automation technology, PatroLab, if there are going to be new regulations get involved, how the regulators are going to be looking at those technologies. That's great questions. Yeah. That's why we are doing a few projects to trigger FDA discussion to see what FDA requirements. FDA already have some documentation or some guidelines, but with AI, it's actually much harder because AI is so new. We use those trigger. We're applying it to two or three PPQs this year. That basically means our clients will file to FDA next year, and we'll welcome FDA discussion, and eventually we'll formalize this technology for all the other projects. Yeah. This is a work in progress. It's going to be a very strong collaboration between WuXi Biologics, between our partners, and FDA. I think because this is, probably for the first time in the industry. I know maybe we have one or two cases, some other company have done this before, but the other case is only an online monitoring technology. It's not AI-enabled yet. With AI-enabled, this is probably the first one. That's why we have a lot of dialogue with FDA, to make this really a role model for a global, like, what's it called? A dental tower. It's like a role model. It's a role model for the global biologic manufacturing industry. Got it. Since you mentioned about AI, well, recently, definitely there has been a lot of the discussion about AI application in drug discovery. You also mentioned about you're going to be increasing the capacity for new projects just to cope up with the potential emergent number of the new projects driven by the AI's efficiency. I'm kind of curious. Now AI has been shifting, started with small molecules, but now also applied to antibodies. In your view, will that lead to more complex antibodies, or it's going to be more simpler antibodies to get into the global pipeline? It's a great question. It's probably both. AI can design molecules, maybe somewhat considered weird by our eyes, right? That, in that sense, is complex. AI will also reduce the barrier of probably antibody discovery. That basically means WuXi Biologics will probably benefiting from the more projects coming, right? AI certainly will lower the barrier of antibody discovery or biosimilar discovery or ADC discovery. That basically means there'll be more and more projects coming our way. Right. That's why we are increasing our capacity to already account for some of the programs. We already have 20 programs from AI companies. Maybe next year will be 40, and at some point we'll go from 40-1 00 very quickly. We want to capture that flow. That's why we want to build our capacity ahead of the time, right, for AI projects. Certainly, AI is already enabled at WuXi Biologics on every part, on R&D and D&M, right? We already give you example on M. On the D part, we are so much faster on timeline, so much better on execution. It's also because of AI as well. On the R part, we also already use AI to develop. We have already completed six drug discovery project. Without AI, that wouldn't be possible. For drug discovery, you have a very strong matrix. For example, you have 10 criteria. You need to meet all 10 criteria. For those six projects, without AI, I can only meet eight out of 10. We feed AI with all those eight molecules and ask AI, say, "Can you do it better? Can you do more diversified study material for us? We can get more." In the end, we are able to complete six projects. Without AI, those six projects will fail, basically, with the wet lab only, the project will fail. AI is already part of the game for R, D, and M. Got it. Also another trend we have been observed in the recent cross-border deals, including those China biotech license style. We actually see more and more deals as being done in a bundled fashion, right? Bundled R&D deals, including the recent Pfizer deal with Innovent, Merck deal, BMS deal with Hengrui. So would it also becoming a trend that instead of working with WuXi on a single project basis, there are going to be more and more clients trying to sign deals with you guys, for a basket of assets in one go, right, given your technology advantage and the cost advantage? What has been the feedback from talking to the clients about potential bundled collaboration deals? Yeah, the one I mentioned, the company A signed 16 program with us next two years, company B, 12, company C, eight. That's very similar. Exactly. It's already bundled programs. Yeah. Yeah. Do you believe it's going to be a trend, or it's just selective, a few companies working on that kind of model? I hope it's a trend. I think in the past couple of years, we also have bundled, but bundle is smaller. We have bundled two, three, four programs a year. I think the largest bundle was maybe 10 programs a year in two or three years. Now suddenly you see 16 programs in two years. It's a much bigger bundle. Got it. Regarding the CapEx, there's something very interesting you mentioned about, you're going to spend RMB 3 billion in China D&M CapEx, to give us another RMB 8 billion-9 billion revenue over the next five years. I believe you haven't increased the China capacity for a while, 2023, 2024 now. What makes you decide to increase China capacity instead of spending that dollar to accelerate the ex-China capacity expansion? It really because the China capacity are quickly fill up, right? As mentioned, both D&M. That's why we have a tremendous growth in both D&M in China, I think. We have not invested significantly in China since 2021. Last time we were making a significant investment was during COVID. Then all those project capacity were taken over by COVID. Suddenly when COVID disappeared, we have a low utilization. Now finally, we're getting to a pace where our utilization is so high, I really want to build a facility. The RMB 3 billion may include some acquisition of the existing capacity in China because we couldn't build it fast enough. Got it. That's great. When you are expanding capacity and also regarding the capacity to handle new projects from 200- 300, what about the headcounts? When we talk about capacity increase by 50%, does that mean headcount also going to be increasing by 50% or? I mentioned our headcount only increased by 10%. That hopefully that 40% is achieved by AI and also our WBS. If we can achieve that'll be amazing. Got it. Great. Another question, I think it's really about the new project orders, right? In the first four months, I think the momentum has been very strong, 69. I remember that earlier this year, you were really targeting for the full year, you're going to get it getting up to about 200. Based on your view, based on the recent momentum, what is the visibility for the full-year guidance, full-year target? At least 250 programs a year. Certainly, we'll exceed our capacity. Our capacity is only 200. That's why we need to quickly ramp up our capacity. At least 250 projects this year. Got it. Without the new capacity, when those new capacity going to be ready? That's why I said we may need to buy, just build. It may not be fast enough, because to build, it take us at least 18 months. Buy some capacity and then build in the meantime. Yeah. We really want the capacity by end of this year. Got it. On top of that, well, there's one investor kind of curious. You reiterated your guidance about 13%-17%, which underlying a 16%-20% growth if excluding FX impacts. Is there any factors in the following months that could potentially trigger you to revise that with the guidance? I think if the currency remains as it is, we should have opportunity to see higher revenue growth. If the currency continue to deteriorate, as you know, we collect 80% of the revenue in U.S. dollars. We spend 80% in RMB. For the first half of the year, the RMB appreciating already give us a 5% lower growth. We only account for 3% in the guidance. We said that we absorb 2% already. Hopefully, if the RMB stay as it is now, we hope we can deliver even higher growth. Got it. Another question is regarding the recent strike at Samsung Biologics. We have been hearing about that a lot, on and off, and back and forth negotiation. Do you believe that could potentially trigger any of the change of the biologic CDMO dynamics in Asia? I cannot comment on specific company. I think commercial manufacturing is really comprehensive. People talk about all the factors. This is what will definitely be one of the factors that any partner will look at, right? How reliable are you in terms of the supply chain or in terms of being able to manufacture continuously, uninterrupted way? Got it. Also this time, on top of the bispecific and multispecific antibody you mentioned about, you also mentioned about biosimilar is going to be very important for the company manufacturing business. How should we really contextualize it? For biosimilars, what about the margin profile for those projects, given we know that biosimilar could potentially come out at a discount, but what about the services? Also, for biosimilars, are you still trying to get those biosimilars projects from those multinational companies you have been working with, or some of the generics company you never worked with before? Yeah. For biosimilar, our client base would be anyone, would be include all of the above, right? I think we achieve a lower cost of goods for biosimilars not by scale, but not by discount, but by with the technology. That's why our margin profile for biosimilars and new product will be almost similar. That's why we start to pay attention to biosimilar this year. For the past 10 years, I think our current funnel, we may have 30 programs, and the next couple of years, we may achieve another 30 programs. Basically, our biosimilar portfolio could double in three years, right? I think that will give us. Biosimilar, as I mentioned, biosimilar also has a short D&M conversion, because with FDA eliminating the requirement of phase III trials, it may go from project start to product approval, maybe three years. That's why they give us much faster ramp up on the manufacturing side to give us even more higher manufacturing revenue on top of the current portfolio, right? That's really, it's good for us. Great. A follow-up question on that is, for all those biosimilar projects, are you also going to be working with the potential pharma companies from very beginning of the projects, or you prefer to take it when it's getting closer to the commercialization stage? It's both. Because our cell lines have such advantage, working from scratch is actually easier to offer a lower cost of goods. If they already have a prototype process, we can work on it and take it on as well, at any state of the process. Got it. Also for biosimilars, you mentioned about if we really take it from a later stage, a single-use bioreactors is still going to be comparable to stainless steel tanks? Yeah. If they use our technology, if they don't use our technology, the productivity lower. We need to multiplex a few of them. For example, a single reactor is 4K, but we can put four of them together, become a 16K. That we can do. Got it. Here comes a relatively general question. Definitely in 2024 and 2025, there has been a lot of discussion regarding geopolitics. This year, at least from capital market sensitivity to that perspective, people are getting kind of muted and not sensitive to that kind of news. What about the pharma and biotech clients when they're talking to you, is geopolitics still something they want to talk about? When we talk about manufacturing orders getting to commercialization stage, are they going to really take into the consideration of geopolitics when allocating the wallet share to different vendors? I think this year, no one want to talk about this AI. Sometime we even would offer to say, "Do you have any questions on biosecurity? We can help you." They said, "No." It's not an issue anymore. I think from all the interaction we have, it is already a non-issue. That's great to know. Chris, I think that's pretty much all the question we have now. I think some question might already been answered in the morning calls. I think that's pretty much it. I'm going to turn the call back to you to see if there's anything you would like to add and have a summary to the call. Great. Thank you, Zhi. I think, we are in a very unique position to enable this global company, whether it's large pharma or small biotech. I mentioned our cell line is so good, one large pharma want to offer us all their programs, right? additional large pharmas want to sign a basket of program with us from eight to 12 to 16, right? This is really a great momentum. On biotech side, we really help biotech from PCC to POC in the fastest manner. That's why for one of my clients, three years to get $60 million market cap just with a single program, and that's because WuXi's enable. The CEO called me saying, now he has $1 billion in cash, and with WuXi's help, he can go from almost zero to 6 billion in three and a half years, and that's unbelievable. This is the type of a story that our clients keep remembering, that WuXi can help them be successful. As their success is our success. As a result, we'll see it R&D and M all growing, and especially manufacturing will be growing a CAGR of 30%, and the company will growing at 20% a year, overall. We'll continue to see probably even accelerated growth next couple years as well. Thanks to all the support from global investors. Great. Thank you, Chris, and thank you Amin. Thank you, Lena. Thank you everyone for joining today's call. We're going to wrap up the call here. Thank you very much. Have a good day. Thank you, Zhi. Thank you