PolyPeptide Group AG (SIX: PPGN), a focused global CDMO for peptide- and oligonucleotide-based active pharmaceutical ingredients, today announced its results for 2022: Revenue of EUR 281.0 million (down 0.4% compared to 2021, or 3.0% at constant currency rates, compared to 2021), including revenue associated with the coronavirus pandemic1 of EUR 50.7 million (2021: EUR 63.2 million).
Adjusted EBITDA2 of EUR 38.7 million (2021: EUR 88.2 million); adjusted EBITDA margin of 13.8% (31.3%), reflecting effects of increased cost base ahead of planned growth, inflationary pressure and operational issues; result for the year of EUR 7.8 million (2021: EUR 47.3 million)
Capital expenditure of EUR 83.0 million or 29.5% of revenue (2021: EUR 76.7 million or 27.2%), reflecting continued capital deployment to support active custom projects
220 active custom projects at end of December 2022 (2021: 196), with two commercial launches in 2022
Nomination of Dorothee A. Deuring (Austrian, 1968) as a new member of the Board of Directors to be proposed to AGM 2023
Comprehensive measures launched to deliver a recovery in performance in the second half of 2023
For 2023, PolyPeptide currently expects high single-digit percentage revenue growth versus 2022, with an adjusted EBITDA margin in the mid-teens
Dr. Peter Wilden, Executive Chairman of PolyPeptide, commented: 'In 2022, as we scaled up for accelerated growth, we faced significant challenges. We have taken comprehensive measures to ensure improved delivery performance. In addition, we are working with customers to further optimize our commercial relationships. We are making good progress in the search for our new CEO, who will have the opportunity of leading PolyPeptide into a future with significant structural growth opportunities.
Revenue, costs and profitability PolyPeptide generated EUR 281.0 million in revenue in 2022, representing a decline of 0.4% versus 2021. At constant currency rates, the revenue decline was 3.0%. This revenue development reflects the lower contribution from the coronavirus pandemic-related business and polypeptide.com 2 in particular the technical and manufacturing process issues during 2022 communicated in December 2022. The pandemic-related revenue contribution was EUR 50.7 million in 2022 (EUR 63.2 million in 2021); excluding this contribution in each of the periods, revenue grew by 5.2%.
The gross profit in 2022 was EUR 54.5 million, down 47.5% versus 2021 with a gross margin of 19.4%, down 17.4 ppts. Adjusted EBITDA for the year was EUR 38.7 million, down 56.2% versus 2021 with an adjusted EBITDA margin of 13.8%, down 17.5 ppts. The decline in the adjusted EBITDA was driven by the cumulative effect of several factors, including EUR 20.9 million in higher personnel costs due to the increase in average FTEs by 9.5% versus the end of 2021, mainly in Operations and Quality. Additional operational and maintenance costs of EUR 11.7 million reflected variations from production and delivery schedules. A decline of EUR 10.8 million was due to inflationary impacts, including wage adjustments
Custom project pipeline and capital deployment
PolyPeptide remained strongly committed to supporting the R&D activities of existing and new customers. The custom projects pipeline included 220 active projects at the end of 2022, compared to 196 projects at the end of 2021. In 2022, the Group secured a total of 47 projects, including several oligonucleotide projects, and 25 new clients. The number of projects in phase III of clinical development remained stable at 30 projects, with two phase II projects moving into phase III and two commercial launches during the reporting period. Subsequent to the reporting period, one phase III project related to the treatment of cancer was terminated by the customer. Given the anticipated future volume requirements from the active custom projects pipeline, PolyPeptide continued to invest in its infrastructure. Capital expenditure for the period increased by 8.3% to EUR 83.0 million or 29.5% of revenue, versus EUR 76.7 million or 27.2% in 2021. Investment projects in 2022 included the ongoing construction of large-scale solid phase synthesis capacity in Braine-l'Alleud (Belgium), large-scale downstream capacity in Malmo (Sweden) and freeze-drying capacity at several sites. Investments also included further efforts in relation to the implementation of the Group's green chemistry agenda, the ongoing strengthening of analytical capabilities as well as IT and digitalization efforts.
Guidance for 2023 and dividend
With the enhancement of its workforce in 2022, the Group increased its fixed costs, and the improvement in profitability in 2023 largely depends on its ability to realize top-line growth. With the time required until the launched remediation measures yield results, the Group polypeptide.com 5 expects revenue for the first half of 2023 to be comparable with the previous year, with profitability significantly lower. A marked recovery in revenue and profitability is expected thereafter in the second half. For the full year of 2023, PolyPeptide currently expects high single-digit percentage revenue growth versus 2020, with an adjusted EBITDA margin in the mid-teens. Capital expenditure is planned to be around 10% of revenue, lower compared to 2022 (29.5% of revenue) and reflecting the planned completion of the accelerated capital deployment for growth launched in 2021. The Group aims to provide an update of the mid-term outlook with the announcement of results for the first half of 2023 on 15 August 2023. With the significant drop in profitability in 2022 and the ongoing efforts needed to restore revenue growth and profitability, PolyPeptide will not be proposing the payment of a dividend to the forthcoming AGM on 12 April 2023.
Results documentation, audio webcast and conference call
PolyPeptide Group will hold an audio webcast today at 9:30 am CET, where Executive Chairman Peter Wilden and CFO Jan Fuhr Miller will discuss business trends and results in more detail. To ask questions during the Q&A session, you must dial in to the moderated telephone conference. Participants may pre-register here and will receive dedicated dial-in details to easily access the call. Please dial in 5-10 minutes prior to the start. A replay of the event will be available in the Results Center after the results presentation. All results documents, including the media release, the results presentation, the Annual Report 2022 as well as the updated time series, will be available from around 7:00 am CET in the PolyPeptide Results Center.
Contact:
Tel: +41 43 502 0580
About PolyPeptide
PolyPeptide Group AG and its consolidated subsidiaries ('PolyPeptide') is a focused Contract Development & Manufacturing Organization (CDMO) for peptide- and oligonucleotide-based active pharmaceutical ingredients. By supporting its customers mainly in pharma and biotech, it contributes to the health of millions of patients across the world. PolyPeptide offers products and services from pre-clinical through to commercial stages, including generics. Its active custom projects pipeline reflects the opportunities from novel drug therapies in development to fight both widespread and rare diseases.
POLYPEPTIDE GROUP AG 
