-- Q1 2008 net revenues grew 56.8%, as compared to Q1 2007, to RMB55.5
million (US$7.9 million)
-- Q1 2008 operating income grew 22.4%, as compared to Q1 2007, to
RMB14.2 million (US$2.0 million)
-- Q1 2008 net income grew 22.3%, as compared to Q1 2007, to RMB 19.8
million (US$2.8 million)
SHENYANG, China, May 15 /Xinhua-PRNewswire/ -- 3SBio Inc. (Nasdaq: SSRX) ("3SBio" or "the Company"), a leading China-based biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products, today announced its unaudited financial results for the first quarter ended March 31, 2008.
First Quarter 2008 Financial Highlights:
-- Total net revenues increased 56.8% over the first quarter 2007 to
RMB55.5 million (US$7.9 million).
-- Net revenue from our flagship injectable recombinant human
erythropoietin ("EPO") products, marketed under our EPIAO brand,
increased 41.2% over the first quarter 2007 to RMB35.5 million (US$5.1
million).
-- Net revenue from our protein-based therapeutic recombinant human
thrombopoietin ("TPO") products, marketed under our TPIAO brand,
increased 103.8% over the first quarter 2007 to RMB15.4 million (US$2.2
million).
-- Operating income increased 22.4% over the first quarter 2007 to
RMB14.2 million (US$2.0 million).
-- Net income increased 22.3% over the first quarter 2007 to RMB19.8
million (US$2.8 million).
-- Net income per American Depositary Share ("ADS") for the first
quarter 2008 was RMB0.91 (US$0.13). Each ADS represents seven ordinary
shares.
Dr. Jing Lou, chief executive officer of 3SBio, commented, "I am pleased to announce a solid first quarter, marked by continued sales growth in our core products EPIAO and TPIAO. Our results demonstrate the underlying health of the oncology and nephrology therapeutic end-markets in which we operate and the growing market positions of our brands. In addition, we continued to realize the benefits of our focused business development strategy, as we witnessed increased revenue contribution and market acceptance for our in-licensed Iron Sucrose product. Finally, in the first quarter 2008, we have made significant progress in advancing our phase III clinical trials and are confident in our timetable to file with the SFDA in the second half of 2008 for all three trials. As an R&D focused company, we continued to make progress on our early stage pipeline and expect to file for clinical trial applications for NuPIAO, our second generation EPO, by the end of 2008."
"The fundamentals of our business remain strong as we expand our organization in order to capitalize on the growth opportunities presented by the growing and under-penetrated China market. With these results, we again demonstrate our focus on maintaining growth and profitability, which we believe is the most effective way to build shareholder value over the long-term."
First Quarter 2008 Unaudited Financial Results:
Net Revenues. Our net revenues amounted to RMB55.5 million (US$7.9 million) in the first quarter 2008 compared to RMB35.4 million for the first quarter 2007, representing an increase of 56.8%, primarily attributable to the continued increase in sales from EPIAO and TPIAO. Net revenues from our leading EPIAO products increased by 41.2% from RMB25.1 million in the first quarter 2007 to RMB35.5 million (US$5.1 million) in the first quarter 2008. This increase resulted from our continued success in the oncology market as well as from the strong underlying demand in the dialysis market; trends which we believe demonstrate the fundamental health of the Chinese EPO market. Net revenues from our TPIAO product increased by 103.8% over the first quarter 2007 to RMB15.4 million (US$2.2 million) due to the continued increase in physician acceptance of the product in the marketplace. Our TPIAO products remain our second largest revenue contributor, accounting for 27.8% of total net revenues for the first quarter 2008 as compared to 21.4% in the first quarter 2007. Revenue from our in-licensed Iron Sucrose supplement was RMB1.4 million (US$0.2 million), representing an increase of 154.5% over the first quarter 2007, accounting for 2.5% to our overall sales for the first quarter 2008.
Gross Profit. Gross profit increased 55.8% to RMB50.6 million (US$7.2 million) for the first quarter 2008 from RMB32.4 million in the first quarter 2007. Gross margin was 91.1% in the first quarter 2008, in line with 91.7% in the first quarter 2007.
Operating Expenses. Total operating expenses, representing 65.6% of total net revenues, increased 74.4% to RMB36.4 million (US$5.2 million) for the first quarter 2008 from RMB20.9 million, representing 58.9% of total net revenues, in the first quarter of 2007. This increase reflects increased sales and marketing expenses in our continued efforts to establish the TPIAO brand and increase market share of the oncology market for our EPIAO products. This increase in total operating expenses also reflects our effort in the expansion of our organization, including strengthening our sales and marketing infrastructure, to capitalize on the growing pharmaceutical market in China.
Research and development expense, representing 5.0% of total net revenues, increased by 26.0% to RMB2.8 million (US$0.4 million) in the first quarter 2008 from RMB2.2 million, representing 6.2% of total net revenues, in the first quarter 2007. This increase was mainly due to expenses associated with the Phase IV clinical trial of TPIAO and other research and development related expenses.
Sales, marketing and distribution expense, representing 46.2% of total net revenues, increased by 64.5% to RMB25.6 million (US$3.7 million) in the first quarter 2008 from RMB15.6 million, representing 44.0% of total net revenues, in the first quarter 2007 as a result of increased personnel, conference, promotional and advertising costs in line with the expansion of our sales and marketing network in China.
General and administration expense, representing 14.4% of total net revenues, increased by 158.6% to RMB8.0 million (US$1.1 million) in the first quarter 2008 from RMB3.1 million, representing 8.7% of total net revenues, in the first quarter 2007. This increase was a result of increased personnel cost and professional fees associated with being a public company since February 2007.
Income from Operations. As a result of the foregoing, operating income for the first quarter 2008 increased by 22.4% to RMB14.2 million (US$2.0 million) as compared to RMB11.6 million in the first quarter 2007. Operating margin for the first quarter 2008 was 25.6% as compared to 32.8% for the first quarter 2007.
Total Other Income, net. Net other income increased by 38.7% to RMB8.8 million (US$1.3 million) in the first quarter 2008, as compared to net other income of RMB6.4 million in the first quarter 2007, as a result of increased interest income from the net proceeds from our IPO in February 2007. No interest expense was incurred in the first quarter 2008 as compared to RMB0.4 million in first quarter 2007.
Income before Income Tax Expense and Minority Interests. As a result of the foregoing, our income before income tax expense and minority interests increased by 28.2% to RMB23.0 million (US$3.3 million) in the first quarter 2008 from RMB18.0 million in the first quarter 2007.
Income Tax Expense. Our income tax expense increased by 90.2% to RMB3.3 million (US$0.5 million) for the first quarter 2008 from RMB1.8 million for the first quarter 2007. The effective tax rate was 14.5% for the first quarter 2008 as compared to 9.8% for the first quarter 2007. The increase in tax expense and effective tax rate were attributable to the corporate income tax rate for a major operating subsidiary from 15% to 18% effective from January 1, 2008.
Under the Enterprise Income Tax (EIT) Law, effective January 1, 2008, China adopted a uniform tax rate of 25% for all enterprises (including foreign-invested enterprises) and revoked the current tax exemption, reduction and preferential treatments applicable to foreign-invested enterprises. A "new and high tech enterprise" prior to January 1, 2008 will gradually transition to the new tax rate within five years, i.e. 18% for 2008, 20% for 2009, 22% for 2010, 24% for 2011 and 25% for 2012, unless it is re-identified as a "new and high tech enterprise" under the EIT Law during the transition period. Companies that are re-identified to be a "new and high tech enterprise" can continue to enjoy the preferential tax rate of 15%. The relevant PRC authority has issued the Management Measures of Identifying New and High-Tech Enterprises and its annex, Key Fields of New and High-Tech Supported by the State in April 2008 although detailed application procedures have not been announced.
Net Income. As a result of the foregoing, our net income increased by 22.3% to RMB19.8 million (US$2.8 million) for the first quarter 2008 from RMB16.2 million for first quarter 2007.
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is performed on our year-end financial statements, which could result in significant differences from this unaudited financial information.
Currency Convenience Translation
For the convenience of readers, certain RMB amounts have been translated into US dollars at the rate of RMB7.0120 to US$1.00, the noon buying rate for US dollars in effect on March 31, 2008 for cable transfers of RMB per US dollar as certified for customs purposes by the Federal Reserve Bank of New York.
Phase III Programs Update
We continued to make progress across our phase III clinical trials during the first quarter 2008.
High-dosage EPIAO
We have completed the Phase III trial for high-dosage (36,000 IU) EPIAO and will commence patient follow-up visits in the second half of 2008. The data generated from these follow-up visits are not required for SFDA approval and are for our internal reference only. We remain confident in the overall safety and efficacy of the product and expect filing with SFDA in the third quarter of 2008.
TPIAO for ITP
As we announced in the last quarter earnings release, the Phase III trial for TPIAO for the treatment of idiopathic thrombocytopenic purpura (ITP) was delayed due to a higher than expected patient drop-off rate (patients left the hospital before the required observation time) as a result of the protocol setting employed by the clinical centers. We have corrected the protocol setting, enrolled five other large clinical centers to the trial and increased the level and frequency of clinical monitoring to increase the speed of patient recruitment. To date, we have seen significant progress and expect to complete the clinical study and file with the SFDA in the fourth quarter of 2008.
NuLeusin
We have completed the Phase III trial for NuLeusin, our second generation IL-2, with positive results based on our data to date. We expect to file with the SFDA for approval in the second half of 2008.
Conference Call
3SBio senior management will host a conference call at 5:00 am (Pacific) / 8:00 am (Eastern) / 8:00 pm (Beijing/Hong Kong) on Thursday, May 15, 2008 to discuss its 2008 first quarter financial results and recent business activity. The conference call may be accessed by calling (US) +1-480-248-5081 / (UK) +44(0)20-8515-2301 / (HK) +852-3009-5027. A telephone replay will be available shortly after the call until May 29, 2008 at (US) +1-303-590-3030/ (UK) +44(0)20-7154-2833, Passcode: 3872203; and (HK) +852-2287-4304, Passcode: 030 110#.
A live webcast of the conference call and replay will be available on the investor relations page of 3SBio's website at http://www.3sbio.com
About 3SBio Inc.
3SBio Inc. is a leading, fully integrated biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products, primarily in China. For more information, please visit 3SBio on the web at http://www.3sbio.com .
Safe Harbor Statement
Statements in this release regarding certain anticipated business prospects constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon 3SBio management's current expectations, and actual results could differ materially. Among the factors that could cause 3SBio's actual results to differ from what the company currently anticipates may include competition from other domestic and foreign pharmaceutical companies; the expected market growth for pharmaceutical products in China; market acceptance of 3SBio products; expected hospital or patient demand for our products; 3SBio's ability to expand its production, sales and distribution network and other aspects of its operations; its ability to effectively protect its intellectual property; changes in the healthcare industry in China, including changes in the healthcare policies and regulations of the PRC government and changes in the healthcare insurance sector in the PRC; and fluctuations in general economic and business conditions in China. For additional information on these and other factors that may affect the 3SBio's financial results, please refer to the company's filings with the Securities and Exchange Commission at http://www.sec.gov. 3SBio undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this press release.
3SBio Inc. and subsidiaries
Unaudited consolidated balance sheets
(expressed in thousands)
December 31 March 31 March 31
2007 2008 2008
RMB RMB US$
Assets
Current assets
Cash and cash equivalents 811,026 790,390 112,720
Accounts receivable, less
allowance for doubtful accounts:
December 31, 2007 - RMB5,257;
March 31, 2008 - RMB5,685 (US$811) 55,186 62,382 8,896
Inventories 6,882 6,847 977
Prepaid expenses and other receivables 12,074 9,093 1,297
Structured deposits 3,527 13,281 1,894
Deferred tax assets 2,335 1,725 246
Total current assets 891,030 883,718 126,030
Available-for-sale securities 15,196 16,296 2,324
Property, plant and equipment, net 49,465 52,423 7,476
Lease prepayments 9,247 9,159 1,306
Non-current deposits 6,124 3,492 498
Income tax receivable 556 -- --
Deferred tax assets 1,857 1,881 268
Total assets 973,475 966,969 137,902
Liabilities
Current liabilities
Accounts payable 1,693 1,917 273
Deferred grant income 374 374 53
Accrued expenses and other payables 22,626 22,968 3,276
Income tax payable -- 4,962 708
Other current liabilities 67 68 10
Total current liabilities 24,760 30,289 4,320
Deferred grant income 3,526 3,433 490
Other liabilities 848 824 117
Total liabilities 29,134 34,546 4,927
Commitments and contingencies
Minority interests 549 472 67
Shareholders' equity
Share capital - ordinary shares
US$0.0001 par value, 500,000,000
shares authorized, 152,099,155
shares issued and outstanding as
of December 31, 2007 and March
31, 2008 122 122 17
Additional paid-in capital 917,527 918,388 130,974
Accumulated other comprehensive loss (48,338) (80,790) (11,522)
Retained earnings 74,481 94,231 13,439
Total shareholders' equity 943,792 931,951 132,908
Total liabilities and shareholders'
equity 973,475 966,969 137,902
3SBio Inc. and subsidiaries
Unaudited quarterly consolidated statements of income
(expressed in thousands, except per share , per ADS and other share and
ADS data)
For the Three Months Ended March 31,
2007 2008 2008
RMB RMB US$
Net Revenues:
EPIAO 25,118 35,469 5,058
TPIAO 7,566 15,420 2,199
Intefen 955 1,084 155
Inleusin 300 177 25
Export 650 1,897 270
Iron 545 1,387 198
Others 239 33 5
Total 35,373 55,467 7,910
Cost of revenues (2,930) (4,911) (700)
Gross profit 32,443 50,556 7,210
Operating expenses
Research and development expense (2,187) (2,756) (393)
Sales, marketing and distribution expense (15,573) (25,623) (3,654)
General and administrative expense (3,091) (7,994) (1,140)
Total operating expenses (20,851) (36,373) (5,187)
Operating income 11,592 14,183 2,023
Total other income, net 6,368 8,834 1,260
Income before income tax expense
and minority interests 17,960 23,017 3,283
Income tax expense (1,758) (3,344) (477)
Income before minority interests 16,202 19,673 2,806
Minority interests, net of tax (50) 77 11
Net income 16,152 19,750 2,817
Net income per share:
Basic and diluted 0.12 0.13 0.02
Basic weighted average number of
shares outstanding 130,004,114 152,099,155 152,099,155
Effect of dilutive potential shares 161,867 1,634 1,634
Diluted weighted average number of
shares outstanding 130,165,981 152,100,789 152,100,789
Net income per ADS:
Basic and diluted 0.87 0.91 0.13
Basic weighted average number of
ADSs outstanding 18,572,016 21,728,451 21,728,451
Effect of dilutive potential ADSs 23,124 233 233
Diluted weighted average number of
ADSs outstanding 18,595,140 21,728,684 21,728,684
For more information, please contact:
Investor Contact:
Kevin Teo, CFO
3SBio Inc.
No.3 A1, Road 10, Shenyang Development Zone
Shenyang, China 110027
Tel: +86-24-2581-1820
Email: IR@3sbio.com
Website: http://www.3SBio.com
Investor Relations (US):
Mahmoud Siddig, Director
Taylor Rafferty
205 Lexington Avenue 8th Floor
New York, NY 10016
Tel: +1-212-889-4350
Email: 3sbio@taylor-rafferty.com
Website: http://www.taylor-rafferty.com
Investor Relations (HK):
Ruby Yim, Managing Director
Taylor Rafferty
Room 3213, Cosco Tower
183 Queen's Road CentralHong Kong, China
Tel: +852 3196 3712
Email: 3sbio@taylor-rafferty.com
Website: http://www.taylor-rafferty.com
Media Contact:
John Dudzinsky, Director
Taylor Rafferty
205 Lexington Avenue 8th Floor
New York, NY 10016
Tel: +1-212-889-4350
Email: 3sbio@taylor-rafferty.com
Website: http://www.taylor-rafferty.com