- Conference call scheduled Monday, November 16, 2009 at 9:00 a.m. ET -
BEIJING, Nov. 16 /PRNewswire-Asia/ -- Sinovac Biotech Ltd. (Nasdaq: SVA), a leading developer and provider of vaccines, announced today its unaudited financial results for the three-month and nine-month periods ended September 30, 2009.
Financial Highlights
-- Sales for the third quarter increased 142% to $21.2 million
-- Sales for the nine-month period increased 40% to $47.8 million
-- Operating income for the third quarter rose 436% to $12.4 million
-- Operating income for the nine-month period increased 90% to $23.7
million.
-- Net income attributable to the shareholders increased 606% to $5.2
million in the third quarter, with diluted EPS of $0.12
-- Cash and cash equivalents at September 30, 2009 was $46.6 million.
Business Highlights
-- In August, Sinovac reported positive top-line results from the completed
clinical trial for its internally-developed pandemic influenza A (H1N1)
vaccine, PANFLU.1(TM). The analysis of the clinical trial results showed
that Sinovac's H1N1 vaccine induces good immunogenicity after one dose.
The seropositive rate, seroconvertive rate and GMT increasing multiple
conform to international criteria for vaccines, which indicated PANFLU.1
has a good safety and immunogenicity profile.
-- In August, Sinovac was selected by the Beijing Public Health Bureau as
one of four manufacturers to supply seasonal influenza vaccine to the
citizens of Beijing. The Beijing Public Health Bureau completed the
bidding process for the purchase of flu vaccines and corresponding
services for 2009 on August 26, 2009. Sinovac will supply its seasonal
influenza vaccine, Anflu®, pursuant to this agreement.
-- In September, Sinovac's registration application for its pandemic
influenza A (H1N1) vaccine, PANFLU.1(TM), was approved by the State Food
and Drug Administration (SFDA) and a production license was granted.
Sinovac received a first purchase order for 3.3 million doses and a
second order purchase for 3.0 million doses on September 4 and September
30, respectively, from China's Ministry of Industry and Information
Technology for the national purchase plan. In October, Sinovac received
a third purchase order for 5.19 million doses. In aggregate, Sinovac has
received orders for a total of 11.49 million doses of its PANFLU.1(TM)
vaccine for China's national purchase plan.
-- In September, Sinovac signed an agreement with Boryung Pharmaceutical
Company Limited, a Korean manufacturer of pharmaceuticals, to
collaborate on marketing efforts and possible vaccine supply efforts to
the government of South Korea for Sinovac's H1N1 vaccine. The agreement
followed meetings between Sinovac and the Korean Food and Drug
Administration (KFDA) and the Korean Center for Disease Control (KCDC)
where Sinovac presented the scientific data of Sinovac's H1N1 vaccine.
The collaboration provides Boryung exclusive rights to represent Sinovac
in discussions with the KFDA and KCDC in the development of business
opportunities in South Korea surrounding Sinovac's H1N1 vaccine.
-- In October, Sinovac obtained a Certificate of Approval from Mexico's
Secretaria de Salud to distribute PANFLU.1 in Mexico. Imperiales S.A. de
C.V., a biopharmaceutical company with operations in Mexico since 1935,
is the exclusive distributor of Sinovac's vaccine products in the
Mexican market, pursuant to a prior distribution agreement signed in
2005 with its affiliate. An application for Anflu was filed in Mexico as
well.
-- In October, Sinovac received the Certificate of Approval to distribute
its H5N1 (bird flu) pandemic influenza vaccine in Hong Kong. The Company
plans to submit applications in Hong Kong for approval of its PANFLU.1
(H1N1) and Anflu vaccines in the coming months.
-- In October, Sinovac was selected to supply its seasonal flu vaccine,
Anflu®, to the Shanghai government. This marks Sinovac's entry into an
additional new public market for its seasonal flu vaccine.
-- In November, Sinovac was selected among five vaccine manufacturers by
the Shanghai Government to supply its hepatitis A vaccine, Healive®, to
the public market of Shanghai. Sinovac will supply Healive valued at RMB
20.6 million, or approximately $3 million, pursuant to the purchase
order that will be in effect for one year.
Mr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, "We are very proud that Sinovac was the first company in the world to develop a vaccine for the H1N1 pandemic flu virus. This achievement was made possible by the Company's focus on its mission to provide Chinese children with the best vaccines in the world, and let children in the world benefit from vaccines made in China. To this end, we have not only acted as a successful provider of H1N1 vaccine to China, but have also made strides toward providing other markets such as South Korea and Mexico with PANFLU.1.
"Sinovac has been able to demonstrate its flexibility and agility as a leading vaccine Company by excelling in the rapid development and production of this new product, while, at the same time, also realizing product orders for Anflu and the H5N1 Panflu vaccine, both inside and outside of China. We will continue to leverage our leadership position in the development of the H1N1 vaccine to pursue international marketing opportunities for our entire vaccine portfolio. We will also continue our development efforts to expand our portfolio of marketed vaccines, such as EV71, pneumococcal conjugated vaccine, and rabies, in the coming years."
Mr. Yin concluded, "Our strong third quarter results were a testament to our ability to commercialize our H1N1 and H5N1 vaccines. We recorded revenues from doses sold in China and Macau. Given our strong product mix, we were able to maintain our gross profit margin in excess of 80%. With the continued execution of our commercialization strategy, we remain on track to exceed the previously projected full year 2009 revenue range of $55 million to $60 million."
Market Overview
The People's Republic of China (PRC) government's expansion program of publicly funded inoculations has driven increased demand for Sinovac's principal product, Healive. Although the gross margin on public sales is lower than on private sales, Sinovac expects to realize volume-related offsetting cost savings and efficiencies.
In the current year, Sinovac expects to generate significant revenues from the sale of its H1N1 vaccine; this is expected to be a short-term initiative that will extend through to the end of the influenza season in the spring of 2010. These sales are not expected to be recurring, but demonstrate the Company's ability to develop, manufacture and distribute vaccines on short notice.
At the same time, the outbreak of H1N1 pandemic flu appears to have increased the demand for seasonal flu vaccines. It is expected that increasing sales of Anflu will benefit the company over the long-term.
Financial Review for Three Months Ended September 30, 2009
During the third quarter of 2009, sales were $21.2 million, up 142% from $8.7 million in the third quarter of 2008. During the third quarter of 2009, Sinovac's unit dose sales were:
Three months ended September 30, 2009 2008
(000 doses) (000 doses)
----------- -----------
Healive 989 1,087
Bilive 215 28
Anflu 4,312 512
Panflu (H5N1) 20 0
PANFLU.1 (H1N1) 586 0
Sales of the hepatitis A vaccine to the public market (including doses purchased by the Ministry of Health) accounted for 31% of total hepatitis A vaccine sales in the quarter. Sales of Bilive increased significantly during the quarter due to a successful marketing campaign. Sales revenues for 20,000 doses of Panflu (H5N1) to Macau and 586,000 doses of PANFLU.1 (H1N1) were booked during the third quarter of 2009.
Gross profit for the third quarter 2009 was $17.5 million, with a gross margin of 83%, compared to $7.1 million and a gross margin of 81%, for the same period of 2008. The gross margin was favorably impacted by the utilization of the Anflu production line to produce PANFLU.1 (H1N1) and Panflu (H5N1). The gross margin for the third quarter of 2009 increased from the gross margin of 81% reported in the third quarter of 2008 due to efficiencies resulting from expanded production volume of Bilive and increased utilization of the flu production line.
Total operating expenses for the third quarter of 2009 were $5.1 million, compared to $4.8 million in the comparative period in 2008. Selling, general and administrative expenses for the third quarter of 2009 were $3.5 million, compared to $3.8 million in the same period of 2008. SG&A expenses as a percentage of third quarter 2009 sales decreased to 17%, down from 43% during the prior year. The lower selling and administrative expenses as a percentage of revenue resulted from the increased economies of scale associated with the significant growth of sales.
Net research and development expenses for the third quarter 2009 were $1.4 million, compared to $812,000 in the same period of 2008. The increased R&D expenses in the third quarter of 2009 were mainly related to the completion of the H1N1 clinical trial and the continued development of the EV 71 vaccine, pneumococcal conjugated vaccine, and universal pandemic influenza vaccine.
Third quarter 2009 operating income was $12.4 million, compared to operating income of $2.3 million in the prior year. Net income for the third quarter of 2009 included $246,000 interest and financing expenses and $3.8 million in income tax expenses. Net income for the same period of 2008 included $190,000 of interest and financing expenses and $911,000 of income tax expenses. Net income attributable to shareholders for third quarter of 2009 was $5.2 million, or $0.12 per diluted share, up 606% compared to net income attributable to shareholders of $740,000, or $0.02 per diluted share, in the same period of 2008.
As of September 30, 2009, Sinovac's cash and cash equivalents totaled $46.6 million, compared to $32.9 million as of December 31, 2008. The increase in cash and cash equivalents primarily reflects an advance payment received for a vaccine-stockpiling program.
Financial Review for Nine Months Ended September 30, 2009
During the nine months ended September 30, 2009, sales were $47.8 million, up 40% from $34.1 million for the same period in 2008. Sinovac recorded strong revenues growth in the second and third quarters, which greatly improved the Company's performance for the year to date.
During the first nine months of 2009, Sinovac's unit dose sales were:
Nine months ended September 30 2009 2008
------------------------------ ---- ----
(000 doses) (000 doses)
----------- -----------
Healive 5,024 5,313
Bilive 708 234
Anflu 4,448 498
Panflu (H5N1) 20 0
PANFLU.1 (H1N1) 586 0
Gross profit for the nine-month period was $38.9 million, with a gross margin of 81%, compared to $28.8 million and a gross margin of 84%, for the prior year period. The gross margin was adversely affected by the lower selling price of Healive vaccine delivered to the Ministry of Health, of which 2.08 million doses was delivered in the second quarter of 2009. Total operating expenses for the first nine months of 2009 were $15.2 million, compared to $16.3 million in the comparative period in 2008.
Selling, general and administrative expenses for the first nine months of 2009 were $12.0 million, compared to $13.4 million in the prior year period. SG&A expenses as a percentage of sales decreased to 25%, down from 39% in the comparative period of the prior year. Net research and development expenses for the first nine months of 2009 were $2.8 million, compared to $2.4 million in the prior year period.
Operating income for the nine months ended September 30, 2009 was $23.7 million, compared to an operating income of $12.5 million in the prior year period. Net income for the first nine months of 2009 included $571,000 in interest and financing expenses and $6.4 million in income tax expenses. Net income for the same period of 2008 included $747,000 of interest and financing expense and $3.2 million of income tax expense. Net income attributable to shareholders for the first nine months of 2009 was $11.1 million, or $0.26 per diluted share, compared to net income of $5.6 million, or $0.13 per diluted share, in the same period of 2008.
Conference Call Details
The Company will host a conference call on Monday, November 16, 2009 at 9:00 a.m. EDT (10:00 p.m. China Standard Time) to review the Company's third quarter financial results for the period ended September 30, 2009 and provide an update on recent corporate developments. To access the conference call, please dial 1-877-407-4018 (USA) or 1-201-689-8471 (international). A replay of the call will be available from 12:00 p.m. ET on November 16, 2009 until November 30, 2009. To access the replay, please dial 1-877-660-6853 (USA) or 1-201-612-7415 (international) and reference the account number 3055 and the access code 337401. A live audio webcast of the call will also be available from the Investors section on the corporate web site at http://www.sinovac.com. A webcast replay can be accessed on the corporate website beginning November 16, 2009 and the replay will remain available for 30 days.
About Sinovac
Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on the research, development, manufacture and commercialization of vaccines that protect against human infectious diseases. Sinovac's commercialized vaccine products include Healive® (hepatitis A), Bilive® (combined hepatitis A and B), Anflu® (seasonal influenza), Panflu(TM) (pandemic influenza (H5N1)), and PANFLU.1(TM) (pandemic influenza A (H1N1)). Sinovac is developing vaccines for enterovirus 71, universal pandemic influenza, pneumococcal infection, Japanese encephalitis, and human rabies. Its wholly owned subsidiary, Tangshan Yian, is conducting field trials for independently developed inactivated animal rabies vaccines.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words or phrases such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this press release contain forward-looking statements. Statements that are not historical facts, including statements about Sinovac's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Sinovac does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Helen G. Yang
Sinovac Biotech Ltd.
Tel: +86-10-8289-0088 x9871
Fax: +86-10-6296-6910
Email: info@sinovac.com
Investors:
Amy Glynn/Stephanie Carrington
The Ruth Group
Tel: +1-646-536-7023/7017
Email: aglynn@theruthgroup.com
scarrington@theruthgroup.com
Media
Janine McCargo
The Ruth Group
Tel: 656-536-7033
Email: jmccargo@theruthgroup.com
SINOVAC BIOTECH LTD.
Consolidated Balance Sheets
(Unaudited)
(Expressed in U.S. Dollars)
September 30, December 31,
2009 2008
ASSETS
Current assets
Cash and cash equivalents $46,579,789 $32,894,102
Accounts receivable - net 36,917,624 19,486,596
Inventories 13,541,462 6,486,351
Income tax refundable - 348,018
Prepaid expenses and deposits 877,260 933,297
Deferred tax assets 678,620 1,189,831
Total current assets 98,594,755 61,338,195
Property, plant and equipment 21,426,879 19,262,099
Long term inventories 3,110,828 942,514
Deferred tax asset 532,854 569,937
Licenses and permits 794,567 1,090,477
Total assets $124,459,883 $83,203,222
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Loans payable $21,937,522 $8,024,277
Accounts payable and accrued
liabilities 14,301,303 11,909,037
Income tax payable 2,962,831 -
Due to related parties 46,971 46,971
Dividends payable to
non-controlling shareholder
of Sinovac Beijing 115,957 115,677
Deferred tax liability 768,876 -
Deferred research grants 1,051,099 1,182,703
Total current liabilities 41,184,559 21,278,665
Deferred government grants 2,690,382 2,836,994
Loan payable - 2,188,439
Deferred revenue 9,798,760 -
Long-term debt 12,489,142 5,025,433
Total liabilities 53,673,701 26,304,098
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock - -
Authorized 50,000,000 shares
at par value of $0.001 each
Issued and outstanding: nil
Common stock 42,584 42,894
Authorized: 100,000,000 shares
at par value of $0.001 each
Issued and outstanding:
42,583,761(2008- 42,893,928 )
Additional paid in capital 42,299,500 41,629,506
Accumulated other comprehensive
income 4,218,717 4,143,225
Dedicated reserves 5,549,684 5,549,684
Retained earnings (accumulated
deficit) 9,407,160 -1,651,534
Total stockholders' equity 61,517,645 49,713,775
Non-controlling interest 9,268,537 7,185,349
Total equity 70,786,182 56,899,124
Total liabilities and equity $124,459,883 $83,203,222
SINOVAC BIOTECH LTD.
Consolidated Statements of Income and Comprehensive Income
Three Months and Nine Months Ended September 30, 2009 and 2008
(Unaudited)
(Expressed in U.S. Dollars)
Three months ended Nine months ended
September 30 September 30
2009 2008 2009 2008
Sales $21,224,685 $8,753,671 $47,809,111 $34,137,101
Cost of sales -
(exclusive of
depreciation of
land -use rights and
amortization of
licenses and permits
of $104,732 (2008 -
$102,742) for three
months and $314,081
(2008- $202,575)
for nine months 3,675,695 1,658,862 8,886,251 5,320,667
Gross profit 17,548,990 7,094,809 38,922,860 28,816,434
Selling, general
and administrative
expenses 3,519,977 3,791,916 11,927,879 13,408,452
Research and
development
expenses - net of 1,443,834 811,901 2,753,009 2,408,745
$133,176 (2008-
$16,829) for three
months and $261,861
(2008- $147,958) for
nine months in
government
research grants
Depreciation of
property, plant
and equipment and
amortization of
licenses and
permits 179,962 178,404 511,835 526,117
Total operating
expenses 5,143,773 4,782,221 15,192,723 16,343,314
Operating income 12,405,217 2,312,588 23,730,137 12,473,120
Interest and
financing expenses (246,036) (189,935) (571,349) (747,496)
Interest income
and other income
(expenses) 77,300 58,456 243,451 (36,685)
Income before
income taxes and
non-controlling
interest 12,236,481 2,181,109 23,402,239 11,688,939
Income taxes
recovery (expense)
- Current (3,230,985) (1,005,174) (5,026,902) (4,229,613)
- Deferred (551,478) 94,028 (1,399,428) 991,461
Consolidated net
income for the
period 8,454,018 1,269,963 16,975,909 8,450,787
Less: net income
attributable to
non-controlling
interest (3,228,659) (530,084) (5,917,215) (2,814,703)
Net income
attributable to
the stockholders $5,225,359 $739,879 $11,058,694 $5,636,084
Net income for the
period $8,454,018 1,269,963 16,975,909 8,450,787
Other comprehensive income
Foreign currency
translation
adjustment 64,108 33,637 90,728 2,358,956
Total comprehensive
income 8,518,126 1,303,600 17,066,637 10,809,743
Less: comprehensive
income attributable
to non-controlling
interest 3,229,599 522,960 5,932,451 2,889,658
Comprehensive income
attributable to
stockholders $5,288,527 $780,640 $11,134,186 $7,920,085
Earnings per share
- basic and
diluted $0.12 $0.02 $0.26 $0.13
Weighted average
number of shares of
common stock
outstanding
- Basic 42,428,755 42,873,511 42,574,921 42,299,187
- Diluted 43,631,572 43,142,788 42,758,104 42,638,584
SINOVAC BIOTECH LTD.
Consolidated Statements of Cash Flows
Three Months and Nine Months Ended September 30, 2009 and 2008
(Unaudited)
(Expressed in U.S. Dollars)
Three Months ended Nine Months ended
September 30 September 30
2009 2008 2009 2008
Cash flows from (used in)
operating activities
Net Income for the
period $8,454,018 $1,269,963 $16,975,909 $8,450,787
Adjustments to
reconcile net
income to net cash
used by operating
activities:
- deferred income
taxes 551,478 (94,028) 1,399,428 (991,461)
- loss (income) On
disposal fixed
assets 641 2,249 (6,708) 2,249
- stock-based
compensation 180,152 16,635 308,195 49,907
- provision for
doubtful debts (1,595,787) 408,289 717,137 1,968,207
- depreciation
of property,
plant and
equipment, and
amortization of
licenses 529,957 517,751 1,394,064 1,298,314
- research and
development
expenditures
qualified for
government grant (133,176) (16,829) (261,861) (147,677)
Change in other
assets and
liabilities
- accounts
receivable (3,545,198) 4,718,247 (18,088,750)(8,650,832)
- inventories (4,063,146) (1,620,126) (9,198,785)(3,934,756)
- income tax
refundable
(payable) 3,482,345 - 3,309,317 -
- prepaid
expenses and
deposits (197,728) 273,079 58,098 188,789
- advance from
stockpiling
program 147,160 - 9,791,728 -
- accounts
payable and
accrued
liabilities 3,646,229 (2,168,844) 2,362,439 1,973,562
Net cash
provided by
operating
activities 7,456,945 3,306,386 8,760,211 207,089
Cash flows from
(used in)
Financing
activities
Loan proceeds - (3,572,010) 16,074,281 -
Loan repayment (4,384,356) 2,143,206 (4,384,356) (3,572,010)
Proceeds from
issuance of
common stock 693,285 - 693,285 2,143,206
Repurchase of
common shares - - (335,831) 9,854,560
Loan repayment
from non-
controlling
shareholder of
Sinovac Beijing 1,461,298 - - -
Proceeds from
shares subscribed 4,035 20,060 4,035 20,060
Dividends paid
to non-
controlling
shareholder of
Sinovac Beijing (3,846,501) - (3,846,501) (2,947,877)
Government grant
received 171,326 143,626 171,326 214,321
Net cash
provided by (used
in) financing
activities (5,900,913) (1,265,118) 8,376,239 5,712,260
Cash flows from
(used in) investing
activities
Restricted cash - 434,196 - (725)
Acquisition of
property, plant
and equipment (1,718,443) (1,046,849) (3,480,444)(3,283,424)
Net cash used in
investing
activities (1,718,443) (612,653) (3,480,444)(3,284,149)
Exchange effect
on cash and
equivalents 37,748 303,614 29,681 845,803
Increase
(decrease) in
cash and cash
equivalents (124,663) 1,732,229 13,685,687 3,481,003
Cash and cash
equivalents,
beginning of
period 46,704,452 18,820,271 32,894,102 17,071,497
Cash and cash
equivalents, end
of period $46,579,789 $20,552,500 $46,579,789 $20,552,500
Cash paid for
interest, net of
interest
capitalized $285,423 $150,657 $615,691 $456,665
Cash paid
(received) for
income taxes $(251,359) $1,502,166 $1,717,585 $2,812,129
