- Q1 2007 net revenues grew 26.0%, as compared to Q1 2006, to US$4.6
million
- Q1 2007 operating income up 26.9% over Q1 2006, to US $1.5 million
- Q1 2007 net income grew 116.3%, as compared to Q1 2006, to US$2.1
million
SHENYANG, China, May 2 /Xinhua-PRNewswire/ -- 3SBio Inc.
(Nasdaq: SSRX), 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, 2007.
First Quarter 2007 Financial Highlights:
-- Total net revenues increased 26.0% over the first quarter 2006 to
RMB35.4 million (US$4.6 million).
-- Net revenue from our flagship injectable recombinant human
erythropoietin ("EPO") products, marketed under our EPIAO brand,
increased 12.7% over the first quarter 2006 to RMB25.1 million (US$3.3
million).
-- Net revenue from our protein-based therapeutic recombinant human
thrombopoietin ("TPO") products, marketed under our TPIAO brand,
increased 227.4% over the first quarter 2006 to RMB7.6 million (US$1.0
million).
-- Operating income increased 26.9% over the first quarter 2006 to RMB11.6
million (US$1.5 million).
-- Net income increased 116.3% over the first quarter 2006 to RMB16.2
million (US$2.1 million).
-- Earnings per American Depositary Share ("ADS") for the first quarter
2007 were RMB0.87 (US$0.11), compared to RMB0.52 for the first quarter
2006.
Dr. Jing Lou, chief executive officer of 3SBio, commented, "The results
for the quarter demonstrate continued execution on our growth strategy. We
achieved further growth in our core product portfolio, with sales in our
flagship EPO product, EPIAO, up 12.7%, and sales for our newest proprietary
TPO product, TPIAO, up 227.4%. In the first quarter 2007, TPIAO accounted for
21.4% of our total sales. Our EPIAO products continued to maintain market
leadership both in terms of revenues and sales volume, with market shares of
36% and 30%, respectively, for the fourth quarter 2006 based on the latest
available IMS Health and our internal data. I am also pleased to report that
the project to build our new manufacturing facility and to enhance our
existing facilities to meet EMEA requirements is on track. The headcount of
our sales team increased from 143 as at the end of January 2007 to 179 as at
the end of April 2007 as planned, and we continue to provide full training for
our specialized team focusing on increasing penetration in the oncology end
market. Our pipeline remains robust, and we are on track to complete phase III
clinical trials for our three late stage projects in the latter half of 2007.
As always, we remain focused on driving growth, margins and profitability
through our proven R&D capabilities, innovative and cost-effective
manufacturing operations, established nationwide sales and marketing network
and market oriented management team."
First Quarter 2007 Unaudited Financial Results:
Net Revenues. Our net revenues amounted to RMB35.4 million (US$4.6
million) in the first quarter 2007 compared to RMB28.1 million net revenues
for the first quarter 2006, representing an increase of 26.0%, primarily
attributable to the continued growth of our flagship EPO product, EPIAO, and
the rapid quarter-over-quarter upward sales trend of our TPIAO products. Net
revenues from our leading EPIAO products increased by 12.7% from RMB22.3
million in the first quarter 2006 to RMB25.1 million (US$3.3 million) in the
first quarter 2007. Net revenues from our proprietary protein-based
therapeutic recombinant human thrombopoietin ("TPO") products, marketed under
our TPIAO brand, increased 227.4% over the first quarter 2006 to RMB7.6
million (US$1.0 million). Our TPIAO products are now our second largest
revenue contributor, accounting for 21.4% of total net revenues for the first
quarter 2007 as compared to 8.2% in the first quarter 2006. In addition, we
started seeing results from our sales efforts in promoting our in-licensed
Iron Sucrose supplement, Tietai, which generated 1.5% of our overall sales for
the first quarter 2007.
Gross Profit. Gross profit increased 27.6% to RMB32.4 million (US$4.2
million) for the first quarter 2007 from RMB25.4 million in the first quarter
2006. Gross margin was 91.7% in the first quarter 2007, up from 90.5% in the
first quarter 2006, as we continued to enjoy economies of scale from larger
volume production, corresponding to higher unit sales of our EPIAO and TPIAO
products.
Income from Operations. Operating income for the first quarter 2007 was
RMB11.6 million (US$1.5 million), representing a 26.9% increase, compared to
RMB9.1 million in the first quarter 2006, and up 32.9% from an operating
income of RMB8.7 million in the fourth quarter of 2006, primarily due to
increased operating leveraging from continued sales growth. Operating margin
for the first quarter 2007 was 32.8%, comparable to 32.5% for the first
quarter 2006. As we initiated additional investments in expanded sales and
marketing efforts for our newly marketed products as well as increased
research and development efforts in the first quarter of 2007, the net
positive effect on our operating leverage derived from our sales growth was
temporarily offset. Operating margin for the first quarter 2007 increased by
8% from 24.8% in the fourth quarter of 2006, as the stock-based compensation
associated with 312,504 restricted shares awarded in June 2006 was fully
recognized, and increased marketing efforts in the fourth quarter of 2006.
Operating Expenses. Our total operating expenses decreased by 11.9% from
RMB23.7 million in the fourth quarter 2006 to RMB20.9 (US$2.7 million) in the
first quarter 2007, but was up 28.1% from RMB16.3 million in the first quarter
2006. The year-on-year increase in operating expenses was primarily due to the
research and development expenses incurred for EPIAO, NuPIAO (our second
generation EPIAO) and clinical trials for TPIAO's new indication, and
increased sales, marketing and distribution costs. Other Income (Expense),
net. Net other income increased by RMB6.9 million (US$0.9 million) in the
first quarter of 2007, as compared to net other expense of RMB0.5 million in
the first quarter of 2006, as a result of reduced debt level because of
internally generated cashflows.
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 108.6% from RMB8.6 million in the first quarter 2006 to RMB18.0
million (US$2.3 million) for the first quarter 2007.
Income Tax Expense. Our income tax expense increased by 49.5% from RMB1.2
million for the first quarter 2006 to RMB1.8 million (US$0.2 million) for the
first quarter 2007. The effective tax rate was 9.8% for the first quarter 2007,
which improved from 13.7% for the prior year period, mainly contributed to by
non-taxable interest income earned from IPO proceeds in first quarter of 2007.
Net Income. As a result of the foregoing, our net income increased by
116.3% from RMB7.5 million for first quarter 2006 to RMB16.2 million (US$2.1
million) for the first quarter 2007.
Accounting of Foreign Exchange Impact on Our Assets and Liabilities
On July 21, 2005, the Chinese government changed its policy of pegging the
value of the Renminbi to the U.S. dollar and now permits the Renminbi to
fluctuate within a band against a basket of certain foreign currencies. This
change in policy resulted in an appreciation in the value of the Renminbi
against the U.S. dollar. This has resulted in a foreign exchange accounting
impact on the Company's assets and liabilities primarily the US$108.0 million
of net proceeds the Company received from its initial public offering
completed in the first quarter 2007. For the first quarter of 2007, the
Company recognized a corresponding foreign currency translation deficit of
RMB3.6 million (US$0.47 million) in accumulated other comprehensive loss as a
component of shareholders' equity, when the Company's assets and liabilities
denominated in U.S. dollars were translated into Renminbi based on the RMB/US
dollar exchange rate as of March 30, 2007. If the circumstances with respect
to our intended use of our IPO net proceeds change in the future, the
accounting treatment with respect to the foreign exchange accounting impact on
our IPO net proceeds may also change.
Currency Convenience Translation
For the convenience of readers, certain RMB amounts have been translated
into US dollars at the rate of RMB7.7232 to US$1.00, the noon buying rate for
US dollars in effect on March 30, 2007 for cable transfers of RMB per US
dollar as certified for customs purposes by the Federal Reserve Bank of New
York.
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 Wednesday, May 2, 2007 to
discuss its first quarter 2007 financial results and recent business activity.
The conference call may be accessed by calling (US) +1 480 629 9562 / (UK) +44
(0)20 8515 2301 / (HK) +852 3009 5027. A telephone replay will be available
shortly after the call until May 16, 2007 at (US) +1 303 590 3030/ (UK) +44
(0)20 7154 2833, Passcode: 3729376; and (HK) +852 2287 4304, Passcode: 088110#.
A live webcast of the conference call and replay will be available on the
investor relations page of 3SBio's website at 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 www.3sbio.com
Safe Harbor Statement
Statements in this release regarding certain anticipated business
prospects resulting from the approval 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 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.
Investor Contact:
Clara Mak, CFO
3SBio Inc.
No.3 A1, Road 10,
Shenyang Development Zone
Shenyang, China 110027
+86 (24) 2581 1820
IR@3sbio.com
www.3SBio.com
Investor Relations (HK):
Ruby Yim, Managing Director
Taylor Rafferty
Suite 2003-5 Vicwood Plaza
199 Des Voeux Road Central
Hong Kong, China
+852 3196 3712
3sbio@taylor-rafferty.com
www.taylor-rafferty.com
Investor Relations (US):
Mahmoud Siddig, Director
Taylor Rafferty
205 Lexington Avenue
8th Floor
New York, NY 10016
+1 (212) 889-4350
3sbio@taylor-rafferty.com
www.taylor-rafferty.com
Media Contact:
John Dooley
Taylor Rafferty
205 Lexington Avenue
8th Floor
New York, NY 10016
+1 (212) 889-4350
3sbio@taylor-rafferty.com
www.taylor-rafferty.com